Date November 2014 File No. 65. Myanmar.15.YNG. Our Ref. Asbjørn O

Date November 2014 File No. 65. Myanmar.15.YNG. Our ref. Asbjørn O. Christansen

Dear Reader,

The Trade Council at the Royal Danish Embassy has produced this market report to give you an insight into the Myanmar market and how to do business in the country. The report contains useful information regarding Myanmar´s historical, political and economic development and we consider it a must-read prior to visiting the country.

Numbers show that upwards of USD 12 billion has been invested in Myanmar during the reign of President Thein Sein, and it does not seem that investment flow will run out in the near future. More than 5000 domestic and foreign companies have been registered since the new government took over 3 years ago. Changes in Myanmar are happening at an accelerated speed! Myanmar is now the darling not only of the hospitality industry, but also of the foreign investment community.

It is important to understand and appreciate that the “business landscape” in Myanmar is changing rapidly. It is an inevitable process, which means that constant changes in laws and new initiatives for foreign investors make yesterday´s information, news and perceptions outdated and obsolete. And that is of course also true for this report, so please, note that some information may already be outdated. You, as new potential investors in Myanmar, can benefit from the fact that Myanmar is currently an open and positive place for investments, but keep in mind that it is a challenging and constantly moving target.

As of August 1, 2014 the Ministry of Foreign Affairs opened a Danish Embassy in Yangon, Myanmar. Minister for Trade & Development Cooperation, Mogens Jensen states:

“The opening of a Danish Embassy in Myanmar underlines Danish support for the Burmese Spring and the country’s giant leap towards democracy and human rights. We sharpen the focus on helping the country’s poorest to benefit from the positive development. And we strengthen Danish interests, and not least the opportunities of Danish companies to set up in business in Myanmar with a population of 51 million people.”

In conclusion, it is good to keep in mind that we are currently witnessing paradigm shifts in Myanmar and what was unthinkable less than 3 years ago is now today’s reality.

Asbjørn Overgaard Christiansen Commercial Counsellor Head of Trade Department Thailand, Myanmar and Cambodia Royal Danish Embassy Bangkok

1. Introduction ...... 1 1.1. Economicforecast...... 2 1.1.1. Tax rates and labor cost ...... 4 1.1.2. Education ...... 4 1.1.3. The legislative system ...... 4 1.1.4. The political system ...... 5 1.1.5. Stages of the reform process in Myanmar ...... 5 1.2. Geography ...... 13 1.3. Demographics ...... 13 2. Ministry of Foreign Affairs of Denmark ...... 15 2.1 DANIDA...... 17 2.1.1 Danida Business Finance ...... 18 2.1.2 Danida Business Partnerships ...... 18 3. EKF ...... 18 4. IFU ...... 19 5. Danish companies in Myanmar...... 19 6. Myanmar and the European Union ...... 20 7. Doing Business in Myanmar...... 21 8. Tourism ...... 22 8.1 Language ...... 23 8.2 Greetings ...... 23 8.3 Body gestures ...... 24 8.4. What to wear ...... 25 8.5. Food and drinks ...... 27 8.6. Marriage in Myanmar ...... 27 8.7. Business culture ...... 28 9. References ...... 31 10. Appendix 1 – Political map of Myanmar ...... 34 11. Appendix 2 – Public Holidays in Myanmar...... 35

Myanmar (or “Burma” as the country was called previously) has approximately 51 million inhabitants, according to the first official population census in 30 years. In 2005 the capital city was moved from Yangon (Rangoon) to Naypyidaw, with the official explanation that Yangon had become too congested with little room for future expansion of government offices. Foreigners see the move as a military strategic move away from the coast, thereby reducing the risk of foreign intrusion.

Map of Myanmar (Burma) Myanmar, a resource-rich country, suffers from pervasive government controls, inefficient economic policies, corruption (see Corruption Index), and rural poverty. Despite Myanmar's emergence as a natural gas exporter, socio-economic conditions have deteriorated under the mismanagement of the previous regime. Approximately 32% of the population lives in poverty and Myanmar is the poorest country in Southeast Asia.

The business climate is widely Myanmar in Figures perceived as corrupt and inefficient. GDP (PPP): $111.1bn (2013) GDP (official ex.rate): $55.8bn (2013) Wealth from Myanmar's ample GDP growth rate: 7.8% (FY2014-FY2015) natural resources is concentrated in Population: 51.4mn (2014, 1st census in 30 the hands of an elite group of years) military leaders and business Inflation: 5.8 % (FY2013-2014) associates - or least was before the Foreign trade: $25bn (2013-2014 (P)) reforms took place over the last year FDI: $45.3bn (31/01/2014) since 1988 and a half. Over the past years a International reserves: $8.3bn (Dec 2013) wide range of new legislation has Kyat/$ = 971K/1$ (21/08/14) Source: IMF, (F) = Forecast, (P) = Projection been introduced, strongly improving the investment climate in the country. It is still yet to be seen how the implementation of these laws and regulations will take place and be enforced. In 2010-2011, the transfer of state assets to military families under the guise of a privatization policy further widened the gap between the economic elite and the public. The economy suffers from serious macroeconomic imbalances - including fiscal deficits and the lack of commercial credit further distorted by a non-market interest rate regime, unpredictable inflation, and unreliable economic data.

Myanmar’s investment climate - including weak rules of law - hampers the inflow of foreign investment. In recent years though, foreign investors have increased especially within natural gas, power generation, timber and mining. The most productive sectors will continue to be in extractive industries - especially oil and gas, mining, and timber - with the latter two causing significant environmental degradation. Other areas, such as manufacturing, tourism, and services, struggle in the face of poor infrastructure, unpredictable enforcement of trade policies, undeveloped human resources and inadequate access to capital for investment. Private international banks have recently been granted licenses for operation, but they still operate under tight domestic restrictions, limiting the private sector's access to credit.

Table 1: GDP and inflation forecast

Year GDP growth 5-year moving average Inflation (%) 2009 5.1 7.7 2.2 2010 5.3 7.8 8.2 2011 5.9 6.4 2.8 2012 7.3 5.5 2.8 2013 7.5 6.2 5.8 2014 (F) 7.8 6.8 6.6 2015 (F) 7.8 7.3 6.9 Note: Years are fiscal years, ending 31 March of the following calendar year. Sources: International Monetary Fund; ADB estimates.

Table 2: GDP & GDP Per Capita forecast

2010/11 2011/12 2012/13 2013/14 (P) 2014/15 (P) 2015/16 (P) GDP (billions of kyats) 39,847 43,368 47,851 54,434 62,572 72,075 GDP (billions of US$) 49.6 56.2 55.8 56.4 60.3 64.8 GDP per capita (US$)* 742 900 876 869 910 959

Source: Asian Development Bank & IMF (P)=Projections *Current prices

GDP Per Capita (PPP) for Myanmar in year 2013 was US$ 1,700. GDP in terms of purchasing power parity is expressed in current U.S. dollars per person. The figures are derived by first converting GDP in national currency to U.S. dollars and then dividing it by total population. The 2013 figure leads Myanmar to be ranked No. 201 in world in terms of GDP Per Capita (PPP).

In August 2014, the country completed its first official population census in over 30 years. Past estimates had landed the total population at around 60 million. However, the census revealed a loss of roughly 9 million people overnight, as the total population amounted to 51.4 million. According to preliminary reports, this meant a 17 % increase in GDP per capita (not PPP adjusted) overnight, breaking $1,000 for the first time, contrary to past GDP per capita projections.

During the military regime the United States, the European Union, and Canada imposed financial and economic sanctions on Myanmar. The EU sanctions were fully lifted in 2013 and the US and Canadian sanctions has been eased, with a few exemptions still in place. Remittances from overseas Myanmar workers - who had provided significant financial support for their families - have driven the Ministry of Finance to license domestic banks to carry out overseas operations.

In 2011 the government took initial steps toward reforming and opening up the economy by lowering export taxes, easing restrictions on its financial sector, and reaching out to international organizations for assistance. One of the most important political improvements was the release of Aung San Suu Kyi, with permission for her to travel abroad and get back into Myanmar. Although the Myanmar government has good economic relations with its neighbors, significant improvements in economic governance, the business climate, and the political situation are needed to result in substantial improvement in the foreign direct investments.

Recently, the country has revised its forecast for foreign direct investment (FDI) to more than $5 billion for the fiscal year that began in April 2014. Earlier estimates of $4 billion for the fiscal year have been revised due to an impressive $3.32 billion worth of investments in the first five months of the current fiscal year. According to the government-run Myanmar Investment Commission (MIC), 31 percent of the investment received by the end of August was in the telecoms sector, with 23.8 percent in oil and gas and 18.4 percent in real estate. Hotels accounted for 13.3 percent and 8.1 percent went into manufacturing, primarily garments. At the top of the FDI list are China (which has invested USD 20 billion since the 1980s), Thailand, Hong Kong, Korea, the UK and Singapore. The abovementioned numbers are indicative and probably subject to significant influence by the

3 authorities - in any case, the authorities have a huge interest in portraying a significant and stable economy to the international community.

1.1.1. Tax rates and labor cost

A PWC report from 2014 show that income tax rate is 35% for non-resident foreigners working for companies not registered under Myanmar Foreign Investment Law. There are, however, different rates depending on the amount of income, so the income tax rate can be between 1% and 20%. The corporate tax rate is 35% for non-resident foreign companies, capital gains are taxed at 40% and the withholding tax rate varies in the range 3.5% - 20%. Sales tax (or VAT) is 30%, but there are different rates depending on the goods. The most common essential and basic commodities are taxed at 5%. Hereafter the VAT rate increases for other goods sold in Myanmar so that cigarettes, fuel, liquor and similar products are taxed at 30% - 200% (the 200% VAT is primarily on imported luxury goods).

The cost of labor is among the lowest, if not the lowest, in Asia. The average salary is USD 70-80 per month for operators, and this goes up to USD 100-120 once insurance and overtime is added. Social security allocation is 4 percent of the salary - with employers contributing 2.5 percent and individuals contributing 1.5 percent.

1.1.2. Education

The educational system is still affected by the British (colonial) system of schools. Information regarding expenditures for the educational sector is unavailable, but based on UN education figures (percentage of people aged 15 years or above who can read and write) approximately 90% of the Myanmar population is educated (weighted towards the male part of the population). This is fairly high compared to other countries in the Asian region. For decades the military regime has been a factor in low investments and a steady decay of the state education system, but there is a highly politically influenced agenda regarding the perceived educational levels in Myanmar. Reports vary – one states that only 27% of all children complete five years of primary school and that only 1.8% complete secondary school. These statistics are difficult to verify, but anecdotal evidence indicates that in urban areas most people can both read and write. The issue of literacy is therefore probably only to be questioned in the rural areas.

In a bid to further improve Myanmar’s education sector, Denmark’s government has committed to contributing US$ 4 million to UNICEF for their Quality Basic Education Programme (QBEP) in Myanmar, a programme aimed at improving access to education in the country. The QBEP, which was launched in January 2012 and will run until 2015, aims to improve education policy and systems, strengthen the quality of education at township level, and bring more children to education through formal and non-formal approaches.

1.1.3. The legislative system

The legislative system is a mixture of homemade laws and leftovers from the English common system. Since there is no real separation of the judiciary and the executive parts of the legal system there is no guarantee of a fair public trial. The

2011 Constitution does, however, call for a Supreme Court, a Courts-Martial and a Constitutional Tribunal of the Union. In the recent years there has been a boom in new legislation being introduced within all areas. The main concern is presently if the weak administration will be able to implement and enforce these new regulations and legislations.

1.1.4. The political system

The legislative branch is bicameral consisting of the House of Nationalities and the House of Representatives. Members of both houses serve 5 years and the next election will be held in December 2015. After the 2011 election the political system is dominated by the USDP (74.8% equal to 129 seats in The House of Nationalities). Other minor parties (NUP, SNDP, RNDP, NDF and AMRDP) stand for the rest 25.2% (equal to 39 seats in The House of Nationalities). In the House of Representatives the USDP stands for 79.6% (equal to 259 seats).

USDP (Union Solidarity and Development Party) dominates the political system and is the party of President Thein Sein. He is the former Prime Minister from when the military regime was in power. The Constitution assigns 25% of the political power to the military, which means that the total political power from the old military regime is around 90%. The real democratic opposition stands for less than 5% of the political power. In the regional parliaments the ethnic minorities are somewhat better represented than in the national parliaments.

Most recently, the Leader of the opposition, Daw Aung San Suu Kyi, has recently completed a nationwide campaign with her party, the National League for Democracy (NLD), to amend specific parts of the country’s 2008 Constitution. The NLD has campaigned for the amendment of Article 436, which requires any changes made to the constitution to have support from 75 percent of parliamentarians, as well as Clause 59(f) which bars anyone with family members “owing allegiance to a foreign power” – namely opposition leader Daw Aung San Suu Kyi - from becoming Myanmar’s President or Vice President. There have been impressive reforms in Myanmar since a quasi-civilian government came to power in 2011, but many are concerned that crucial changes cannot be made to the constitution in time for the General Election, which is expected to be held at the end of 2015. The forthcoming election is being seen as a key landmark by potential investors as to whether the reforms currently taking place are a sign of genuine will for change by the government.

1.1.5. Stages of the reform process in Myanmar

For further development of the economic activities in Myanmar the progress is divided into three stages (which is almost the opposite of the reform process in China - increase GDP, reform the financial system and reform the political system).

The reform process in Myanmar is divided as followed:

Stage 1: Transition to a stable and open political system

(The central point is that without political stability in an open society the development process cannot succeed.)

Stage 2: Reform of the financial system (The central point is that Myanmar cannot hope to rapidly increase its GDP if its financial system is not modernized and integrated into the world financial system.)

The government is working with the IMF to entirely reform the domestic financial system. The first step was to unify exchange rate conversion. Myanmar until recently had five different exchange rates. These have been eliminated in favor of a single exchange rate that more closely reflects the value of the Myanmar currency Myanmar Kyat (MMK). 1 USD is currently approximately 993 MMK1. The next steps will be to modernize the Myanmar banking system and integrate that system with the world system.

Myanmar Kyat (MMK) One example of the reform of the financial system according to "Myanmar Business Network" is that MaterCard has signed a deal with a Myanmar bank. In November 2012 MasterCard was introduced as the first international electronic payment card in Myanmar with the first ATM installed in the country. Since then, ATMs can be found in many locations. MasterCard hopes to pave the way for electronic payments in this country where most transactions are made in cash as a result of years of tough international sanctions against the former military dictatorship. In the past people were obliged to carry money in cash - a challenge for tourists and foreign businesses. The MasterCard deal can have an impact on tourism and travel and can be crucial in the efforts helping connections to the global economy.

Lifting of sanctions has also resulted in the return of international financial institutions and trade organizations: the World Bank opened an office in Yangon in August 2012; the Asian Development Bank now has offices in Yangon and the

1 http://www.xe.com/currencyconverter/convert/?Amount=1&From=USD&To=MMK

6 capital Naypyidaw and UK Trade & Investment opened its office in Yangon in July 2012. With the help of the Tokyo Stock Exchange, the government is preparing to establish Myanmar’s first stock exchange, and new laws are being drafted to simplify and encourage foreign exchange and investment.

Currently there are four state owned banks:

Myanmar Economic Bank (MEB), which has the largest commercial banking network in Myanmar, maintains the largest deposit base (over MMK 70 billion) of any financial institution and is heavily weighted towards domestic savings. The bank's loan portfolio is directed to 70% private sector, 10% cooperative and 20% government employee borrowers. Myanmar Economic Bank has a total number of 314 branches throughout the country. The bank’s paid up capital amounts to MMK 220 million. The functions of the bank are accepting current accounts, savings and deposit accounts, issuing of saving certificates, advancing loans to economic enterprises and personal loans, and financing private business undertakings such as production, trade and services.

The Myanmar Foreign Trade Bank concentrates on international banking business, rendering banking services for export, import, guarantee issuing, remittances, credit card services, sale and purchase of foreign currencies and traveler’s checks, collection of foreign currency checks and drafts. The bank maintains correspondent relations with 30 foreign banks from all parts of the world. Offering current accounts and fixed deposit accounts, Myanmar Foreign Trade Bank has 63,003 foreign exchange accounts.

The Myanmar Investment and Commercial Bank (MICB) specializes in corporate and investment banking to local customers and foreign companies. The bank accepts deposits in both Kyat and foreign exchange, and undertakes foreign trade transactions.

Myanmar Agriculture and Development Bank was established with the intention to promote agricultural, livestock and rural society economic enterprises including processing and production. The bank has a country wide network of 14 regional offices, 164 branches and 48 agency offices providing short and long term credit for crop production, salt production, livestock, fish and dairy farming etc. Clients receive 10% interest on their deposits and are allowed to borrow four times their savings at 15% interest where the funds are used in relation to farm development.

Besides the typical commercial banking business, the private banks have introduced higher margin businesses such as longer term deposit and lending instruments, hire purchase facilities, current accounts, credit and ATM cards, and mortgage loan facilities. The list of private banks consists of:

1. First Private Bank Ltd 2. Myanmar Citizens Bank Ltd 3. Myawaddy Bank Ltd 4. Co-operative Bank Ltd 5. Asia-Yangon Bank Ltd 6. Asia Green Development Bank Ltd

7. Kambawza Bank Ltd 8. Innwa Bank Ltd 9. Yadanabon Bank Ltd 10. Yangon City Bank Ltd 11. Tun Foundation Bank Ltd 12. United Amara Bank Ltd 13. Yoma Bank Ltd 14. Myanmar Oriental Bank Ltd 15. Ayeyarwaddy Bank Ltd 16. Myanmar Livestock and Fisheries Development Bank Ltd 17. Myanmar Industrial Development Bank Ltd 18. Sibin Tharyar Yay Bank Ltd 19. Myanmar Apex Bank Ltd 20. Naypyitaw Sibin Bank Limited 21. Myanmar Microfinance Bank Limited 22. Construction and Housing Development Bank Limited 23. Shwe Rural and Urban Development Bank Limited

On October 1st 2014, a list of a number of newly licensed foreign banks was published by Myanmar’s central bank:

Inside a local bank in Yangon A total of nine foreign banks out of around 25 applicants have been granted access to Myanmar. The licensees will have 12 months to prepare for their business in the Myanmar market, which will be limited to banking for foreign corporations and foreign-exchange services. Also, foreign banks will be limited to one branch, will not be allowed to conduct retail-banking, and will also only be allowed to lend in foreign currency. However, a partnership with a local Myanmar bank will still allow such banks to lend in Kyat, the local currency. The entrance of foreign banks has brought with it a level of skepticism from local banks that fear the increased

8 competition for market share as well as loss of labor to foreign banks with more experience and technological expertise.

Stage 3: Increase GDP through local and foreign investments.

The government is seeking to push development into manufacturing, real estate, agriculture and services - areas that are currently untouched by foreign investments. Though the government seeks to promote foreign investment, the current steps show an extreme level of caution.

In September 2012 the Myanmar parliament passed a long-anticipated law laying the ground rules for global companies planning to move into the country's long- restricted market, and in November 2012 Myanmar's new foreign investment law was approved by President Thein Sein. The new law allows overseas firms to fully own ventures and offers tax breaks and lengthy land leases. Joint ventures between foreigners and Myanmar citizens or the government are also permitted with any stake ratio agreed between the partners. Under the new law, The Myanmar Investment Commission can allow foreign investors into the restricted sectors with the approval of the government and foreign investors can lease land from the government or from authorized private owners for up to 50 years.

Foreign firms may be entitled to a tax holiday for the first five years of operation and other forms of tax relief may be available depending on the investment.

One indicator of the increasing foreign interests in Myanmar is that Singapore Airlines started a daily service to Yangon in October 2012 to meet growing business and tourist demand for flights to Myanmar’s largest city, Yangon.

Myanmar’s GDP growth reached an expected 7.5 percent for the 2012-2013 fiscal year, which ended on March 31, up from 7.3 percent a year previously, according to a report by the Asian Development Bank (ADB). In its report, entitled Asian Development Outlook 2014, which collated data from dozens of countries across Asia and the Pacific, the group said that the growth was helped by much-publicized increased investment both locally and abroad, fuelled by improving business confidence, commodity exports, a strong tourism sector and credit growth, and was helped by the strong economic reforms being implemented by the government. Business confidence has seen huge improvements in recent years, reflected by record-high new business registrations, which reached 5,000 in the 10 months to January 2013, more than in the entire previous fiscal year. Foreign- owned business registers also increased to 375, the report said. The agricultural industry, which employs more than 70 percent of Myanmar’s workforce, recovered in the 2012-2013 fiscal year after being held back by flooding a year previously. Oil and gas, the highest area of foreign investment, saw huge gains in part due to large gas projects going live. ADB also predicted that GDP growth will continue and potentially reach 7.8 percent for the next two years. This growth is fostered by economic reforms loosening the laws for private sector development. The reforms include the introduction of a managed floating exchange rate, more autonomy for the Central Bank, the removal of exchange restrictions and an increase in investments in the education and health sector. Even though Myanmar is currently demonstrating fast development, sectors such as the financial sector still need modernization and reform efforts with careful supervision capacity. The role of

9 foreign banks is widely seen as crucial to boost a sustainable development of the financial sector.

Overall, it is difficult to access the economic and political news in Myanmar, so it is useful to know that Myanmar-based research, consulting and technology company Thura Swiss Ltd. is publishing a weekly newsletter (Thura NewsViews) covering economic and political developments in Myanmar (investments, banking, media etc.). The newsletter is free and interests can receive it by subscribing here: http://www.thuraswiss.com/news/newsletter

Economic Updates

Asian Development Bank (ASD) stated in a report released late in August 2012 that Myanmar needs to broaden its economic base beyond agriculture. If necessary reforms take place then Myanmar could be the next rising star in Asia with growth rates at 7-8% per year.

The conditions for these positive growth expectations are:

 An efficient use of the natural resources;  Development and cooperation with the neighboring countries which have prospered for the last 20 years (e.g. China and India);  The infrastructure needs to be developed;  The economy needs to broaden the economic base to include the manufacturing and service sectors;  Investments in the educational system (only a quarter of all school children move on to the middle school).

The above mentioned conditions, among others, indicate that there is a lot of work to be done. In addition, Myanmar has a foreign debt to ADB and The World Bank respectively of nearly USD 500 million and USD 393 million. Repayment of the debt is crucial for the future of Myanmar in order to get further access to financial improvements of the infrastructure, investments (also foreign direct investments) and prosperity.

In January 2013 it was reported that ADB is resuming operations in Myanmar, with an assistance package for social and economic development. ADB’s first major assistance will help Myanmar develop a competitive economy by focusing on improved public finance, trade, investment, small and medium-sized enterprises, and financial sector development, building on significant measures the government has already taken, including major reforms to its central bank and trade and investment liberalization. In rural areas ADB’s funding will help develop a strategy to make banking services more widely available. It will also identify and address gaps in technical and secondary education access, enabling more of Myanmar’s people to prepare for and benefit from the country’s anticipated boom. Loan of USD 512 million, the first one from ADB in almost 30 years, was made possible through the bridge financing provided to the Myanmar government by the Japan Bank for International Cooperation (JBIC) on 17 January 2013. The loan will also be used to finalize arrears clearance and sustain government efforts to revamp the national budget process and modernize tax administration. It will also support

10 trade policy reforms and capacity development, improve the investment climate and small and medium-sized enterprise development.

Inflation in Myanmar a growing problem: World Bank

Inflation in Myanmar reached 5.8 percent by the end of the 2013-2014 fiscal year, according to World Bank’s Myanmar office. Representatives from World Bank say that the marked rise in inflation is having a disproportionate effect on the poor, and that it accompanies an increasing GDP. Representatives from World Bank said that the inflation is chiefly driven by the insufficient domestic supply of rice, resulting from flooding and a surge in investments in the private sector. The latter point, analysts say, is positive in that banks are lending to the private sector, which is helping to grow the economy, but inevitably those investments are driving up prices for local people. Prices of meat, fish, vegetables and other basic food products have increased by about 20 percent in the last month, according to a local price index. Myanmar has seen a surge in interest from foreign companies in recent years, and while this has helped growth in the country’s economy, those benefits are not necessarily filtering down to many of the country’s citizens, particularly those in rural areas of Myanmar.

Corruption biggest concern for Myanmar businesses

The top concern for businesses in Myanmar is corruption, according to a UN-led survey released recently. The much-publicized economic and political reforms in 2011, opening the country to increased foreign in-vestment, have made Myanmar one of the most sought after business destinations in the world, but a recent survey suggests that the reforms have not gone far enough to rid the country of corruption. In the survey, which was organized by the UN, the Organisation for Economic Co-operation and Development, and the Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI), 20 percent of more than 3,000 companies questioned listed corruption as a “very severe obstacle” according to a Reuters report. Other obstacles to local companies include access to a skilled workforce and technology. 60 percent of the firms questioned said that they had had to pay bribes in various stages of their business, with some of those bribes exceeding US$ 10,000. The survey also found that the average locally-owned company is 15 years old and that very few new ones have emerged since the reforms began. The government has taken measures to combat the issue of corruption by enacting anti-corruption laws last year and appointing an anti-graft commission earlier this year. In its annual report on business environments in October 2013, the World Bank listed Myanmar as 182nd of 189 countries in terms of ease of doing business, with the biggest issue in the report being corruption.

Myanmar economy could grow 8.5 percent this year

Myanmar’s economy could grow by 8.5 percent during the current fiscal year, according to the International Monetary Fund (IMF). In January, the IMF predicted a 7.7 percent growth for the 2014-2015 fiscal year, but increased its estimate due to rising gas production and investment. Matt Davies, who headed the team behind the report, said that Myanmar is likely to build on the economic reforms that have taken place to continue rapid growth, but warned that a broad

11 range of policy and structural reforms are needed for the growth to continue. The report added that increasing foreign investments are likely, particularly in manufacturing, telecommunications and natural resources.

Foreign investment has reached US$ 46.71 billion

According to data released by the Directorate of Investment and Company Administration (DICA), cumulative per-mitted foreign investment in 12 sectors in Myanmar has reached US$ 46.71 billion as of end of June 2014. However, the figure is often confusing analysts as it represents a total of all permitted investments from 1990. As China has been heavily investing in Myanmar in the past, the country usually takes the top position in the list of foreign investors, followed by Thailand. As of end of June, China’s total investment in Myanmar has reached US$ 14 billion. However, in the recent two years, China has slowed down significantly with investments in Myanmar. Instead, most investments have been coming from Singapore which is often used as a platform for investments in Myanmar due to beneficial double taxation agreements.

January 2014

Denmark writes off Myanmar’s debt worth DKK 295 million

Denmark’s former Minister for Development Cooperation Mr. Rasmus Helveg Petersen, during his meeting with President U Thein Sein on 10 January 2014, pledged to write off Myanmar’s debt of DKK 295 million (approximately US$ 54 million). This debt relief program was intended to show Denmark’s support towards Myanmar’s political and economic reforms by the new civilian government which took office in April 2011, said the Minister. During the meeting, President U Thein Sein and the Danish delegation discussed a variety of topics including investment, Danish humanitarian aid in Rakhine State and technical assistance aimed at promoting Myanmar’s agriculture and livestock farming sector. In addition, the two governments reportedly discussed the launch of a strategic cooperation plan between the two countries in 2015.

EU and Myanmar reach investment protection agreement

The EU and Myanmar have reached an agreement that will protect the investments of both Myanmar and European businesspeople. The EU-Myanmar Investment Protection Agreement, which was agreed following a meeting between EU Trade Commissioner Karel de Gucht and Myanmar’s Minister for National Planning and Economic Development Dr Kan Zaw, will offer EU investors in Myanmar guarantees including protection against such matters as discrimination, expropriation without compensation, unfair treatment and will allow for the transfer of capital. The agreement is seen by the EU as key to helping maintain the influx of foreign investment in Myanmar, as it will ensure the confidence of EU businesspeople in investing in Myanmar. One of the key barriers cited by foreign investors apprehensive about investing in Myanmar is the lack of legal clarity and security of their investments, and this agreement should go some way to giving more confidence to potential investors. The EU has forged close ties with Myanmar since the latter began implementing economic reforms under a quasi- civilian government in 2011. The EU formerly dropped all remaining economic sanctions against Myanmar in July 2013 and has taken a number of measures to make it an attractive market for EU investors, including reinstating the Generalised Scheme of Preferences (GSP) tariff, which had previously been withdrawn in 1997 over forced labour issues. In 2013, bilateral trade between the EU and Myanmar reached €569 million (US$ 785 million), an increase of 41 percent from 2012. EU exports to Myanmar increased by 45 percent in 2013, reaching €346 million (US$ 478 million), with key exports being powered aircrafts, pharmaceuticals, electrical machinery and equipment.

Myanmar has borders with Bangladesh, China, India, Laos and Thailand. Total area of Myanmar is 676,578 km2 and Myanmar is the second largest country in Southeast Asia. Situated between two of the most growing and prospered countries in Asia, Myanmar has the potential to have a growing and improved economy if the reforms progress as recommended by several international organizations.

There are many ethnic groups in Myanmar, but the Burmese people account for approx. 70% of the total population. Minor groups are 9% Shan, 7% Karen, 4% Rakhine, 3% Mon, 2.5% Ka Chin, 0.5% Kayah, 0.3% Chin and 3.7% other. The most widely spread religion is Buddhism, which accounts for 89% of the population. The rest of the religious groups are split into 4% Christians, 4% Muslims, 1% Hinduists and other minor religious groups.

Minority groups in Myanmar. Source: BBC

The current situation is that the region of Myanmar in the Northern Rakhine State is dominated by Muslims. The UN Refugee Agency, UNHCR, is trying to protect the Muslim minority of some 800,000 citizens. In the southeast, UNHCR works to improve the coping mechanism of communities affected by displacement. Assessments have shown the need to improve access to basic services such as health, water and sanitation as well as non-food items and shelter. Years of conflict and displacement have weakened traditional self-management structures of the communities and this need to be strengthened. Through an expanded presence, greater access and new partnerships with local NOGs, UNHCR will monitor the situation of this population, raise protection concerns with central and regional authorities and provide legal assistance where necessary.

NGOs present in Myanmar are divided into two categories:

Implementing partners: Government agencies: Ministry of Immigration and Population

NGOs: Action Contre la Faim Aide Médicale Internationale Community and Family Services International Bridge Asia Japan Myanmar Red Cross Society Save the Children

Operational partners: Government agencies: Ministry of Progress of Border Areas and National Races and Development Affairs

NGOs: Norwegian Refugee Council Swiss Agency for Development and Cooperation CARE Médecins Sans Frontiéres - Netherlands Médecins Sans Frontiéres - Switzerland World Vision

The demographic age structure is divided into the following groups: 27.5% of the population is between 0-14 years; 67.5% between 15-64 years; 5% is 65 years and over. This breakdown supports potential economic growth due to the median age landing at 27.2 years. There is a huge unused workforce waiting for increased activity and new jobs in all sectors.

The overall population growth rate was estimated to be 1.03 % in 2014. This places Myanmar at number 116 in the world (out of 233 countries). The total population average lifespan is 65.94 years (number 170 in the world out of 223 countries). This low number makes sense when looking at the expenditures in health as a percentage of GDP at 2.0% (number 188 of 189 countries - number 189 is North Korea). The low expected age should also be taken into consideration when looking at the prevalence of infectious diseases carried by food and water: hepatitis A, diarrhea, and typhoid fever. For vector-borne disease the main risks are dengue fever and malaria.

The big cities are growing, and so are the problems of clean drinking water and wastewater. The current urban population is around 30 %, with annual urbanization rate of 2.49 % for the 2010-2015 period.

The Ministry of Foreign Affairs of Denmark has over the last years increased the attention to Asia and especially the southern part of Asia - including Myanmar. The main emphasis in Denmark’s bilateral development cooperation is the support to Denmark’s priority countries. Priority countries are those countries, where Denmark is present with a long-term engagement and with political and financial weight. Denmark has 24 priority countries, which includes also Myanmar.

In Asia Denmark also supports private sector development based on a wish to contribute to growth and employment and to provide the Danish business community with a footing in Asia. One of the objectives of Danish development assistance in Asia is also environmental interventions that contribute to counteract the negative environmental consequences that result from the region’s swift growth and which often affect the poor part of the population. In countries outside of Southern Asia development cooperation is mainly targeted at promoting democracy and human rights as well as climate and environment. This applies to efforts in Indonesia, China, Vietnam, Cambodia and Myanmar.

As a consequence of the democratic elections in Myanmar, many countries including Denmark have signaled that the previously imposed sanctions against Myanmar will be eased or even in some areas removed. The Myanmar government has taken steps towards democratic reforms such as a revision of the constitutional law, use of the internet and softening the censor of the media and press. The easing of the trading sanctions against Myanmar should help to promote and support the efforts towards a democratic society, national conciliation and prosperity for Myanmar’s people. However, pro-democratic politician Aung San Suu Kyi warned the U.S. and EU about removing the sanctions totally. She has pressed for a more pragmatic inverse approach. The more democratic reforms being adopted and conducted, the more the sanctions can be removed. This careful approach stems from experience regarding the military regime and their will to adopt and implement democratic reforms.

Royal Danish Embassy in Yangon, Myanmar Denmark’s presence in Myanmar has been further strengthened with the opening of the Embassy of Denmark in Yangon. The embassy opened on the 1st of August, 2014, and handles the ties between Denmark and Myanmar. Trade and Commercial interests for Danish companies are carried out in joint cooperation with the Trade Council of the Danish Embassy in Bangkok.

In January 2014, H.R.H Crown Princess Mary of Denmark and former Minister of Development Cooperation, Rasmus Helveg Petersen, visited Myanmar. The delegation travelled to the Rakhine state where the Danish Refugee Council operates, which H.R.H Crown Princess Mary is a patron is for. The delegation also visited Danish funded projects in Yangon. The Minister of Development Cooperation also had several official meetings ion Nay Pyi Taw with government officials, where the signing of the Danish-Myanmar debt relief was signed.

In August 2012 the Ministry of Foreign Affairs held a corporate social responsibility event in Myanmar with focus on doing business in Myanmar and

The Danish Parliament´s Foreign Affair Committee visited Myanmar from the 20- 25th of January 2013, where they met with the Myanmar Parliament, political parties and civil society groups. The Committee held a roundtable discussion with Myanmar Parliament members to exchange views on political developments, parliamentary work and to look into possibilities for corporation between Danish Parliament and Myanmar Parliament.

Danida supports local women groups in Myanmar

Danish International Development Agency (Danida), is a Danish organization inside the Ministry of Foreign Affairs of Denmark, set up to provide humanitarian aid and development assistance to other countries, with focus on developing countries.

Since 2006, Danida has increased its engagement in international multi-donor funds operating in Myanmar. The main purpose of this funding is a commitment to the long-range planning of large scale activities inside Myanmar in the fields of healthcare, education and livelihoods2. In addition, Danida will continue the involvement with a broad range of smaller NGO-driven projects aiming at humanitarian aid, human rights and democracy. This involvement includes projects inside Myanmar and Thai-Burma border activities alike, including support to the Burmese refugee camps in Thailand.

In 20113, Denmark´s bilateral development support to Myanmar was DKK 59, 3 million and in 2013 that number was DKK 131,37 million. DKK 95,38 million was used to program and project assistance to Myanmar, personnel assistance, Danida Business Partnership program, Danida Business Finance program, assistance to regional areas and the promotion of democracy and human rights. DKK 35,00 million went for humanitarian aid and DKK 0,99 million was for NGO assistance.

2 http://thailand.um.dk/en/danida-en/danida-in-burma/activities-in-burma/ 3 http://um.dk/da/danida/det-goer-vi/aarsberetning2011/duit/dasien/

In 2014, the total Danish development assistance in in the country will be around DKK 120 million4.

2.1.1 Danida Business Finance

Danida Business Finance program increases access to long-term financing through involvement of commercial actors for investments in important infrastructure, which will lay the groundwork for economic growth. Danida Business Finance also aims at minor industrial projects with direct job-creating potential, which cannot be financed on normal market conditions and targets key infrastructure sectors where investment improves the climate for economic development, in particular for the private sector. The main sectors are transportation, energy, water supply and sanitation. In all areas, climate-friendly and cleaner technology is a top priority.

The countries that are eligible for project financing should have a GNI per capita of less than 80% of the World Bank upper limit for ”lower-middle income countries” (i.e. less than USD $2,067 in 2013). However, priority is given to projects in Danida’s partner countries. Myanmar is not a Danida partner country, but satisfies GNI criteria - in 2013, GNI was USD $835 and The Economic and Social Council of the United Nations includes Myanmar in the list of least developed countries (LDC).

2.1.2 Danida Business Partnerships

The overall objective of Danida Business Partnerships programme is to support sustainable development and contribute to poverty reduction. The immediate objective of Danida Business Partnerships is to transfer knowledge and technology from Danish to local partners, including improvement of working and living conditions of the poor and enhancing the competitiveness of local enterprises. This is done by supporting establishment of commercially oriented partnerships that create value for companies while at the same time add overall value to society. Danida Business Partnership applies to all Danida Partner countries where the political and economic context allows commercial co-operations and where Danida is represented and has the capacity to support a partnership. In addition, regionally oriented partnerships, including partners from non-Partner countries can be supported as long as the partnership is anchored in a Partner country.

Danida Business Partnership has currently been suspended from November 2014, due to planned changes in the programme to make the use of Danish companies’ competences in development work more effective in promoting sustainable development. The programme is expected to be reintroduced before the end 2015.

Myanmar is rated by EKF (Danish Export Credit Agency) as a country at the bottom, indexed 7 (on a scale of 0-7), with regard to projects until 1 year, up to 5 years and projects more than 5 years. This equates to an additional insurance expense of approx. 8-10% of a project amount. The business climate is rated as “challenging”, which means that the commercial framework conditions in the country are challenging or poor. There may be extensive problems with several

4 http://um.dk/da/om-os/organisation/repr/aendringer-repr/myanmar-burma/

18 aspects of the business climate and it may be difficult to conduct business in the country.

The Asian Development Bank provides financing for projects in the member countries, but one of the policies of ADB is that "the proceeds of any loan, investment, or other financing provided by the ADB shall be used only for procurement in member countries of goods and services produced in member countries", ADB, p.14.

IFU – the Investment Fund for Developing Countries – is a Danish, government- owned Development Finance Institution that advises and invests in collaboration with Danish trade and industry in new emerging economies – including Myanmar.

With the purpose of creating economic growth and social development in the host countries, IFU provides share capital participation, mezzanine financing, loans and guarantees on commercial terms in production or service companies. It is a condition that the Danish partners likewise are willing to invest.

The maximum financial participation of IFU is to match the amount invested by the Danish partner and normally up to 30% of the investment, with a time perspective of 5-8 years. IFU financing is provided without recourse to the partners. IFU will accept the risk associated with the project/the legal entity established in the host country.

Since IFU’s start in 1967, the fund has participated in close to 800 investments in 86 countries.

Myanmar is eligible for IFU investments and despite the many challenges ahead – fragile political stability, sanctions still active, necessary reforms to be implemented, non-functioning banking sector, lack of infrastructure, new investment law to become operational a.o. – IFU is ready to invest and has started building a network of local advisors, businessmen and authorities for assisting Danish investors.

For more information - see www.ifu.dk

Currently, few Danish or Danish-affiliated companies operate in Myanmar. Maersk, DAMCO, MCC Transport, Signature Myanmar, Sanfoco Wood Industries, and Myanmar-Nordic Liason all do business in Myanmar. Besides these, the Danish brewer Carlsberg also does business in Myanmar. Carlsberg has entered into a joint venture with local partner Myanmar Golden Star (MGS), and will begin operating their first factory by the end of 2014. Carlsberg will own 51% of the joint venture. The brewing facilities in the Bago Region are currently being build and are expected to finish in late 2014. The brewery will produce both the Carlsberg and Tuborg brands, as well as a new brand – Yoma – which is meant both for the local market as well as for export to Europe.

A joint venture between Carlsberg and Myanmar Golden Star Breweries

Danish Minister for Trade and Investment Pia Olsen Dyhr led a delegation of business leaders to Yangon in December 2012 with the hopes of pairing companies from Denmark with Myanmar partners. Eighteen adventurous companies joined the minister on the trip to Myanmar, including representatives from Danish Water Services, pharmaceutical supplier Novo Nordisk and dairy product manufacturer Arla Foods.

Development aid and trade The European Union is planning to give Myanmar (Burma) – up to €90 million a year or a total of over €600 million in its 2014-20 development-aid budget. This would make the country one of the principal recipients of EU support.

The increase in support comes as a form of recognition of the recent reforms that have taken place since the new quasi-civilian government took over in 2011. The EU has called off economic sanctions and put in place positive trade terms and financial support to the Myanmar Peace Center, a government-linked body dealing with the country’s major conflicts. Focus will be on development in; rural development, education, governance and peace building from 2014 to 2020.

Parts of the funding are also going towards supporting trade, which is one of the key priorities of the EU’s development plans in Myanmar. More specifically, the EU provides a package of about €15 million that supports both government agencies and the private sector. The support will go to inform and build up skills that could raise the skill-level and further develop Myanmar as a marketplace. Additionally, a 2 million euro grant was launched to fund a three-year program titled SWTICH-SMART, which will target the country’s SMEs. The plan is to improve the environmental approach, accountability, corporate responsibility and

20 transparency of Burmese companies, with a particular focus on the garment industry.

The objective is to increase the competitiveness of SMEs in the garment sector and ensure more sustainable production and consumption within Myanmar.

The project is done in collaboration with European organizations such as Sequa from Germany, the Sheffield Chamber of Commerce and Industry in the UK, the Confederation of German Textile and Fashion Industry, and the Association of Development Financing Institutions in Asia and the Pacific, as well as local business associations. Additionally, the ILO (International Labor Organization) is taking part to ensure sustainable labor standards in the work places, and the organization seeks to have 10 best-case examples by the end of 2015.

Overall budget The 2014 EU budget – the Multi-Annual Financial Frameworks (MFF) is allocated in 7 year cycles. The budget is made up of 5 areas of spending:

 Sustainable development: 45 % of total spending o Competitiveness and cohesion for growth and employment  Sustainable Management and Protection of Natural Resources: 43 % of total spending o Common Agricultural Policy, rural development, fisheries and the environment  Citizenship, Freedom, Security and Justice: 1 % of the budget  ‘The EU as a global player’: 6 % of the budget o Spending outside EU contains 10 different instruments, including development aid. o One example if the ‘Development Co-operation Initiative’, which includes aid given to thematic and geographical programs in developing countries. Thematic aid might be education, whereas geographical programs focus on countries and regions.

 Administration: 6 % of the total budget

Myanmar debuts on the Ease of Doing Business Index

The World Bank Group’s Ease of Doing Business Index has included Myanmar for the first time. The bank ranked Myanmar 182 out of 189 countries placing it amongst countries such as Eritrea and Chad. Despite the low ranking however, the bank commented on the rapid pace of reforms, and said that it expects Myanmar to move up the rankings in coming years. The bank noted that Myanmar still needs to work on its reforms and administration as it is far behind fast moving Asian countries in terms of the average time taken to set up a business. Currently it takes 72 days in Myanmar compared to Singapore with 2.5 days and Thailand with 27.5 days. Despite huge potential in the country’s tourism industry, challenges still remain, mainly with regards to infrastructure. While hotels are being built,

21 particularly in the largest city, Yangon, the demand for hotel rooms still far out- weighs supply, which is leading to disproportionate prices in hotel rooms. Some hotels in Yangon have increased prices by more than 500 percent in the last two years. Intercity travel also remains an issue for many travelers. Domestic flights remain relatively expensive, while overland trips are long and often made on uncomfortable roads.

According to the Ministry of Hotels and Tourism, from January 1 to December 31, Myanmar received 2.04 million foreign visitors, with 885,476 arriving by air, 6086 by water and more than 1.15 million by land through border checkpoints. This figure is almost double the foreign visitors from the previous year. The Ministry has set a target of three million visitors for the next fiscal year. Yangon and Bagan stand in the top of the list for most visited tourist destinations, followed by Inle Lake in Shan State, Kyaik Hti Yoe Pagoda in Mon State and Ngapali Beach in Rakhine State, according to the Ministry. In an attempt to develop the major tourist attractions and to increase the number of tourists visiting Myanmar, the government in collaboration with the Asian Development Bank and Norway has initiated a seven-year tourism master plan worth US$ 500 million.

The Yangon International Airport, the country’s major international airport, has also seen a tremendous increase in the number of tourist arrivals. According to figures from the Department of Civil Aviation (DCA), the airport received 3.08 million tourists in 2012, up from 1.6 million in 2009. In a recent tender opening by the DCA, Pioneer Aerodrome Services has been awarded the right to upgrade the airport including expanding its capacity from 2.7 million to 5.5 million passengers by 2015.

Locations of Yangon and Hanthawaddy International Airport. Source: Google Earth

Mandalay International Airport, in upper Myanmar, is also scheduled to upgrade and expand its capacity to handle 3 million passengers annually. At the same time, Hanthawaddy International Airport is being developed to become the new gateway to Myanmar with an estimated total capacity of 30 million passengers. The new airport will be located in Bago region about 80 km northeast of downtown Yangon by road. Furthermore, in November, the DCA has invited private investors through state-run newspapers to upgrade 30 of the country’s 69 domestic airports. With these infrastructural developments, Myanmar’s tourism sector has a huge growth potential, experts predict.

The multitude of ethnicities and prevalence of Buddhism, together with the country’s decades of isolation, mean that doing business in Myanmar is different from anywhere else. But Myanmar is also to a degree rooted in its colonial past, with some familiar customs and decent levels of spoken English.

Burmese society has traditionally been built on a foundation of order, respect for the older people and a reverence for the Buddhist religion. The people of Myanmar can be very polite and helpful, but they expect foreigners to adapt to their codes of conduct. Politeness and respect are watchwords for visiting Myanmar. Discussion of politics never takes place. People prefer the country to be called Myanmar not Burma. It is because Myanmar represent all ethnic groups not only one tribe. Burma represents only one tribe “Burmese” or Burma.

Myanmar is a former British colony and therefore English is widely spoken. Business meetings are usually conducted in English. However, outside of Yangon, Mandalay and Naypyidaw, and off the tourist trail, English is not widely spoken. It should also be noted that while Burmese is the main language of Myanmar, there are many other ethnic and language groups. Learning basic Burmese greetings are always highly appreciated - it is useful to know that “Min Ga Lar Bar” means Good Day/Good Morning/Good Afternoon/Good Evening. It might also be a good idea to have business cards translated into Burmese - this will give you respect. The unspoken language and behavior style is also worth – for example, it is an insult to point at any image of Buddha.

Myanmar does not have hard or strict rules about greeting, but it is necessary to remember that men should not touch women. Many will nod the head in greeting, and it is also possible to see handshakes. But the most common greeting in Myanmar is done like “Namaste” in India or “Wai” in Thailand. Using two hands closed like “Wai” in Thailand or “Namaste” in India means to pay respect to Buddha, monks, nuns and older persons. Hugging is not acceptable.

Wai” in Thailand and “Namaste” in India

When you are greeting someone, it is acceptable to do “Namaste” the first time and then shake hands afterwards. It is not acceptable to shake hands and then do “Namaste”.

The best way of greeting in Myanmar:

• When a man greets a man, it is acceptable to shake hands; • When a woman greets a woman or a man, it is acceptable to shake hands; • When a man greets a woman, he needs to first say “Min Ga lar Bar”, then wait for the response and then, if she gives him a hand to shake, then shake the hand.

USA president Barack Obama greets Aung San Suu Kyi

Remember that the Burmese consider the head as the highest point, and the feet as

24 the lowest point of the body. It is not acceptable to touch someone’s head, especially older peoples´, monks´, and nuns´, senior in ranks´ heads. Touching the head is considered to be treated like an animal. It is also not acceptable to point at things with your feet, or to use your feet to touch or move something.

Touching the head in Myanmar means that person is treated like an animal It is a good idea to offer articles or business cards with both hands. If you use one hand, then use the right one. Using the left hand is considered to be impolite. In Myanmar the right hand is used for eating and drinking, but the left hand for cleaning your output. Do not point a finger straight into someone’s face and keep your feet on the ground as much as possible.

Secretary of The United States Hillary Clinton in business meeting in Myanmar, November 2012 It needs to be stressed that holding hands for couples in Myanmar is not acceptable. Kissing or hugging is also not acceptable. There is a law against public affection, but no precedence of taking legal action.

Because of the hot climate lightweight suits for men are acceptable. Smart casual attire – a shirt or polo shirt – with smart trousers, is fine for most meetings. Women's skirts should be of a conservative length (below the knee) and they

25 should avoid clothing that shows the shoulders. The Burmese people usually dress in Western clothing, but do not be surprised to see the traditional sarong-type garment also worn.

Do not wear shoes inside a temple or compound (includes land and building), where Buddha’s images are kept or monks and nuns are staying. Removing shoes means removing all footwear, which includes shoes and socks. In Myanmar you must remove your footwear when you start entering the compound.

You need to also take off shoes (shoes only, not socks) before entering someone’s home. Nowadays some people wear shoes at home, so you can start to take off your shoes and wait for host´s reaction. This rule applies also to some private offices and big companies offices. There is no need to take shoes off in the government offices and ministries. It is suggested to wear a half shoe or similar, which is easy to put on and take off, if you plan to visit private resident or locally owned offices.

People are not wearing shoes in the compound of the Shwe Dagon Buddhist Pagoda

President and The Secretary of USA in visit of Myanmar, November 2012

People eat mostly rice and curry. Spoon and fork are used for meals – the spoon is held in the right hand and the fork in the left. It is also acceptable to use only the right hand for eating (wash before you eat).

Most people do not eat beef or pork. Some of the people are vegetarians. So it is important to remember to mention it to your guests if you are offering beef or pork. If you are serving the lunch or dinner, you should have one vegetarian dish, and one dish with chicken or fish to make sure your guest will not end up eating just rice.

Some people do not drink alcohol, so you need to keep one type of non-alcoholic drink or soft drink at home.

When serving dinner for guests, you need to remember that the Burmese are shy people. This means that when offered the first time, your guests will refuse, and will wait for the second offer.

If you are inviting the guests, it is necessary to serve one vegetarian dish and one dish with chicken or fish

The legal age for marriage for both men and women is 18 years. If a person is under 16, he or she needs both parents’ consent. If a person is under 16, even if both parents agree, it is considered a rape case. Same sex marriage is not legal in Myanmar. In fact homosexual (considered as unnatural) activity is illegal in Myanmar, pursuant to Penal Code, Act 45/1860, Section 377. The maximum penalty is 10 years and a fine.

Myanmar marriage law says that a Christian husband can have one wife. Islamic husbands can marry up to 4 wives. Buddhist law does not mention how many wives a husband can have.

Couples are considered married if neighbors affirm that they are husband and wife. This means that a man is seen visiting the girl´s house regularly and staying overnight. Another case is if a man is caught alone in a room with the door closed – it is enough to announce them to be married. Marriage means to have support for life. The wife is entitled to equal share of man’s belongings, even if she is wife number 10, and married only yesterday. Adultery is criminal offence in Myanmar.

Business in Myanmar requires patience, as well as a willingness to build friendships and foster trust. Attempts to do business in a fast-track way without sufficient regard for the local culture and procedures, may lead to frustration, and perhaps offence. Often a first (or even second) meeting will simply be an opportunity for parties to get to know each other, as a prelude to more serious or in-depth matters being discussed later.

Furthermore, people do not in general have a strict “yes is yes” attitude; matters can initially seem ambiguous and you may need to make contact several times before a matter is finalized, which may include dealing with something as simple as administration or paperwork right through to large business deals. Of course this is not always the case, and matters are sometimes concluded more rapidly – but it is an aspect of society that should be kept in mind. Most deals are verbally agreed and then followed by written contract, because the Burmese live in a closed community and people know each other. It is also expected that you will understand if someone explains his problem to you, and you will be able to wait or prolong a payment period, for example.

Myanmar has a deep culture of hospitality and openness – for example, hotels are a relatively modern concept, as traditionally people visiting another part of the country would stay with friends or relatives for as long as they liked. This means the exchanging of gifts and favors is ingrained in society, and if a gift is received, it should always be repaid at a later date.

You also need to remember that the Burmese will not show much excitement when receiving the gift because they are afraid to be seen as greedy. The Burmese will never open the present in front of the guest. They open the gift and appreciate it only when the guest has gone.

Burmese will not show an excitement about the gift for fear of being seen as greedy You should also not be surprised or disappointed if you see people giving tips or pocket money when the job is completed. It is not considered to be a bribe and the Burmese accept it like donation or tea money.

On the surface, corruption does not generally strike visitors to Myanmar as a major issue, but it remains endemic in some areas, and high-level business and political practices can be opaque. As part of the government’s reforms, efforts are being made to increase transparency and reduce the corruption levels. How corruption is dealt with by foreigners in Myanmar is up to the individual, but U.S Secretary of State Hillary Clinton perhaps put it best when she said in May 2012, “Invest in Burma and do it responsibly; be an agent of positive change.”

As in much of Asia, making the right connections can be crucial in networking and securing deals; being introduced by a mutual, trusted contact goes a long way. Consultancies such Myanmar Business Answers can offer advice and facilitate introductions, and playing golf are a long-established means of networking.

Business and politics in Myanmar are dominated by men, but there are increasing numbers of women involved, from running small businesses to board level and cabinet politics – and of course the democratic hero Aung San Suu Kyi is the most revered figure in the country.

In keeping with other countries in the region, there is a strong tradition of respect for elders throughout society and in business; when an older person enters a room, it is normal to stand up in deference. Perhaps more uncomfortably for some westerners, the opposite sometimes also holds true: more junior members of staff will enter a room and bow uncomfortably deeply as they pass you, to seem as if they are not present at all.

The exchanging of business cards is common in Myanmar. As a mark of respect, it is a good idea to take a short time to read a business card. Some people use both hands to exchange cards (as in China), but the practice is not universal. If you are planning long-term or repeated trips to Myanmar, it might be wise to print double- sided cards with both English and Burmese text. If you have the flexibility to do so, ensuring your card designates you clearly as a key decision maker (“company head”, “company director”) is a good idea.

When it comes to copyright law, the Burmese do not like to be seen as thieves. In contrast, they stress that people in Myanmar do not know the international copyright or intellectual property law. So it is recommended to register your product first if you are entering Myanmar´s market.

If you are working in Myanmar, you should expect strikes. Strakes happen almost every day and there are more than 100 labor unions in Myanmar. In contrast, there are less than 10 employer's associations. When you start a business in Myanmar, it is a good idea to be ready to form a Danish Employers' Association.

When doing business in Myanmar, it is important to remember that holidays in Myanmar make up almost 25 to 27 days per year. Most of the private businesses are closed, but shipping and customs are open.

Water festival in Myanmar

An introduction to Doing Business in Myanmar, Dezan Shira & Associates: http://emergingfrontiersblog.files.wordpress.com/2012/07/an-introduction-to- doing-business-in-myanmar-dezan-shira-associates.pdf

BBC news Business, Carlsberg signs joint venture in Burma: http://www.bbc.co.uk/news/business-21291614

CIA: www.cia.gov

Corruption Perception Index: www.transparency.org

Danida in Myanmar: http://thailand.um.dk/en/danida-en/danida-in-burma/

Danida, Danish bilateral assistance to Asia 2011: http://um.dk/da/danida/det-goer-vi/aarsberetning2011/duit/dasien/

Do's and Don’ts in Myanmar, presentation by Dr. Myo Thant (private material)

Eleven, news media in Myanmar: http://elevenmyanmar.com/national/2558-central-part-of-myanmar-needs- drinking-water

Foxy Trading Club, Myanmar passes Foreign Investment trading law - WSJ.com: http://www.foxytradingclub.com/us-hidden/us/myanmar-passes-foreign- investment-law-wsj-com

Go-Myanmar.com, Myanmar travel website, Doing business in Myanmar: http://www.go-myanmar.com/doing-business-in-myanmar/

IFU: www.ifu.dk

IMF: www.imf.org

Index Mundi, Population growth rate (%): http://www.indexmundi.com/g/r.aspx?c=bm&v=24

Ministry of Foreign Affairs of Denmark: www.um.dk

Ministry of Foreign Affairs, Denmark in Myanmar: http://burma.um.dk/en/

Myanmar business and economy, Myanmar’s net:

31 http://www.myanmars.net/myanmar-business/

Myanmar Business Network: www.myanmar-business.org

Myanmar telephone directory and official yellow page, Myanmar Government Telephone Directory: http://www.myanmarteldir.com/wpgovothercity.php

PricewaterhouseCoopers LLP, 2012, Myanmar Business guide: http://www.pwc.com/sg/en/assets/document/myanmar_business_guide.pdf

Report from UN Children´s Fund: http://reliefweb.int/report/myanmar/urgent-action-needed-improve-water-and- sanitation-displaced-myanmar%E2%80%99s-rakhine-state

Reuters, Myanmar state media details new foreign investment law: http://www.reuters.com/article/2012/11/03/us-myanmar-investment- idUSBRE8A204F20121103

Reuters, Singapore Airlines to start flying to Myanmar in October: http://in.reuters.com/article/2012/09/05/singapore-air-myanmar- idINL4E8K51T620120905

Tax rates.cc, Myanmar tax rates: http://www.taxrates.cc/html/myanmar-tax-rates.html

The Asian Development Bank and Myanmar: http://www.adb.org/countries/myanmar/main

The Asian Development Bank, ADB Returns to Myanmar with First Re- engagement Assistance: http://www.adb.org/news/adb-returns-myanmar-first-re-engagement- assistance?ref=countries/myanmar/news

The Asian Development Bank, Loan Disbursement Handbook, 2012: http://www.adb.org/

The Myanmar times, Danish trade minister and delegation visit: http://www.mmtimes.com/index.php/national-news/3512-danish-trade-minister- and-delegation-visit.html

The Myanmar times, Myanmar to adopt pesticide residue standard in drinking water: http://www.mmtimes.com/2012/news/628/news62808.html

Xinhuanet.com, business news, Foreign banks not yet allowed to open branches in Myanmar: http://news.xinhuanet.com/english/world/2012-10/11/c_131900768.htm

Xinhuanet.com, business news, Visa card introduced in Myanmar private banks: http://news.xinhuanet.com/english/business/2012-12/22/c_132057749.htm

Myanmar Energy Investment Summit, (2013). http://www.myanmarenergyinvestmentsummit.com/conference/speakers

Myanmar Energy Investment Summit, (2014). http://www.myanmargreenenergysummit.com/conference/speakers

UNDP, 2013: “Accelerating Energy Access for all in Myanmar” http://www.mm.undp.org/content/dam/myanmar/docs/Accelerating%20energy %20access%20for%20all%20in%20Myanmar.pdf

IGES, 2013: “Third Green Economy Green Growth Forum - IGES Parallel Session”. http://www.iges.or.jp/files/research/climate- energy/mm/PDF/20131120/1_Miyazawa.pdf

Rajawali Foundation Institute for Asia. Ash Center for Democratic Governance and Innovation at the John F. Kennedy School of Government, Harvard University. (2012). http://www.ash.harvard.edu/extension/ash/docs/electricitydemand.pdf

In the following table you can see the public holidays in Myanmar.

Name Date Remarks

Independence Day January 4 A day of joy and ceremonies

Peasant’s Day March 2 Planning for improving the peasant sector

Full Moon of March 5 A time of pagoda festival Tabaung

Maha Thingyan April 13-16 Water festival

Myanmar New Year April 17 Celebrated with colorful ceremonies

Full moon of Kason June 1 Buddha’s Birthday

Martyr’s Day July 19 Death anniversary of Aung San

December Christmas Celebrations of birth of Jesus 25

Source:http://www.toorizt.com/myanmar-holidays-2015/

The Trade Council is a part of the Ministry of Foreign Affairs and is the official export and investment promotion agency of Denmark. The Trade Council benefits from around ninety Danish Embassies, Consulates General and Trade Commissions abroad. The Trade Council advises and assists Danish companies in their export activities and internationalisation process according to the vision: Creating Value All the Way. The work in the Trade Council follows specific procedures and quality guidelines. In this way our customers are secured the best possible quality under the varying working and market conditions at any given point of time.

Ministry of Foreign Affairs of Denmark

Royal Danish Embassy Thailand 10 Sathorn Soi 1 South Sathorn Road Bangkok 10120 Tel +66 (0) 2343 1100 Fax +66 (0) 2213 1752 E-mail: [email protected] Webpage: thailand.um.dk