Myanmar opens retail & wholesale business to 100% foreign-owned companies

On May 9, 2018, Myanmar’s Ministry of Commerce (MoC) issued Directive 25/2018 (the Directive) permitting 100% foreign-owned companies, and joint venture companies established between Myanmar citizens and non-Myanmar citizens, to conduct retail or wholesale business in Myanmar, provided that they meet minimum initial investment requirements, register with the MoC, and comply with certain operational restrictions.

Initial Investment Capital

To qualify under the Directive, companies must meet certain minimum initial investment requirements. Foreign-owned companies and joint ventures in which Myanmar citizens own less than 20% of the direct share equity require more initial investment capital than companies with 20% or more direct share equity owned by Myanmar citizens, as detailed below.

Minimum Initial Investment for Retail and Wholesale Business in Myanmar

100% foreign ownership

Joint venture with less than 20% Myanmar direct ownership

Retail – USD 3,000,000

Wholesale – USD 5,000,000

Joint venture with 20% or more Myanmar direct ownership

Retail – USD 70,000

Wholesale – USD 2,000,000

For the purposes of the Directive, initial investment capital does not include the cost of leasing land.

MoC Registration

Any company intending to operate a retail or wholesale business under the Directive must register with the MoC by supplying the following documents:

* Certificate of company registration
* Copy of the company’s Myanmar Investment Commission (MIC) endorsement, (or MIC permit if the company falls under the MIC permit requirement scheme)
* Recommendation letter from the relevant City Development Committee or Township Development Committee of the region or state
* Lists of groups of goods to be sold retail or wholesale
* Detailed descriptions of the business plan prescribing the amount of initial capital investment, the location, and the area to be occupied in square meters

Any existing company registered under the Directive that wishes to open a new branch or outlet must provide 90-days’ notice to the MoC.

In addition, the Directive expressly entitles Myanmar citizens to operate retail or wholesale businesses with any amount of initial investment capital. However, if these businesses are already in operation, and their initial investment capital was equivalent to USD 700,000 or more, they must register with the MoC within 150 days of the issuance of the Directive.

Operational Restrictions

Companies established under the Directive must not:

* operate a retail, or wholesale premises, including minimarkets and convenience stores, with a floor area of less than 929 square meters
* operate a business outside the times, days, and location prescribed by the development committee of the relevant region, state, city, or other local authorities
* distribute unsafe or substandard goods in breach of relevant laws
* or sell goods prohibited under the law.

In addition, companies have a duty to cooperate with the MoC to support their efficient supervision and enforcement of the law.

This represents a major relaxation of business operational requirements in the Myanmar retail sector and opens the door for large-scale foreign investment in this burgeoning economy.

If you have any questions about the Directive, or about doing business in Myanmar in general, please contact Yuwadee Thean-ngarm at [email protected] or Nwe Oo at [email protected] or call +95 1 255208.