Dec 11, 2017

Myanmar’s New Companies Law

Myanmar’s New Companies Law

On December 6, 2017, Myanmar’s President U Htin Kyaw approved the new Myanmar Companies Act, 2017, replacing the country’s century-old Companies Act of 1914. The new law aims to change the way companies are regulated in the country. It will modernize company formation and management, and significantly revise corporate governance in Myanmar, bringing the country’s company legislation at par with international standards. The Act was drafted by Myanmar’s Directorate of Investment and Company Administration (DICA) with technical assistance from the Asian Development Bank (ADB). It offers a wide range of regulations that are relevant to foreign investors and businesses operating in Myanmar. Some of these are discussed below.

Change in the definition of foreign companies
One of the most significant changes introduced in the Act is the new definition of foreign companies. In the old Companies Act of 1914, even a company with a one percent of its shares owned by a foreign investor was classified as a foreign company. To sustain the “local company” status, companies had to maintain a 100 percent local ownership, thereby largely restricting foreign investment in Myanmar’s domestic companies.
The new Companies Act allows foreign investors to hold up to 35 percent of shares in a domestic company without the company losing its classification as a “local company”. The change in the foreign company definition unlocks huge business potential in areas that were previously restricted to foreign investors, such as banking and finance. It authorizes foreign investors to trade in shares on the Yangon Stock Exchange,which was previously restricted to local companies.
Further, it is much easier for companies to transform its legal status from “foreign” to “local” or vice versa, without seeking prior approval from the regulator. The concerned domestic company only need to notify DICA, if it transforms its legal status to that of a foreign company, that is, if the foreign investors share in the company increases beyond the prescribed limit of 35 percent.
This effectively opens up Myanmar’s economy to foreign minority ownership and paves the way for more foreign investments.
Amendment to rules related to company administration 
Earlier, every company required a minimum of two shareholders and two directors for the incorporation of the company. The new Act reduces this requirement to a minimum of one shareholder and one director, allowing investors to make their Myanmar company a 100 percent owned subsidiary.
As per the new legislation, the director of the company need not be a Myanmar citizen, but must fulfill conditions to pass the “ordinary resident” status. In other words, she or he must be present in Myanmar for a minimum of 183 days in a year to qualify as the director of a company.
Further, the new Companies Act explicitly details the duties of corporate directors, including the duty regarding the use of position and use of information. It also details duty in relation to obligations of a company and duty to act with care and diligence.
Other important changes
Capital management: The Act allows more flexible capital structures and changes to share capital that will permit companies to raise or reduce capital with fewer procedural requirements.

Company registration process: Simplifying the application process for incorporation and registration of companies, the Act exempts investors from the need to obtain a trade permit from DICA. The change will significantly enhance the ease of doing business in Myanmar.

Protection to minority shareholders: Allowing for more flexibility in the organization of a company, the new legislation introduces more protection to minority shareholders. It empowers such shareholders to sue on behalf of the company, even if the directors of the company do not approve of the claims. Companies may also provide other instruments in their constitution that minority shareholders may use to further their interests.
Further, the law legally authorizes companies to carry on any business and activities, after obtaining a relevant license and therefore no longer need to define the objectives of the company in its Memorandum of Association.

Source: ASEAN  Briefing

Dec 4, 2017

Yangon is on the list of the world’s top cities that may soon become global financial capitals and havens for the super-rich

Yangon is on the list of the world’s top cities that may soon become global financial capitals and havens for the super-rich, global real estate consultancy Knight Frank predicts in its annual Wealth Report, released last week.

Belgrade, Panama City, Addis Ababa and Yangon are listed as cities that with their emerging markets and regional influence have a “bright future,” according to the report.
Yangon is said to have grown in importance as a magnet for foreign investment since Myanmar began opening up in 2011.

The report lists the world’s most important cities. Top of the list in 2015 are London, New York, Hong Kong, Singapore and Shanghai.

The Wealth Report covers the property market and global development trends that help shape the investment strategies of wealthy individuals around the world.

Source: Mizzima 

Nestle to produce half of its products in Yangon

Imports of Nestle products to Myanmar would be reduced to 50 per cent next year when the firm’s recently-opened factory in Dagon Seikkan Township of Yangon reaches full production.

HayriDevrimCobek, managing director of Nestle Myanmar, said in an exclusive interview all the Nestle products in Myanmar have been imported from other Asean countries until this year, but its factory plans to produce half of them next year. 
“We will continue to import half of our products from different countries. Thailand is obviously our main supplier right now, but we are also importing from Vietnam, Malaysia and the Philippines,” he said.
In a bid to ensure deeper, wider distribution of its products throughout the nation, the firm has joined forces with Myanmar Distribution Group and other local partners since it formed a Yangon-based subsidiary in September 2013. 
“We will focus on all channels so our products can reach everywhere. We have products for different age and socioeconomic groups in Myanmar. Both wholesale and retail shops play an important role in our distribution strategy,” he said.
Cobek said the firm aims to reach 80,000 retail shops across Myanmar soon. He also plans to launch a new product every two months, as his team has spent a couple of months designing products especially for Myanmar people.
“To develop a new product, it usually takes between 12 and 16 months. We have to do a lot of tests before the launch of a product to ensure high quality. The quality is non-negotiable for us. We never compromise on the quality of our products,” he said.
He said the firm would keep on innovating and launching new products, in addition to expanding its distribution network through different channels including its recently-launched Facebook page.
Currently, the firm has distributed six major brands in the market: Lactogen, Cerelac, Milo, Nescafe, Bear Brand and Maggi. He claimed that all the products were designed to enrich the quality of life and to contribute to the healthy future of Myanmar people of different ages, from birth to the elderly.
“Nestle has over 2,000 brands globally. Among them, we have chosen six to invest in Myanmar. We want our international quality products to reach everywhere at an affordable price,” he said. 
Cobek is proud to say that most of the firm’s products are market leaders in Myanmar, except for Bear Brand enriched malted milk, which was launched two weeks ago, and Nescafe, which has to compete with over 50 coffee brands. 
To him, Bear Brand is a localised innovation specially designed for Myanmar in which real milk is used to help Myanmar fight against iron deficiency. According to World Health Organisation, nearly half of adult women in Myanmar suffer from iron deficiency.
“We are on the top ranking in the [coffee] mix category where we are competing with local companies who are doing very well in terms of local taste. We are looking more into all categories,” he said.
“Instead of looking at the amount of market share which does not cover the whole of Myanmar, we are looking for the trends right now such as who is gaining, losing, etc. Globally, Nestle is the leader in coffee. Our ambition is to achieve the same position in Myanmar.”
He said sales volume should grow four times in four years, putting Nestle in the top three in Myanmar’s food and beverage business. To achieve this, the firm has invested US$25 million (Bt817 million) in Myanmar, and will continue to invest further.
He said the firm would prioritise three things – human resources, local manufacturing and branding. The workforce has grown threefold from 43 to 150 staff within one and a half years. Among them, only 10 are expatriates and the local employees’ average age is 29.
Though Cobek considers finding and recruiting skilled workers as a key challenge, he seems impressed by Myanmar people’s willingness to learn new skills.
“I have managed people from 35 different nationalities throughout my career. So I can really see the difference in Myanmar. The average learning ambition is very high and the energy is very impressive. We are investing in our people on that front,” he said.

Source: Eleven Weekly Media 

Foreigners interested to purchase real estate in Myanmar, but leagal ownership not allowed and prices remain unrealistic

Prices continue to drop in the Myanmar property market as a dramatic oversupply in all categories of Yangon real estate persists!  In our update for previous years, extreme prices were common – $8psf for office space, and $5500/mo+ for quality apartments.  With the opening of so many new real estate projects of all types – malls, hotels, condos, and offices – key industry trend measures such as purchase prices, rental rates, occupancy levels, and average daily rates are at almost unbelievably low levels(for this market), with more downward pressures expected as several mega developments open in the coming months.

The lifting of U.S. Sanctions has also opened up access to a few key building that were previously on the blacklist.  In short, it is STILL a great time to be an occupier/renter seeking new spaces.  Expect  to see rent prices continuing to drop in 2017 and 2018.

Until recently, real estate was one of the limited numbers of wealth management vehicles in Myanmar, and most developments were locally-owned. Under Western sanctions that prevented interaction with international banking and capital markets, successful business persons in Myanmar stored their wealth in land and buildings. They regularly bought and sold land assets, like institutional investors in the west would buy and sell blue chip stocks and mutual funds, with speculation driving up prices. The price of land further skyrocketed as the suspension of western sanctions became reality, and foreign developers were priced out of the market.

Energy tycoon studying projects in Myanmar, ready to invest billions

Gulf Energy Development Pcl’s billionaire founder Sarath Ratanavadi plans 150 billion baht ($4.6 billion) of investment in power plants over the next four years after the company’s listing this month.

The initial public offering’s proceeds will help fund some of the outlay, with the rest coming from loans, Sarath, the company’s chief executive officer, said in an interview in his Bangkok office. His net worth is about $2.2 billion based on Gulf Energy’s $733 million IPO, according to the Bloomberg Billionaires Index.
"Gulf Energy will have stronger financial leverage for more expansion following the IPO, as new power plants require a large amount of money,” Sarath said on Friday. “The company is looking at a number of opportunities in Thailand and neighboring countries.”
The firm is studying projects in such countries as Myanmar, Laos and Vietnam, where faster economic growth will boost demand for electricity, he said. Southeast Asian nations are enjoying an economic boom, spurred by a global recovery that’s buoying exports.
Sarath said the investment plan will focus on gas-fired electricity and probably cover acquisitions of existing power plants and green-field projects. Gulf Energy generates almost all of its power from natural gas and will double output to 4,647 megawatts by 2024, according to a filing.
Coal faces regulatory curbs due to pollution and returns on renewable energy are comparatively low, Sarath said. Such risks underscore the need for measured expansion, he added.
The IPO is the largest first-time share sale in Thailand since Jasmine Broadband Internet Infrastructure Fund priced a $1.7 billion offering in 2015, according to data compiled by Bloomberg. It adds to the $2.5 billion of first-time share sales in the country this year, up from $1.5 billion during the same period in 2016, the data show.
Thailand is set for a “strong recovery” after years of slow economic growth, Sarath said, adding that industrial customers have boosted demand for electricity, steam and other supplies.

Source: Bloomberg

Dec 1, 2017

Australian mining company looking for investment projects in Myanmar

For more details, please contact

Nov 2, 2017

European Wine Exporter looking for Myanmar partner to supply wines for mass market

All interested Myanmar-based companies that possess alcohol import license, please contact