Doing business in Myanmar: Part 2 – Practicalities and IP rights

shutterstock_71051062In part one of this very mini series Your IP Insider investigated the challenges and opportunities for doing business in Myanmar. It’s here in case you missed it but today we’re revealing the key practical and intellectual property right (IPR) considerations for you as well as some conclusions….

 

Practicalities

Myanmar presents some logistical challenges that should be made aware to potential investors, particularly small businesses, from the beginning. Myanmar has limited facilities for credit cards and most hotels and restaurants only accept cash (US$). Only brand new and clean notes will be accepted. It is advisable to have access to the local currency (kyats) also. Money can be changed at the airport and in certain outlets in Yangon. It is nearly impossible to exchange money outside of Yangon. The exchange rate fluctuates between 850-900 kyat to the dollar.

At the moment international roaming is non-existent. SIM cards are coming down in price but could (not so long ago) set you back US$ 1500+. Mobile phones will become more affordable with the telecommunications licenses having recently being awarded to Qatari and Norwegian companies. Orange, the French company, placed third and is on stand-by. Wi-Fi is increasingly available at hotels, restaurants and cafes but is often slow and unreliable. It is difficult to download and send emails, and Skype is extremely unlikely to work.

 

Key Business Locations

Getting around Yangon (most businesses are centred here and as the principal economic and cultural city it is typically the first point of contact for any potential investors) is difficult due to large volumes of traffic. There is no public transport and foreign businessmen and women are encouraged to hire a car and driver (approx. US$ 80 per day). It is possible to negotiate these prices with your hotel before arriving.

The government is based in the new capital, Naypyitaw (about 4.5 hours from Yangon by car). Mandalay, 3 hours from Naypyitaw, offers significant opportunities for investment in trading, construction, manufacturing and heavy industry. It is strategically located in the crossroads of Myanmar, and therefore well positioned for access to the rest of the country. Having said that, critical infrastructure is still massively underdeveloped.

 

Employing staff

One of the challenges facing investors is the lack of trained labour and, under the new FIL, foreign companies are not permitted to employ unskilled foreign workers. Locals must make up a high percentage of the skilled workforce. The figure varies depending on the sector but can reach 75% within the first six years of operation in some sectors.

However, the recruitment procedures for employers are relatively straightforward and Myanmar has a relatively high literacy rate, with a large number of English speakers in the country.

 

IP in Myanmar

To date, Myanmar has not complied with its obligations under TRIPS in respect to intellectual property rights. The Office of the Attorney-General, with the co-operation of the Ministry of Science and Technology as well as legal experts, is drafting new IP laws in accordance with the TRIPS Agreement.

IP professionals are optimistic about the strengthening of IPR in the country and estimate that the new Myanmar IP laws will be adopted no later than early 2014 – watch this space!

Furthermore, and according to both experts, the present national IP regime in Myanmar gives a sufficient grade of protection for foreign and domestic companies. Both admit however that the effective enforcement of IP can be problematic due to a rather complicated judicial system.

 

Conclusions

Doing business in Myanmar is not without risks as the reform process is still in its early stages.  However, by investing in Myanmar sooner rather than later, it is likely that those companies will become trend-setters, rather than followers. That said, most in the European business community in Yangon aren’t surprised that many EU SMEs are waiting until after the next election before committing to this relatively untested market. It is unlikely that SMEs will achieve short-term success and would benefit more if they commit to a long-term investment in the country.

Good progress has been made with improvements in infrastructure, legal frameworks and developments in the banking and financial sectors. It is clear that Myanmar is committed to strengthening its already abundant natural advantages; rich natural resources, its strategic location in the heart of Asia, and a strong labour force, with 75% of the population being of ‘working age’. The lifting of sanctions came about as the country started to embrace a wide range of social and economic reforms, including free press and an open market ethos.

Although figures vary, many economists predict that Myanmar could grow up to 8% per annum, a big ask but not impossible. That said, only a diversified economy can achieve these ambitious targets and the basics must first be in place – a stable economy and political system, rule of law, necessary skills and modern infrastructure. On this, many investors are waiting to see what happens post-2015. Despite positive changes, it is a cautious optimism that prevails.

 

The ASEAN IPR SME Helpdesk is looking forward to assisting EU SMEs looking to invest in the country; to navigate and enforce their IP rights in this developing nation. The Helpdesk, with experts on the ground, will look to liaise with local partners and provide EU SMEs with the most accurate and up-to-date information on IP in Myanmar.

Have you already taken steps to enter Myanmar? Let us know!

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