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Myanmar allows 100% foreign ownership for retail and wholesale commerce.
16 May

Myanmar allows 100% foreign ownership for retail and wholesale commerce.

The Mynanmar Ministry of Commerce on 9 May authorised foreign firms to operate businesses with 100% ownership to provide wholesale and retail services in Myanmar. (Directive 25/2018).

With minimum capital investment benchmarks of US$5M for wholesale and US$3M for retail this change is clearly aimed at the larger operators. Previously, Myanmar laws protected Myanmar firms in this sector. Here is another clear signal indicating The Government is keen to attract even more foreign investment. Last year imports grew by 3.7% to US$17.2 billion, and foreign direct investment was over US$4.5 billion as at the end of November 2017.
(Investement benchmarks exlude land rental fees).

A foreign company can also choose the route of Joint Venture with a Myanmar company. For a JV wholesale operation the capital requirements are US$2M or above, for retail US$ 700,000 or above. A 20% or more equity holding must held by a Myanmar national. In the past, foreign firms seeking Joint Ventures with local firms in this sector were unlikely to obtain authorisation. The commercial landscape is going to change.

This is a huge step. Back in 1964 wholesale shops, departmental stores and warehouses across the country were nationalised. Even in recent years and after changes in the laws, there were strong restrictions on who could provide these services. Apart from some products, which remain on a prohibited list, all other commodities are now authorised and there are no restricted regions or districts for sales. However, mini-markets and convenience stores are not authorised. A new commercial site must have a floor area of over 929m2.

All companies must register, excluding 100% domestically owned firms with initial investment capital of under $700,000.

Myanmar firms, who are already trading and with initial investment of $700,000 or more, must register with The Ministry within 150 days from May 9. All registered entities must notify The Ministry ninety 90 days before any new stores open for trading.

Myanmar Government sends a clear signal to encourage
even more foreign investment.

The Government has said they wish to see changes leading to lowering of commodity prices, growing competition, broadening availability of brands and so widening customer choice. This change will also improve marketing channels for local produce. A bonus for small and medium size companies in Myanmar and a boost to employment figures.

Many new commodities, product ranges and trade names
will soon be available on Myanmar retail shelves.

One Chief Excecutive in Myanmar with links to the United Kingdom commented on this change in the law, saying it will attract well known British brands, such as “The Arcadia Group, which is responsible for Topshop and Miss Selfridges, Marks and Spencer, John Lewis and H&M”. Visitors to the UK or parts of Continental Europe will almost certainly know of these of big brands, with large stores and who employ large numbers of staff. All good news for Myanmar and Myanmar shoppers.

A further change is that now brands can arrive directly and not go through local importers. There are already predictions that Myanmar will now see more car brands and white goods being available.

FocusCore has been recording these growing figures and is an active contributor to the growth. We started here in 2014, helping companies obtain the required visas and work permits. Our operation has also grown, and now includes a wide range of corporate support services, from bookkeeping to legal services and commercial real estate solutions.

Public spending power is growing fast. Figures showing exponential demand in mobiles and Internet usage confirms this positive change. This growth has been blocked for many years. The gates are open and now many more doors of large modern stores and malls. Call FocusCore today and start trading in Myanmar.

Myanmar: New law arriving for Trademarks and IP protection. You must act to protect & register your trademarks.
07 May

Myanmar: New law arriving for Trademarks and IP protection. You must act to protect & register your trademarks.

This may be the most important blog we have ever written. Action is required by your company to protect trademarks even if already declared. If not your responsibility please share now this link for this blog to selected colleagues.

http://myanmarcs.focuscoregroup.com/myanmar-new-law-arriving-for-trademarks-and-ip-protection-you-must-act-to-protect-register-your-trademarks/

Existing trademark declarations of ownership are not automatically transferred to the new system.

Myanmar will be introducing new laws that cover trademarks and Intellectual Property (IP). You must be ready to act very soon, within legally binding timescales, to protect your trademark and IP in Myanmar.

In February this year The Upper House of the Myanmar Parliament passed the Trademark and Geographical Indication Bill. This new law means that Myanmar will have controls closer to international laws for this topic.

Myanmar has been operating without a formal trade mark registration and control system. Firms who did register, completed a Declaration of Ownership for their trademark. This was recorded with the Office for Registration of Deeds. This then led to a “Cautionary Notice” being published in the local press. The purpose being to publish the new information and also to hear from and identify any potential claimants who wanted to contest ownership. This complies with the Registration Act, 1908. Due to the new law The Myanmar Intellectual Property Office will be established, operating under the Ministry of Education for the registration of trademarks.

You have some time to respond to these changes, BUT not doing so could be critical for your company. The new law awaits approval from the Lower House and current predictions for its full approval are for June 2018.

The 2008 Constitution of Burma says that laws signed by the President, enacted by the Pyidaungsu Hluttaw, or regional and state Chief Ministers “shall be promulgated by publication in the official gazette. The laws come into effect the day of such promulgation, unless otherwise stated”.

The official gazette is The Burma Gazette. This was a British invention created to publish circulars. The first edition was called The British Burma Gazette and was published in January 1875.

There will be safeguards and of course extensive guidelines associated with the new law. However, as it stand at present the draft law does not mention any protecting transition period for existing trademark registrations. For all companies, notably foreign firms, there is one more very important detail. This is also important for any company who has not completed any registration process, maybe because they have not yet started trading here, but intend to start soon.

This key element is called First-to-File Ownership. This allows recognition of trademark owners on a first-to-file basis. It is important to note that prior use of a trademark is not taken into account. A competitor or proposed competitor could attempt to register the said trademark. There are, as we say guidelines and controls, provisions to oppose a registration, but arbitration procedures are not clear.

There is no doubt, you must register with the new process in a timely manner. The alternative? Someone else might register a trademark and prevent anyone else using it.

FocusCore can help you and also provide services to obtain permits and visas. In addition, we have now a very broad range of corporate services and associates with Bookkeeping, Office Rentals, Permanent & Contract Staff Recruitment and Legal services, to assist companies before trading commences and ongoing with strategic guidance and consultancy – routes to market expansion etc.

Foreign investors should know that Myanmar is already signed up to the World Trade Organization (WTO) Agreement on Trade Related Aspects of Intellectual Property Rights, the TRIPS Agreement, 1994. There is important detail within this agreement and Annex 1C of the Marrakesh Agreement Establishing the World Trade Organization. This is referred to as the “WTO Agreement”, which was concluded in April, 1994, entered into force on January 1, 1995. The TRIPS Agreement binds all Members of the WTO and, as we said, Myanmar is a member. See also below reference to the Nice Agreement.

This agreement covers:-

Copyright and Related Rights, Trademarks, Geographical Indications, Industrial Designs, Patents
Layout-Designs (Topographies) of Integrated Circuits, Protection of Undisclosed Information, Control of Anti-Competitive Practices in Contractual Licences, and Enforcement of IP and Related Laws.

Foreign businesses are rightly encouraged by these new laws as Myanmar will provide protection for trademarks – but there is the proviso that firms must register or re-file correctly their trademarks and in the correct timescale even if currently recorded in the existing Declaration of Ownership listing. You do not have the option of automatic registration having been in the current listing. Registrations are not transferred automatically – you must file again.

Note also that the new law will conform to the Nice Classification. The Nice Agreement (1957) is a system of classifying goods and services for the purpose of registering trademarks via the World Intellectual Property Organisation, WIPO. This, together with TRIPS, is an important milestone for Myanmar.

We have reported many times on the rapid and continuing rise in foreign investment entering Myanmar. Increasing numbers of companies are moving here. Some from China to avoid rising labour costs. Myanmar is now to adopt new laws that come into line with other countries notably ASEAN countries, yet Myanmar still has low labour costs. Companies from many countries, now entering Myanmar with new or known trademarks can now do so with confidence. BUT do not forget, as stated above, the First-to-File procedures.

If a company or person(s) register a trademark, this then closes the door to anyone else using that mark. Trademark registration will run for ten years with then a procedure for renewal. There are safeguards, for example a well known name cannot be registered. You should call us now as when the new law is published in the gazette, it is law and in force. You must abide to the timescales.

It is not our aim to cover other elements in detail here but together with Trademark Law these include:-

Patent Law

Myanmar is not signed up to the Paris Convention. This provides “Protection of Industrial Property or any other treaty protecting patents including the Patent Cooperation Treaty (PCT).” But the new Patent Law will introduce a patent registration procedure apparently close to rules seen in many other countries who operate under the Paris Convention. This will give more power to claimants seeking to initiate legal action to stop patent infringement.

Industrial Design Law

This is a new procedure to register industrial design and will be valid for 5 years with renewal options.

Copyright Law

Copyright laws from overseas are not currently recognised – as per the Myanmar Copyright Act, 1914. This will be replaced by the new Copyright Law, offering protection to works created by nationals from countries who are also members of the TRIPS agreement.

This is a major change, bringing good news for investors and will further boost confidence for all sizes of companies with their brand names who are not yet operating in Myanmar.

We have said now is the time to enter BUT now is the time you MUST ACT to protect your IP. Contact FocusCore now and take steps to obtain this protection for your trademarks.

Myanmar – 100 percent foreign ownership now permitted for projects in the education sector.
30 Apr

Myanmar – 100 percent foreign ownership now permitted for projects in the education sector.

Overseas investors can now create a 100% holding company to finance a new enterprise for the education sector in Myanmar. A recent Notification from The Myanmar Investment Commission, MIC, has opened another door for investors seeking more opportunities in Myanmar. (April 20 2018, Notification 7/2018).

Forecasts rank the education sector as the top investment opportunity in Myanmar.

For many commercial sectors permission is only granted for foreign investment when a blend of national and foreign investors is proposed and this is also subject to various conditions. But now and importantly for education, the new Notification states: –

“A private school [may be] established by full capital investment of foreigners, a foreign organization, foreign organizations or a foreign government organization”.

The school must comply with the Myanmar Investment Law and Rules and Notifications issued by the Myanmar Investment Commission and National Education Law, 2014.

The definition by the MIC for a private school is one that is not operated by the state. A private school may be a hundred percent owned by Myanmar citizen(s) or companies; or alternatively a private school created as a joint venture between a Myanmar entity and a foreign entity (a JV); or a private school owned one hundred percent by an overseas entity.

Opportunities in the Myanmar education sector have been noted before. For example, in the autumn of 2012 President Obama visited Myanmar and in February 2013 the largest ever delegation of U.S universities visited to promote the theme “Investing in the Future: Rebuilding Higher Education in Myanmar”.

Last August, Myanmar Strategic Holdings (MSH) announced that they were on course to list on the main market of the London Stock Exchange and raise $4 million for a tourist hostel and English language training school in Myanmar. MSH now confirm they have a portfolio of consumer-focused businesses in Myanmar, with 100 per cent ownership, such as Ostello Bello (accommodation) and Wall Street English and further branches are planned.

The Auston Institute of Management, a higher education college have announced a joint venture with MSH for a new private school in Yangon. Auston is an operator of private schools in Singapore and Sri Lanka preparing students for careers in engineering, information technology and project management.

Levels of funding have been rising and forecasts show even faster growth is expected.

Referring to the Notification, the types of schools listed are in summary as follows:-

Private basic education school.
Private technical, vocational and training school.
Private higher education school.
Private subject based school.
Private school designated by The Ministry.

Some of the key education requirements reported in research findings after the visit from US universities include:-

English language training for teachers.
Sharing of best teaching practices.
Training and curriculum development for law, international relations, public administration.
Teaching methodologies.

Permission for full capital investment by foreigners will be welcomed by both investors and students. Records have shown a steady movement of students overseas in the past, seeking a wider choice for their education. The options for them will get better in Myanmar as more colleges open. The demand is there, leading to forecasters placing the education sector as the best sector for investment in Myanmar.

Figures from UNICEF indicate the size of the opportunity:-

Public spending as a % of GDP (2008-2010) allocated to education 2012 for under 18 year old students was 0.8%.

Myanmar population (thousands) in 2012 was total: 52797

The population aged 10-19, as a proportion of the total population was in 2012: 17.6%

Publications in Myanmar have reported rapid growth in the number of new schools. As the economy grows people seek better education for their children, and private schools are seen as the better option. For professional training, the increased foreign investment and growth of commercial enterprises is fuelling the demand for management and skills training.
Overall growth was indicated in our forecasts within FocusCore that led us to open here in 2014. We have a growing corporate client list with firms now trading in Myanmar, for whom we provide guidance and corporate services having obtained the required permits and visas.

In July 2017, FocusCore was chosen to obtain licences and Government approvals for the first foreign charitable school in Myanmar to achieve NGO status.

Whether your sector is education or commerce, contact FocusCore to receive details of our corporate support services that can be tailored to your company, school or college.

Positive changes arising from the Myanmar Investment Law and the Myanmar Investment Rules.
11 Mar

Positive changes arising from the Myanmar Investment Law and the Myanmar Investment Rules.

Attention from local and overseas companies continues to grow with all eyes on the rule changes applying to companies operating in Myanmar. The changes are within the Myanmar Investment Law 2016 (MIL) and the Myanmar Investment Rules 2017 (MIR).

The Government instructed the Myanmar Investment Commission (MIC) and Directorate of Investment and Company Administration (DICA) to draft these new rules.

These changes now makes it easier to invest in Myanmar

Followers of our blogs will have seen our many reports on these changes. The new Myanmar Investment Law 2016 (MIL2016), was signed into law in October 2016 and effected in practice from 1 April 2017 at the start of the new financial year. This replaced the Foreign Investment Law 2012 (FIL2012) and Citizens Investment Law 2013. In March 2017 the Myanmar Investment Rules (MIR) were issued.

Documents have been published on the web sites of MIC and DICA with the extensive details. For example, last July the draft rules extended to 183 pages. Naturally, our blog today cannot include all these details. Do not hesitate to contact us, FocusCore Myanmar, for specific data relating to your company and or a specific trading sector or zone. These changes are good news for investors and the Myanmar economy.

Some of the most important changes include:-

MIC Endorsements (A new process)
MIC Guidance Service (A new process)
MIC Permits
Tax exemptions
Land Leases
Faster Timescales
Compensation for Expropriation
Designated Development Zones
Promoted Sectors
and we also include the World Bank growth forecast for Myanmar.

Myanmar Investment Commission (MIC) Permits and Endorsements

Depending on certain conditions investors may now apply to the MIC for an Endorsement or a Permit. An Endorsement is a new form of MIC approval. Previously, MIC Permits were required for all investments*.

This new Endorsement process has been introduced to reduce processing time for approvals and cover investment applications for non-restricted business activities. These Endorsements also enable investors to benefit from land use rights as well as exemptions and reliefs such as customs free duty and income tax.

Business applications with investments below US$5M in non strategic and or non restricted areas will be now be processed via an Endorsement issued by state or regional departments and DICA.

*There are businesses not allowed for completion by foreign investors, these include:-

Security and defence related manufacturing, defence related munitions production, issuance of national postage stamps, establishment of mail boxes for the official national postal service, air-traffic control services, waterways navigation pilot services, management and conservation of natural forests and forest reserves (excluding activities focussing on reduction of carbon-footprint), exploration and prospecting. Businesses exclusions also include those which may cause hazardous waste; activities which may bring technologies, medicines, flora and fauna and instruments that are still being tested abroad or which have not obtained approvals for use; planting and cultivations except for investments made for the purpose of research and development; activities which may affect the traditional culture and customs of racial groups within Myanmar; activities which may affect public health; damage to the natural environment and ecosystem.

Investment in certain sectors is only allowed as a joint venture with a Myanmar citizen or citizen owned entity. A local minimum direct shareholding interest of at least 20% is required with approval from the relevant Ministries.

Under Notification 13 if the application relates to one of the “Promoted Sectors” there is the possibility that a 100% foreign-owned business may receive an Endorsement from the MIC or state or regional committee.

Guidance for investors

A new service allows a business to request non-binding guidance on their Permit application and for example also to learn if the activity is covered on the restricted list or is in a promoted sector.

Investment projects will be approved for sectors that the Government view as important for the economic growth of Myanmar. As you will have seen in our blogs, the range of sectors is extensive and all are growing rapidly.

Permits

The businesses that do require a Permit also include:-

Businesses considered strategic to Myanmar, (i.e. technology, energy, urban development, natural resources, media, and projects with funding over US$20M); activity which could lead to environmental or local area damage; work on state owned land and or properties.

Tax exemptions

Note – There are alternative rules relating to investments in Special Economic Zones (SEZ).

Previously investors could receive a 5 year tax break and tax exemption for re-invested profits and income tax relief up to 50 per cent on profits from exports. Now, tax exemptions are only allowed on Promoted Sector Investments and Development Zones. Some elements have not been changed as benefits exist for construction machinery and also imported goods used for product production destined for export.

Land Leases

Previously, long term leases of up to 50 years were only possible following the issuance of an MIC Permit. Now, any investor with a Permit or an Endorsement can apply for a lease of up to 50 years. (The guidance of two extensions of up to 10 years also applies).

As stated above regarding tax concessions in Special Economic Zones, there are also alternative lease periods applicable for SEZ designated areas.

Faster timescales for applications

These changes are designed to speed up applications with now the target of 70 working days for Permit applications. This excludes time used to request and receive additional information from the investor. For Endorsement applications the target is 40 days.

Compensation for Expropriation

Now compensation is recognised with procedures to invoke this action if certain project actions are deemed to be a risk, for example if a development is contrary to the public interest. The guidelines layout a process to be followed, stipulating that fair and adequate compensation should be paid to the investor.

This comes together with a new heading “An Investment Guarantee”. This states that the Government will not initiate expropriation steps that “could lead to the cancellation of a project”.

There is also a grievance procedure in place with the MIC, designed to resolve any disputes without recourse to legal process by the aggrieved parties.

Designated Development Zones

There are three zone classifications for areas and townships. These specify conditions allowing income tax exemptions.

Zone 1. These areas are the less developed regions and allow income tax exemption for 7 years.
Zone 2. Areas allowing 5 years income tax relief.
Zone 3. Areas allowing 3 years income tax relief. In this category there are zones in Mandalay and
Yangon.

Promoted Sectors

There are categories and sub categories of various activities, including:-

Telecommunications; Information Technology; Electricity generation; Renewable energy; City development; Hotels and tourism; Construction of roads, bridges, railways, sea and river ports and dry ports. Health services; Scientific Research; Airport operations; Education services; Agriculture, forest conservation and plantation, livestock production; Transport services; Manufacturing (excluding cigarettes and alcohol); New industrial zones; New urban areas.

For many years investors were commenting on the golden opportunities arriving in Myanmar. These changes greatly enhance economic growth and make Myanmar one of the fastest growing areas in the world.

World Bank growth forecast for Myanmar

The World Bank has published forecasts for Myanmar’s economic growth at 6.4 percent
for 2017/18. In the previous fiscal year growth was 5.9 percent. Also, Government forecasts project GDP to grow at 6.8 percent. Foreign direct investment was over US$4.5 billion as at the end of November 2017.

FocusCore opened in Myanmar in early 2014 and we have seen ongoing growth not only in client numbers but also rapid changes for the population. Growth of job vacancies, and overall prosperity and people buying power. If you are considering investing in Myanmar contact us today. If you are not, consider all these details that highlight this once in a lifetime opportunity to join this expanding economy.

IMF reports more economic growth for Myanmar and higher forecasts for 2018.
02 Feb

IMF reports more economic growth for Myanmar and higher forecasts for 2018.

In November 2017 an International Monetary Fund (IMF) team visited Myanmar. We include some of their key findings and some comments on 2017 from those working in Myanmar.

There are end-of-Mission press releases following IMF visits. These offer preliminary findings and the views of IMF staff. The IMF confirms that:-

Myanmar’s economy is rebounding and macroeconomic imbalances are stabilising; growth is expected to rebound to 6.7 percent in 2017/18.

The medium-term outlook remains favourable, albeit moderately weaker than previously anticipated and with greater downside risks.

A second wave of reforms is needed to accelerate the growth momentum and foster inclusion, anchored on a medium-term economic plan linked to capacity development.

The economy stabilised in 2016/17. The new Government saw a challenging first year with lower than expected growth of 5.9 percent in 2016/17 mainly due to weak agriculture production and exports, and temporary suspension of some construction projects in Yangon.

Current account deficit fell. Inflation moderated to 6.8 percent, and the deficit fell to about 3.9 percent of GDP in 2016/17 from 5.1 percent 2015/16.

Growth is expected to rebound to 6.7 percent in 2017/18. The medium-term macroeconomic outlook remains favorable mainly supported by a recovering agriculture sector and exports.

Higher fiscal spending is anticipated, in the second half of 2017/18, due to buoyant tax revenues and the revenue neutral supplementary budget will also support growth.

Risks are tilted to the downside. The banking sector needs to adjust to important new prudential regulations after a period of rapid credit growth. The internal conflict and humanitarian crisis in Northern Rakhine state could affect development finance and investor sentiment, although the direct economic impact appears to have been largely localised so far.

Additional risks stem mainly from external sources including commodity prices, potentially volatile global financial markets, and exposure to spillovers from China. Flood effects have been moderate this year, but natural disasters remain an ever-present risk. On the upside, implementation of a more detailed strategic reform plan and higher infrastructure investment would raise potential growth.

Myanmar’s initial phase of economic liberalisation led to an impressive growth takeoff and poverty reduction; now a second wave of reforms is needed to sustain the momentum. Reforms should be focused on agriculture, the banking system and gradual interest rate liberalisation, infrastructure, trade, natural resource management and the legal framework, including further opening up the economy to joint foreign ventures (amendments to Companies Act). A well-sequenced second wave of reforms and greater public investment efficiency would help the economy further integrate with global value chains and foster inclusion.

We in FocusCore have heard these calls for a second wave of change. Survey results have indicated a fall in confidence among the business community. Overall figures for respondents with a positive short-term business view fell from 73% to 49%. However, 88% are positive about Myanmar’s medium to long term forecast. This is especially due to the buoyant domestic market and the potential they believe it can deliver. Data from the Asian Development Bank (ADB) data reports that imports of consumer goods grew by 54 percent and intermediate goods by 20 percent for the period April to July 2017.

Peter Beynon, Chairman of the British Chamber of Commerce in Myanmar, was also confident that growth would continue but added, “In order to improve its business environment, The Government needs to accelerate the pace of economic liberalisation. In particular, the executive should focus on promoting a faster liberalisation of sectors such as insurance, banking, non-banking financial institutions and microfinance”.

The business index 2018 of the World Bank, which measures ease of doing business, placed Myanmar 171st out of 190 economies. No change in placing but six of the ten measured categories have improved, confirming that the Government’s changes are being recognised and are effective.

Do not forget The New Companies Law. You may have seen our blogs on this topic. All agree the new law will have a dynamic effect. Its more flexible regulations will stimulate and allow more foreign investment.

We echo the confidence shown, as indeed do our growing list of client companies, for whom we provide corporate services. We assist companies with business permits, company incorporation and staff to obtain all the necessary visas and work permits and guide new entrants into the market.

The on-going positive economic results for Myanmar have been recorded and published and validated by notable organisations. The positive trend has a growing momentum. Call us now to get your company started in Myanmar.

Myanmar confirm Russian military aircraft order – Sukhoi Su-30.
29 Jan

Myanmar confirm Russian military aircraft order – Sukhoi Su-30.

Six Su-30 jets have been ordered. Reports in the public domain indicate the cost per aircraft to be between $30 – 40 million. The Su-30 is a twin-engine, two-seater multi-role advanced tactical fighter aircraft from the Sukhoi Aviation Corporation of Russia.

The aircraft has ground hugging capabilities, Nap-of-the-earth (NOE). A type of very low-altitude flight to help avoid detection. Its potential was witnessed and photographed during an air show at Zhangjiajie Hehua International Airport in China. It flew along the runway at an altitude of just 1 metre. The aircraft has a reported maximum cruising speed of 2,500 km per hr.

The exact model ordered has not been disclosed. The marque is well known. The Su-30MKI is the Indian Air force’s primary multirole fighter. Aircraft from the same brand are in use with many other countries including China, Malaysia, Vietnam, Nigeria and Belarus.

The announcement of the Myanmar order was made by Russian Deputy Defence Minister, Lieutenant General Alexander Fomin at the end of the visit last month by Mr Sergey Shoigu, the Russian Defence Minister, a post he has held since 2012.

Mr Formin stated: “During the Russian defence minister’s visit an agreement was reached under which Myanmar would purchase six Su-30 planes, [the aircraft] will become the main fighter aircraft of Myanmar’s air force to protect the country’s territorial integrity and repel any terror threats.”

He added that “Russian armaments proved their capability during their operation in Myanmar’s Armed Forces. These are, in particular, the Mi-24, Mi-35 and Mi-17 helicopters, as well as the MiG-29 fighter aircraft, the Yak-130 combat-capable trainer aircraft, the Pechora-2 air defence system and other equipment”.

He also confirmed that more than 600 Burmese military are studying in Russia’s higher military educational institutions, stating, “All of this helps tighten security in Southeast Asia and the Pacific Rim in general”.

Running costs for these aircraft are substantial. For a Mig the estimates are $20,000 per hour and $35,000 for the Su-30.

Myanmar is increasingly making its mark as its economy continues to grow. FocusCore opened its Myanmar offices in 2014 to help foreign firms start in Myanmar. Since then we have helped an extensive range of companies and the list grows with globally renown names. Contact us now and let us help you become established in Myanmar. We offer a wide range of corporate support services.

New Joint Venture: Myanmar Petroleum Enterprise (MPE) signs 30 year lease with Yandanar Su for the operation of two LPG production plants.
03 Jan

New Joint Venture: Myanmar Petroleum Enterprise (MPE) signs 30 year lease with Yandanar Su for the operation of two LPG production plants.

The Myanmar government has published policies seeking to operate state owned enterprises through private partnerships. There are also other partnerships, some of which we outline in this blog. All are adding to the ongoing and growing inertia of the Myanmar economy. In this case the agreement is between MPE and Yandanar Su for Liquefied Petroleum Gas (LPG) production and distribution.

MPE have confirmed that they will contribute $2.2 million to the project. This will be for LPG production at the Nyaung Don LPG plant together with the operation of Liquefied Petroleum Gas filling stations in Ahlone, Insei, North Dagon and Hmawbi township. The Nyaung Don LPG plant was established in 2005 and produces LPG out of gas extracted from the onshore Nyaung Don gas field.

MPE figures indicate that state-owned LPG plants produce about 800 metric tons of LPG per day, covering only about 19 per cent of the country’s demands. The actual LPG demand in a year in Myanmar is between 50,000 to 60,000 metric tons. This has led to a rise in the price for LPG but the new JV will impose controls to limit further rises. Also, with combined JV budgets, it is hoped distribution can grow faster and reach more homes in a shorter timescale.

The Myanmar Government plans to reduce usage of electricity by improving distribution of LPG and also the reduction of wood burning for cooking and so reduce the increasing trend of deforestation. The target is for 1.5 million households to be using LPG within two years. There are 670 LPG stations with distribution licenses that come under control of the MPE and will now be linked to the new JV.

In another example of state owned assets being opened up to the private sector, Parami Energy Service Co. was awarded the rental tender, published in 2015, for the state owned No.1 Refinery, Thanlyin. Parami was established in 2004 and has grown to be the Parami Energy Group of Companies, 10 companies focussing on the Oil & Gas sectors as well as Construction, Power, tourism and event-planning. There published core values include, “integrity, professionalism, and sustainability. As a wholly-owned Myanmar company, we are committed to transparent relationships and take pride in our selective international partnerships”. It is Parami’s vision to become Myanmar’s ethical energy company.

There are important developments in this sector with major overseas investments. In 2015 an agreement was announced with PTT, the Thai state-owned oil and gas company, formerly the Petroleum Authority of Thailand. This gave the green light for a study on a Bt20 billion investment in a 3-million-tonne liquefied natural gas (LNG) floating storage and re-gasification unit for Liquefied natural gas (LNG) procurement and import in the southern city of Kanbauk, Myanmar.

In October Japan hosted the “Dialogue for Quality Infrastructure — Building Asia’s Future”. An event attended by about a hundred participants with the focus on the infrastructure required by Myanmar, for the sustainable development of the country and “how Japan can play an important role”. Councillor Kazuyuki Takimi at the Embassy of Japan in Myanmar stated in his opening remarks on behalf of the Government of Japan that “quality infrastructure is the principle for developing countries to develop appropriate infrastructure within limited resources. We will continue to contribute to Myanmar’s infrastructure development with Japan’s wealth”.

FocusCore works across all sectors to help companies become established in Myanmar and start trading as quickly as possible. Having established our own offices here in 2014 we work with Government Departments and many commercial sectors, enabling us to give your company the necessary guidance and information for you to prosper in this growing economy. Contact us today.

MyTel, the 4th Telco in Myanmar, is launching a 4G network as planned.
31 Dec

MyTel, the 4th Telco in Myanmar, is launching a 4G network as planned.

It was in our January 2017 blog that we confirmed the arrival of a new player in the expanding Myanmar Telecoms marketplace. We also confirmed their product name, MyTel. Now, on schedule, it has been announced that their service will be launched in 2018.

MyTel are stepping forward with the first 4G service for Myanmar, scheduled for the first quarter of next year. MyTel is a joint venture between Viettel of Vietnam, and a consortium of 11 local firms under the banner “Myanmar National Telecom Holding” and Myanmar company, Star High.

Viettel is planning a major investment in Myanmar. A country they see with the largest population (55 million) among its 10 foreign markets. They will skip 2G and 3G. MyTel plans to make an impact.

Since the roll out of mobile services there have been three network providers in Myanmar. MPT with 42 per cent market share, Telenor (Norway) at 35 per cent and Ooredoo (Qatar) at 23 per cent. There has been a huge rise in the purchase of SIM Cards due to a massive drop in price (to just over USD 1) and more sales outlets.

MyTel state that they will have “the largest infrastructure system with almost 7,200 base transceiver stations (BTS) covering 90 per cent of Myanmar’s population and 33,000 kilometres of fibre cable – double that of the biggest rival in the country”.

Reports indicate that MyTel is seeking to employ 3000 staff for their infrastructure build and roll out. This ties in with our findings in January 2017 when we reported MyTel were expected to focus initially on rural areas. Current estimates indicate 70 percent market penetration by the existing providers with a remaining 30 percent untapped, located mainly in rural areas. These are now clearly tagged for MyTel. To-date, the growth of Internet usage has been far greater than expected, another plus for 4G. The user base is eager and expanding.

Also in January we reported that MyTel were said to have paid $300 million for their licence. In 2014 Telenor paid $500 million and Ooredoo $1 billion. There were 91 applications for these licences.

FocusCore is at the forefront of the developing economy in Myanmar and is able to provide your company with information and observations relevant to your market sector, planning and focus. We also provide a wide range of corporate support services including, Company Incorporation, Bookkeeping, Compliance, HR, staffing, and assistance for visa and permit applications.

The roll out of this new network will enable a leap forward for retail and other commercial opportunities with now even more of the population to receive the option to get on-line.

Photo Credit Viettel Global:
Vietnamese Party General Secretary Nguyen Phu Trong and Myanmar Vice President U Myint Swe on Saturday cut the ribbon to inaugurate the headquarters of Telecom International Myanmar (MyTel) in Yangon, a joint venture by Viet Nam’s Viettel Group and a Myanmar partner.

Changes in the Myanmar Companies Law
29 Nov

Changes in the Myanmar Companies Law

The National Assembly has passed the Myanmar Companies Law (the “Law”). After extensive debate on various aspects of this long awaited Myanmar corporate reform the Law is finally here, pending signing into law by The President.

Key areas, which were hotly debated in recent weeks, included the highly contentious question of whether small companies are still required to appoint an external auditor, or whether they can benefit from an audit exemption.

In this briefing note we detail several issues which were integral to the parliamentary debate, and outline the final parliamentary result.

It should be noted that the full force of this Law is contingent upon the signature of The President. There is the possibility that further changes may be applied to the Law. However, we do not expect further changes and The Presidential signature as required to bring the Law into full force is merely a formality.

The Resident Director.

The Law still retains, as was stated in the earlier draft of the Law, the requirement for a company to have a resident director for all private companies. In respect of private companies, the resident director must be ordinarily resident in Myanmar for at least 183 days in a 12 month period. The resident director requirement may prove to be an issue for companies, as any company which does not have a resident director must appoint one.

However, the position for public companies has been modified with the requirement of a Myanmar Citizen resident director. For now, the impact of this rule on foreign investment is limited as there are no public companies with foreign shareholders at this time.

Foreign ownership of Myanmar Companies.

The Law has adjusted the definition “not a Myanmar company” to “a foreign company”. Now, under the Law, a foreign company is defined as a company with an ownership interest of more than 35% by a foreign corporation or a foreign individual, or a combination of the two. This can be contrasted with the earlier draft which stated that the ownership threshold would be prescribed at a later stage by the Directorate of Investment and Company Administration (DICA).

Once signed into law this 35% ownership interest ruling will also mean that foreign corporations or individuals would be allowed to hold up to 35% ownership in a Myanmar company without the company being classified as a “foreign company”. This could potentially unlock otherwise restricted sectors and encourage foreign investors. It will allow for the first time in Myanmar foreigners to be involved, albeit indirectly, in areas such as banking and insurance. However, it is also possible that the regulators of these activities may impose their own restrictions.

The Law also allows foreign companies and investors to trade shares on the Yangon Stock Exchange. This has been described as a game changer.

Statutory audit exemption and small companies.

The controversial requirement for audit exemptions for small companies has been retained. Despite early Parliamentary resistance and disquiet in some commercial circles, small companies are no longer required to submit their financial statements for auditing. In practice this will offer small companies considerable savings in time and resources. We expect that the new audit exemptions will help the development of smaller companies.

Ability to appoint only one shareholder.

In relation to the requisite amount of shareholders the Law provides that a company must have at least one member. This allows companies to appoint only one shareholder and would in practice make the formation of small businesses less onerous than was previously the case under the 1914 Act, which required at least 2 shareholders.

The transitional provisions.

The transition period of 12 months, within which a company may either redraft or uphold their objects, has been retained and is the same as in the draft law. Companies could elect to uphold their pre-existing corporate objects by passing a special resolution. The default position would be that upon the expiration of the transition period the pre-existing objects of the company will lapse.

In relation to winding up, commenced under the Myanmar Companies Act 1914 (the “1914 Act”) the Law provides that such winding up proceedings shall be resolved by application of the 1914 Act.
Finally, the Law, much like the earlier draft, provides that documents executed under the 1914 Act shall be valid under the 1914 Act.
Options to draft tailor made constitutions.

The Law removes a provision which was contained in the draft which provided that a template constitution will be published. This removal of a template from the Law means that companies may draft customised constitutions to meet their specific business exigencies and particulars.

The Law also adds that the constitution cannot contravene the Law itself. While this may be an obvious statement of law, it does somewhat restrict options for companies to draft a completely customised constitution. Time will tell if DICA and other authorities will honour the legislators’ liberal intention and allow shareholders to organise their company as they see fit.

Distribution of dividends without profit.

The Law provides, in accordance with the draft version, that dividends may be paid subject to compliance with the solvency test. The solvency test itself remains unchanged and can be contrasted with the position under the 1914 Act, which required dividends to be paid out of company profit. Consequently, a company had to be in a profit-making position to pay dividends.

The solvency test itself requires the company to:-

a) Be able to pay their debts as they become due, and
b) For the company’s assets to exceed its liabilities.

There are other considerations which must be complied with in addition to the solvency test, such as requiring the dividend to be fair and reasonable to the company’s shareholders and for the dividend not to prejudice materially the company’s ability to pay its creditors.
The reduction of share capital is made easier.

The position on reduction of share capital under the draft remains the same under the Law, namely, compliance with the solvency test is required. The position under the Law is favourable to companies as it does not unduly restrict reduction of share capital by requiring a court order as was the case under the 1914 Act.

FocusCore was established in Myanmar in 2014 to meet the startup and ongoing requirements of overseas companies seeking investment opportunities in Myanmar. As our name suggests, our core focus is to empower our clients and provide them with a roadmap to success by guiding them through the incorporation process while providing the visas, licenses and permits required to do business in Myanmar. FocusCore’s staff of seasoned local and international professionals specialize in finding the best fit for our customers’ product or service utilizing our in-depth knowledge of the Myanmar market and established network within the commercial and government sectors. We are convinced that the combination of our expertise and the innovative endeavors of our clients will provide a swift and seamless launch for their enterprise into Myanmar, the land of opportunity.

Contact us now to secure your place in this vibrant economy.

DAMCO and Star Light Group open new logistics centre in Myanmar
28 Nov

DAMCO and Star Light Group open new logistics centre in Myanmar

A new logistics centre has opened in Myanmar, bringing together Damco a global provider of freight forwarding, chain management services and Myanmar-based construction company Star Light Group. The Guest of Honour at the opening ceremony was H.E Peter Lysholt Hansen, The Ambassador of Denmark to Myanmar.

The new facility is close to the emerging industrial zones, Thilawa economic zone (MITT) and city ports with a total space of 10,000 square meters and is built to C-TPAT standards. (Myanmar International Terminals Thilawa is a deep river port 25 kilometres south of Yangon in Myanmar, and can operate 24 hours a day, seven days a week).

Damco opened the first international standard warehouse and Container Freight Station (CFS) facility in June 2014. Damco has continued to invest in state-of-the-art Warehouse Management Systems.

Star Light Group was founded in March 1993 and operates in property management, construction, trading, hospitality, healthcare, and educational institutions.

The new location provides access to a number of services including, inventory management, order processing, RF scanning and bar coding. Also available are value-added services such as cross-border and inland trucking. But most important, and perhaps many will have noticed the importance of the Denmark connection, as Damco is part of A.P. Moller – Maersk, an integrated transport and logistics company with multiple brands and a global leader in container shipping and ports. They have 33,000 employees, 630 vessels and 306 offices in 114 countries. You have probably seen the Maersk name on containers, ships or other hardware. This really places Myanmar on the trading map, yet again.

At the opening event Samuel Conroy, Country Manager of Damco Myanmar said “We are proud of this major investment Damco has made in the Myanmar Logistics sector. This project has given us the opportunity to partner with local organizations and continue to grow our workforce further supporting the Myanmar economy. I would like to thank the Damco team and our partner Starlight for this fantastic achievement. ”

Marco Civardi, Area Managing Director of Damco Vietnam, Cambodia and Myanmar confirmed “The opening of the new Damco Myanmar Logistics Center means that we will be able to provide more comprehensive supply chain solutions…..As a warehousing distribution hub, this new facility marks a significant step forward in better helping our customers to stay ahead in their respective markets.”

Damco has a presence in over 100 countries, employing over 11,000 people and reported in 2016 a turnover of 2.5 billion US dollars, and managed 659 thousand TEUs (twenty-foot equivalent units) of ocean freight and 190 thousand tons of air freight.

Like Damco, FocusCore opened facilities in Myanmar in 2014, having also identified the positive economic growth forecasts for Myanmar. We are here to help you start trading rapidly in Myanmar and assist with the incorporation of your company, helping you with all the steps required to obtain work permits and visas and, ongoing, offer a wide range of corporate support services.