In the year since professional-services firm KPMG reopened its office in Myanmar, the situation has improved.
It was difficult in the past to plan when the Myanmar Investment Commission would respond to applications, but now businessmen can find that out within 90 days, which is similar to what Thailand's Board of Investment requires. Now that the approval process is clear and transparent, investors can plan ahead with more confidence when setting themselves up.
KPMG sees advances in areas covering infrastructure, real estate segments like office buildings, serviced apartments and condominiums, and simple manufacturing, as well as projects that do not require substantial water and electricity.
KPMG as a tax and business adviser is also active because businesses need a good fundamental structure from the very start. There's huge room to grow in the country, so businesses should establish transparent and well-governed operations right from the beginning.
Japanese investors have been very active. "Abenomics" even boost Japanese sentiment. The strong sign is that the first phase of the 400-hectare Thilawa Special Economic Zone, which is financially supported by the Japanese government, is on track to be completed by the middle of 2015.
The latest move by Japan's largest airline, ANA Holdings Inc, which secured a deal to buy a 49-per-cent stake in Myanmar's Asian Wings Airways for US$30 million (Bt940 million), implies that there'll be more business transactions to come.
Businesses from China and South Korea have also been active in exploring opportunities, particularly in garments and textiles, while companies from Europe and the US have lowered their guard and cautiously investigated certain areas such as oil and gas and mining.
Besides the hard industries, there is some interest in agriculture and tourism. There are also some moves below the radar in other areas, retail for example, though it remains restricted.
Foreign investors can enter the country through the formation of joint ventures, but only Malaysia's leading retail company, Parkson Retail Asia, has tapped into this market through an agreement with Myanmar-based conglomerate Yoma Strategic Holdings and First Myanmar Investment Co. Other retailers, including Japanese brands, are still looking for local partners.
Another change that is crucial to Myanmar's transformation is the banking system. With the Central Bank Law now in place, the Myanmar Central Bank is an independent agency with the authority to impose financial regulations.
As the banking system is the gateway to the next step of doing business, KPMG has monitored the movements and shared its experience with its clients and non-clients both inside and outside the country.
"Our inaugural Myanmar Business Forum held recently in Yangon about the past, present and future of Myanmar's banking system attracted a lot of interest, and an open and honest dialogue took place. The next episode of our Myanmar-focused conference is in the pipeline."
KPMG is optimistic to see a series of developments in the financial market in Myanmar. A few that should be seen in the first stage are intra-bank transfers in major commercial cities such as Yangon and Mandalay, followed by easier foreign-currency transactions.
Looking forward, dynamic changes are expected, as there will be more stakeholders participating in Myanmar. Although the future is quite bright, businesses should not jump in blindly without thorough study.
_ This information is intended as a general guide only. Professional advice should be taken before acting on the information provided.
Key events
Oct 2012 KPMG Myanmar reopens
Nov 2012 New Foreign Investment Law/US president's visit to Myanmar
Feb 2013 Notifications for Foreign Investment Law
Apr 2013 European Union sanctions lifted
June 2013 World Economic Forum on East Asia
July 2013 Central Bank Law/Myanmar Citizen Investment Law/Security Exchange Management Law/Cabinet reshuffled/New Central Bank administration and deputy governors appointed
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