Setting up business operations or otherwise taking your business to Myanmar? Consider how you can contribute to a sustainable and inclusive economy.
It is likely a coincidence, but it is fitting that in the month that Myanmar’s first democratically elected President Htin Kyaw took office, developments in Myanmar were also in the spotlight in the Netherlands with several well-attended events in April on doing business in Myanmar.
Both events confirmed what I’ve heard before: there is a lot of opportunity in Myanmar for foreign businesses, but it’s tough to do business successfully in this emerging market.
In the most recent World Economic Outlook the IMF puts Myanmar at the top of the world’s fastest growing economies, with a predicted growth in GDP of 8,6% for 2016. This fast growth is confirmed by the World Bank, but at the same time it also lists many barriers that foreign and domestic businesses face. These include lack of access to finance, difficulty in getting land-use rights, power outages and inadequate workforce skills. In the World Bank’s ‘Ease of Doing Business’ ranking Myanmar is listed at #167 in 2016 – but up 10 places from #177 in 2015. There is also still a lot of internal conflict across the country involving some of the ethnic groups that make up the population of Myanmar.
Opportunities and risks in Myanmar
These barriers aren’t surprising: Myanmar is a country in transition which is working hard on its development. Infrastructure, energy, water, telecommunications, industrial development, financial services, tourism – these are just some of the areas in which investment is needed and which provide opportunities for foreign businesses to enter the market.
But many of these industries – where the opportunities loom largest – are also the segments of the economy with high potential for environmental and social impact. Oil & gas and other extractive industries can have severe negative environmental impact and displace communities. The rush to develop the tourism industry is creating environmental and social pressure for communities, e.g. developing hotel zones in environmentally sensitive areas. The quickly expanding garment industry is prone to negative social impact, just as in many other Asian countries, where in Myanmar there’s a risk of unpaid wages, excessive overtime and workers being prevented to strike.
It was encouraging to hear several of the speakers during the events comment on these issues as well. In their experience it is expected of companies to give social and environmental issues due consideration in their operations. Several initiatives also show that the government of Myanmar values the development of a responsible business environment. Some examples: Myanmar joined the Extractive Industries Transparency Initiative as a candidate country in July 2014, committing itself to a policy of transparency and accountability in the extractives industry. The garment industry is taking steps to standardize ethical and responsible business practices across the industry, adopting a sector-wide Code of Conduct in January 2015.
How do you consider and act on these challenges and risks when starting operations in Myanmar’s promising market?
One of the most important points made on tackling the challenges of doing business in Myanmar was: do your due diligence! This referred to knowing who you are doing business with: what are their connections (eg, the influence of previous members of the military junta is something to consider), what is their financial position and so on. But having a thorough due diligence process in place is also important for all those other aspects of regulatory, social and environmental risk.
Key topics to think about are:
- knowing what types of risk your operations are exposed to;
- how you can tackle these challenges in a way that minimizes their negative impact;
- and, ideally, how you can do business in Myanmar in such a way that it provides a positive contribution to the development of an inclusive and sustainable economy.
Where to find information?
Below is an updated list of resources that will help your business to identify the risks (as part of your due diligence process) you may be confronted with when operating in Myanmar, and how to deal with them.
– find information on investing in Myanmar on the renewed website of the Directorate of Investment and Company Administration (DICA)
– the Myanmar Centre for Responsible Business provides extensive information on specific topics and selected industries. A quick way to get an overview is the online Human Rights and Business Country Guide, with information on e.g. labour standards (including child labour, forced labour, etc), community impact (including environment and revenue transparency & management) and profiles of several sectors (including apparel, extractives, agriculture and tourism) and regions.
– a slightly older, but still relevant, report by CSR Asia (2013), Responsible and Inclusive Business in Myanmar, offers background content on several challenges that businesses face in Myanmar and also looks at opportunities for inclusive business.
– the CSR Risk Checker, developed by CSR Netherlands with support of the Dutch government, gives an overview of risks worldwide, which you can specify to product and/or country. For Myanmar, it lists 97 risks, with most falling into the categories of labour rights and human rights & ethics. Which of these apply to your business operations of course depends on your activities, industry and location.
But also: get in touch with organizations, companies or networks in your own country who are already working in Myanmar and who can share valuable knowledge and experiences.
And last but not least: contact the local representation of your country in Myanmar. The Netherlands established an embassy this year, based in Yangon, which offers support to Dutch entrepreneurs.
In short: Myanmar is an exciting new market, where businesses are able to develop a new market and also contribute positively to the sustainable development of this country. But that requires time, research and network.
Interested to learn more about this or to talk about how I can support your business activities? Please let me know.
Also, please share any additional tips and resources you have in the comments, thanks!
Photograph by Guillén Pérez.