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Myanmar opens retailing sector to foreign investors

Japanese convenience store chains and supermarket operators looking to set up shop in Myanmar now have a clearer path as the Southeast Asian nation has ended its virtual ban on foreign entry into its retail sector.

The move came on Jan. 31, as the Myanmar government released bylaws to its Foreign Investment Law that define specific conditions for the entry of foreign capital.
The bylaws authorized wholly foreign-owned ventures and joint foreign-domestic ventures. The ratios of foreign capital should be between 30 percent and 80 percent in the latter case.
Previously, foreign investors in the retailing industry were only allowed to operate local franchise outlets. Now, large retailers, such as supermarkets and shopping malls, will be allowed to operate only on the condition that they do not lie close to existing outlets of domestic capital.
Japanese supermarket operator Aeon Co. has shown a willingness to operate in Myanmar's Thilawa Special Economic Zone, where Japan is taking the lead in development efforts.
The bylaws grant foreign investors the right to use not only state-owned land, but also privately owned plots, and extend the terms of lease from the current maximum of 30 years to 50 years, which is renewable.
The bylaws explicitly state that foreign entry will be restricted in coastal fisheries and in enterprises prone to environmental pollution. That provision could be applied to ironworks and other large-scale investment projects.
Although the new bylaws contain provisions that are favorable to foreign investors, some provisions are not clearly defined and leave much to the discretion of the government, raising concerns about a lack of transparency.
The minimal capital requirements, which were not included in the Foreign Investment Law when it was enacted in November, were defined at $500,000 (45.8 million yen) for the manufacturing industry, $300,000 for the services and other industries, and $10 million for mineral resources development.
The bylaws defined no restrictions on foreign capital ratios in specific fields, such as the food, hotel and transport industries. Such matters will likely be left to the discretion of the government's investment commission.
Since the international community eased sanctions on Myanmar and wrote off much of its past debts, the country has pushed forward with economic reform and is seeking a path to economic development through full-scale introduction of foreign investment.
Foreign investors have been eager to see what provisions would be included in the bylaws to the Foreign Investment Law because the law itself was only vaguely defined and included few concrete provisions.
(Source: The Asahi Shimbun)

Aeon Co.