Myanmar opens wholesale and retail trade to foreign investment

Workers stack watermelons after unloading them from a truck at a wholesale vegetable market in Yangon in April, 2017. (AFP)

YANGON – The Ministry of Commerce has opened retail and wholesale trading to foreign owned companies and joint ventures, creating new opportunities in a sector that several years ago was tightly restricted.

Notification 25/2018 permits foreign companies and joint ventures to trade any commodity manufactured in Myanmar or imported from overseas. Foreign traders were previously limited to dealing fertilisers, seeds, pesticides, agricultural equipment, hospital equipment and construction materials.

The commerce ministry wants to “enable consumers to have more choice and pay less through the creation of better competition”, according to an unofficial translation of the notification by Lincoln Legal Services.

It also intends “to develop the quality of goods and better service in the distribution sector, to develop technologies, and to develop small and medium enterprises through the creation of a bigger market for local products”.

The May 9 directive contains several conditions, including a minimum capital requirement of $5 million for foreign-owned wholesalers and $3 million for foreign retailers, excluding the value of land rental.

Joint-venture wholesale traders – in which the local partner must have at least a 20 percent share – require a minimum of $2 million in capital, while joint-venture retailers must have at least $700,000. There are no capital requirements for local wholesale or retail traders.

New companies must register with the Ministry of Commerce and submit a detailed business plan, the directive said, adding that existing companies with over $700,000 in capital must register with the ministry within 150 days.

Foreign-owned and joint venture companies also need a Myanmar Investment Commission permit or endorsement and a recommendation from the relevant city or township development committee, Lincoln Legal Services said in a note.

Foreign investors are barred from opening minimarts or convenience stores with a floor area of less than 929 square metres (10,000 square feet), the notification said.

“This is a welcome strengthening of the MoC’s positive trend in opening up the economy to greater levels of foreign participation and investment,” said Mr William Greenlee, a partner at DFDL, in a client note.

“The MoC has now streamlined and dramatically eased the otherwise tedious process of foreign investors attempting to actively engage in Myanmar’s retail and wholesale sector. The significance of these recent developments cannot be overstated, and they will be sure to exert profound effects on foreign investor confidence and levels of participation in the coming months and years.”