Myanmar Wholesale TradingWholesale trade Myanmar
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Wholesale and retailing in Myanmar allowed for international investment
Communication No. 25/2018 of 9 May 2018 of the Ministry of Commerce of Myanmar (Notification) now fully permits non-German corporations and jointventures with interests abroad to operate wholesale and retail operations in Myanmar, provided certain minimal investments and various limitations are met. The very welcome general liberalization should make it considerably easier for FDI in retailing and wholesale operations.
The notification allows retailing and wholesale trade in goods manufactured and/or reimported in Myanmar, except for goods that are banned or limited under existing laws (such as the banned import listings on the Ministry of Commerce's national trade portal in Myanmar), provided that the following are met. WholesaleThe notification allows wholesaling by: a public and/or private partnership in which at least 20% of the capital is in the hands of citizens and/or civil enterprises, provided that the enterprise has an up front capital expenditure of at least $2 million (excluding the value of the goods to be dealt and the rental of the land).
RetailingThe notification allows retailing by: a venturer in which at least 20% of the capital is in the hands of citizens and/or civil enterprises, provided that the enterprise has an up front capital of at least $700,000 (excluding the value of the goods to be dealt with and the rent), provided that no enterprise with non-resident participation may carry out retailing activity on an area of less than 929 m2, which includes a mini-market or a food and beverage shop.
The ban on space of less than 929 sq. m. is reinforced in Communication 15/2017 of the Myanmar MIC. Myanmar has no requirement to invest in a 100% majority of its assets to operate wholesale or retailing businesses. As well as explicitly authorizing non-resident involvement in Myanmar's wholesale and retailing operations, the notification establishes conditions for all enterprises engaged in retailing or wholesale to be registered with the Ministry of Commerce, with the exception of enterprises who are fully held by Myanmar citizens and have an start-up capital of less than $700,000, which are exempted from the conditions for registering.
Registering the retailer and wholesaler who wishes to enter into retailing and wholesale operations as a result of the liberalization granted by the notification must provide the Ministry of Commerce with the following documents for registration: memorandum of association; copy of MIS approval or end-orsement (if available); letters of reference from the competent urban development committee or township development committee in each region/state in which the enterprise intends to act; detail commercial plans (including the original amount of investments and the propounded trading location(s) and the corresponding size).
All Myanmar's middle-class retailers and wholesalers must be registered with the Department of Commerce within 150 day of issuance of the notification (unless they are exempted because their original capital outlay is less than $700,000). In order to be registered, they must provide the Ministry of Commerce with a copy of the following documents: memorandum of association; current trade in goods; if the enterprise has more than one trading firm, information on the various firms, together with detailled schedules and a current trade in goods.
Whilst the Notice explicitly provides that it covers all enterprises currently engaged in retailing and/or wholesale trade (including jointventures with overseas holdings and fully foreign-owned enterprises), the Notice does not include registry obligations for overseas enterprises already engaged in retailing and wholesale operations in Myanmar, as allowed in the various product-specific Notices of recent years under the progressive "liberalisation" (e.g. Notice 36/2017 of the Ministry of Commerce on chemicals fertilisers, seed, pesticides, medical devices and building materials).
As we know, all enterprises and jointventures with international holdings currently engaged in retailing and wholesale business in Myanmar are also obliged to notify the Ministry of Commerce in accordance with the notification, and we suggest immediate notification (notwithstanding the fact that no timeframe is specified in the notification).
Enterprises listed under the notification must inform the Ministry of Commerce within 90 workingdays of the opening of further commercial establishments or any other "expansion". Regulatory information set out in the Notice is in supplement to any regulatory and licensing requirement under existing legislation or regulation, as well as product-specific regulatory information.
This Communication explicitly states that businesses must meet the needs of the competent urban planning commissions, community planning commissions and local government bodies, together with the definition of allowable sites and associated quantities, the allowable number of sites and the allowable trading dates and time. For a long time, international investment has been waiting for the general opening of Myanmar's retailing and wholesale trade, which has been achieved through notification following the progressive liberalization in recent years.
This Communication provides welcome clarification for these industries with strong promise for attracting FDI. This, in turn, should help to give Myanmar's local industry a welcome upturn, not only through a strong growth in customer choice, but also through a much wider range of machines, equipments and commodities for local manufacturing.
The notification will also hopefully help to create a more conformist corporate structure and to put an end to inconsistent "creative corporate structures" that some have supposedly used in the past to evade the earlier limitations. Notification is a forward-looking move to improve the regulatory environment and develop the Myanmar economies for a variety of reason.