To encourage the employment and urbanization, rules for foreign ownership of local wholesalers and retailers are being relaxed. These rules have prevented some oversea companies from taking the opportunities in the sector.
Myanmar Ministry of Commerce announced in May that foreign companies that seek to take more than an 80% stake in domestic retail market have to make an initial investment of at least $3 million. For the smaller retailers thus require an initial investment at least $700,000. Furthermore, the foreign companies must own stores 929 square meters or more to avoid the competition with the small local retail businesses.
Japan’s Aeon was one of the first overseas retailers to express interest in the opportunity. “It’s important for economic development to foster service industries,” said Company President Motoya Okada. After the May announcement, there was some confusion. Some foreign retailers were unsure what goods they would be allowed to sell and were not clear the definition of initial investment. They are also concerned for the future and the possibility of changing rules because imprecise rules and abrupt changes to these are common in Myanmar. The ministry released a list of 24 categories, including clothing, home electronics and furniture, which are eligible for foreign investment at the end of July. “It is now certain that, at a minimum, these products will be open to foreign investment,” said Yusuke Yukawa, a partner at Tokyo law firm Nishimura & Asahi’s office in Yangon. “Ambiguities will have to be discussed one by one and made clear,” Yukawa said. At an information session to explain the new rules, ministry officials said foreign companies need only show a remittance stub equal to half the required initial investment when applying.