Newly announced reforms have opened up Myanmar's rapidly expanding retail and wholesale sectors to overseas investment. Despite some restrictions in place, the new reforms will allow for 100% foreign ownership. 

The Ministry of Commerce (MOC) has issued amended regulations for the retail and distribution trade allowing foreign retailers and distributors to trade in all types of domestically produced and imported commodities. 

Colliers International Myanmar believes that the 2018 Notification marks a welcome step in the liberalisation of the sector follows other recent developments designed to attract foreign capital into the country. 

This directive removes several unnecessary processes and structures undertaken by foreign-invested businesses in the past in importing and selling their goods in Myanmar, says Colliers. 

Colliers also suggest that this legislative action may prove significant in ramping up retail activities and encouraging a more conducive business environment going forward. 

Prior to these amendments, foreign participation within the retail sector had been relegated to joint ventures (JVs), and even then, only with approval from regulators. 

The regulations stipulate that fully owned foreign firms are required to make an initial investment of US $3 million in a retail operation and US $5 million if they are working in a wholesale capacity. 

For JVs where a local partner has at least 20% equity investment, initial investments necessary for retail and wholesale activities are US $700,000 and US $2 million, respectively. These provisions do not apply to locally owned retailers or distributors. 

Mini-markets, convenience stores, and retail outlets with a floor space of less than 929 sqm are off limits to foreign investors and JVs. 

While some hurdles, such as the restriction on foreigners holding long-term leases still exist, the new reforms should have a positive impact across the retail and associated sectors. 

The changes mean that new foreign entrants into the retail trade will have to contend with strong demand for floor space, particularly in highly commercial areas such as Yangon. 

Overall, Colliers believe that this liberalisation is an encouraging move from the government, with this initiative expected to drive demand for retail spaces with the rise of foreign and local joint venture businesses in the country. 

Sources: Colliers International, The Borneo Post, Ministry of Commerce

This article was previously published on the Mingalar Real Estate Conversation

Similar to this:

Myanmar grants Visa-free entry to Japan and South Korea

5 things to consider when presenting office space to the Yangon market

Outward-oriented reform positions Myanmar as an FDI destination