9 August, 2016
The Ministry of Commerce and Trade of the Republic of the Union of Myanmar has recently relaxed restrictions on trade in construction materials in Myanmar. The recent notification no. 56/2016 (the “Notification”) released by the Ministry of Commerce and Trade permits joint venture companies (with foreign joint venture parties) to trade in construction materials subject to the conditions set out in the Notification.
This update looks at the salient terms of the Notification.
Conditions for joint venture companies to trade in construction materials
Conditions for joint venture companies |
|
|
Trading company |
The joint venture company must obtain permission to trade and hold an import / export license. |
|
Equity ratio |
Compliance with the equity ratio fixed by the Directorate of Investment and Company Administration/ Myanmar Investment Commission. (We understand that a minimum shareholding for the local shareholder in the joint venture company is required but the percentage has not been specified yet.) |
|
Requirements on foreign currency |
Joint venture companies shall only trade using foreign currencies officially brought into Myanmar. |
|
Standard of goods |
Imported construction materials must comply with quality standards fixed by the relevant government departments. |
|
Manner of sale |
The joint venture company can sell the construction materials via wholesale or retail. |
Why is the Notification important?
Trading for foreign companies is generally restricted in Myanmar. In the last year, the Ministry of Commerce had relaxed such restrictions on the agriculture sector and hospital instruments. This Notification further liberalizes trade in construction materials in Myanmar, giving foreign investors the opportunity to penetrate the Myanmar construction market through partnership with a local company.
How does this affect you?
Foreign companies can now invest in the Myanmar market via trading in building materials and construction equipment. Given the country’s emphasis on the infrastructure and real estate sectors, demand for construction materials is set to grow. However, given that the Notification was just published, we note that the list of goods allowed to be traded has not been fixed and there may be other requirements imposed by the Ministry of Commerce going forward.
For further information, please contact:
Christopher Chuah, Partner, WongParntership
christopher.chuah@wongpartnership.com
