Doing business in Burma

“We are prepared to go further...”

Hillary Clinton, December 1, 2011, after announcing four new initiatives to foster development in Burma.

 

In the last 40 years there have been a number of seismic changes on the global economic scene, changes that unleashed huge opportunities for multinational businesses. The first was the opening of China by Richard Nixon, which allowed that great nation to become today the second largest economy in the world. Another change was the fall of the Berlin Wall, which lead to the opening of many countries in Eastern Europe. More recently, we have seen the emergence of Vietnam as a global trading partner with the West.

Another change is about to happen. After half a century of economic and political isolation, Burma will soon take its place on the world scene. There is now a civilian government which has publicly stated its intention to attract foreign investment and create special economic zones such as are in China today. 

Six months ago, the EU relaxed some of its restrictions and after Secretary of State Hillary Clinton’s recent visit it is possible to foresee some lifting of sanctions in the future by the US.

Currently, the following are allowed by the EU:

1 Supply and service of the oil and gas industry

2 Supply and service equipment for building industry

3 Consumer goods (all categories)

4 Pharmaceuticals, white goods, electronics

5 Services: law, audit, advertising agencies, market research, procurement, IT, vocational training, education, insurance, serviced offices,…

6 Hotel and tourism

7 Property development

8 Agriculture, equipment, supplies, fertilizers, chemicals,…

9 Manufacturing

For the company interested in pursuing opportunities in Burma, what are the appropriate steps? I was in Rangoon last week and met with many businessmen. Two recommendations came through.

Luc de Waegh is the managing partner of West Indochina, an advisory firm specialised in developing businesses in Burma. Now based in Bangkok, Luc has previously lived seven years in Burma. Luc and his team advise local and foreign companies on setting up and growing their business.

 

Here is what Luc has to say. “The first two things any company must do are quantify the business opportunity and meet and create links with potential partners. A company cannot survive choosing the wrong partner.”

 

Here is the The West Indochina 5 steps Approach:

 

1. Quantify the business opportunity for products or services with the assistance of professional market research companies

2. Search for a local partner/agent/distributor

3. Determine the most efficient legal and fiscal structure with professional lawyers and auditors

4. Draft a three-year business/marketing plan

5. Assist with start up of commercial operations

a. Recruit local/expat staff

b. Help with local admin (tax filing, work permits, profit repatriation…)

Additionally Luc points out the investing in Burma today not only helps a company to grow (there are 60 million untapped consumers in the country) but also can be considered as part of a company’s CSR (Corporate Social Responsibility) programme. Responsible and accountable companies have a role to play in the transition of Burma by providing its people with quality – life-changing – employment.

As quantifying the business opportunity is also a key, I spent some time recently with Peter Moe Kyaw. British-educated Peter returned to his native country where he now runs the leading market research company MMRD, as well as the country’s largest Yellow Pages Directory.

Employing more than 200 people, Peter’s Company is the first stop for both local as well as international companies who need to learn more about the Burma market and its consumers.

Luc and Peter must both be the first places any international company should go to start understanding the market.

There are still many human rights and political issues that must be resolved. No one is claiming that all problems have been solved in this sometimes difficult to understand country. But every businessman owes it to himself and his company to begin understanding this potentially exciting future business opportunity. 

 

Eric Rosenkranz (www.ethree-asia.com) assists both existing companies as well as start-ups to develop their long-term strategy and achieve success in their business. He has been to Burma many times to study the market for its eventual opening to the West.

 

_ Follow his “Creating Success” series in the Hi! Managers column every fourth Friday of the month.