Myanmar allows full foreign ownership in Retail Business

Foreign companies are now allowed to invest in Myanmar’s retailers and wholesalers, including holding 100% stakes, as the country makes efforts to lift foreign investment amid the Rohingya refugee crisis.

The Ministry of Commerce announced the change on Friday, explaining that it wants to increase competition in the sectors and promote price stability and technology transfers. The new rule took effect on Wednesday.

But restrictions still apply. Foreign companies must invest at least $700,000 to take an up to an 80% stake in retailers, and $3 million for anything more. They cannot own minimarkets and convenience stores with floor spaces of 929 sq. meters or less. For wholesalers, the minimums are set at $2 million for up to an 80% stake and $5 million for more.

The ministry is also letting foreign companies themselves bring their products into Myanmar and sell them instead of going through local importers as in the past. This could encourage automakers and appliance manufacturers to make further inroads here.

Foreign companies could technically take stakes in Myanmar retailers and wholesalers before if they received the ministry’s approval. But almost none got the green light. Japanese retailer Aeon, one of the handful that did, began operating supermarkets with a local partner in 2016.

Emerging economies often restrict foreign investment to protect homegrown retailers and wholesalers. It is unusual for a country like Myanmar, with per capita gross domestic product of only $1,200 or so in 2016, to relax the rules so much.

But de facto civilian leader Aung San Suu Kyi has come under fire for delays in key economic reforms. And human rights abuses against the Rohingya Muslim minority, hundreds of thousands of whom have fled to neighboring Bangladesh, are making American and European businesses uneasy about operating in Myanmar.

The country approved about $5.7 billion of foreign investment in the 12 months ended March, down for a second straight year. A further decrease could throw a wrench into a development strategy heavily reliant on foreign money.