Now that political reform is under way, the quasi-civilian government has relaxed its grip on banking, opening up the economy to private enterprise and foreign investment. Many Western companies are eager to do business with Myanmar. Some have already taken the plunge and signed contracts; others have sent scouts or put out feelers to test the waters. The situation is still tricky for ethically minded businesses, as most prime business sectors remain in the hands of so-called “cronies,” who are close to the military.
More than twenty private banks have emerged, ending the government’s monopoly. New banking and investment laws have been adopted, and the Myanmar currency, the kyat, has been allowed to float against international currencies since 2012. You can now exchange foreign currency at a local bank with no questions asked. Myanmar citizens can open foreign currency accounts, and Western Union has been allowed to open branches in several cities, including Yangon, Naypyidaw, and Mandalay.
Many young Myanmar people, especially those who have returned after receiving education overseas, have entered the business world, either on their own or in partnership. Others have formed NGOs or created training schools for various trades or professions, using their education to help others. During the time of economic sanctions, Myanmar leaned heavily on neighboring China and received much political as well as financial support in return for its gas, oil, copper, and so on. Japan and Singapore also found opportunities to invest, while Western companies kept their distance. Now that sanctions have been relaxed they are in a hurry to catch up.
Myanmar operates a system of “crony capitalism”—whom you know is as important as what you have to offer—and investment decisions involving foreign companies require government approval. A well-trodden path is through a ministry, or a minister, using personal contacts. It helps a lot if someone has already dropped a word in the minister’s ear before an official letter arrives on his desk. It is very important to find the right contact person within a ministry to avoid frustration and wasted time at a later stage. Make enquiries in advance, seek information from other businesspeople already working on the ground, and find a reliable and trustworthy consultant or local contact. Make sure that everything is put in writing to save misunderstandings or embarrassment at a later stage. Verbal agreements are not enough, no matter how influential and powerful a minister may be. For example, an international festival almost came to a halt the day before its opening ceremony, because the verbal go-ahead by one senior minister was revoked by another, who was actually in charge of the responsible ministry. When that sort of thing happens it is no use complaining because you will find there is no one ready to pick up the phone to resolve things. The lesson of this episode is to be sure you are dealing with the appropriate minister.
On paper, you can spell out the details of your company, your purpose, your background, and whatever you can offer or expect in return from them. The letter should be addressed to the minister, deputy minister, or a director-general, as appropriate. Then a formal meeting will be arranged, depending how important your company is on their scale of priorities. If you are from the private sector, bear in mind that appointments are not written in stone and can easily be canceled or postponed with very little notice. Appointments are not made months ahead; two weeks or ten days in advance is the norm. If an appointment is made a month in advance, there is a greater likelihood of its being canceled if something more pressing comes up.
For big projects, decisions are made by ministers at the top level in the capital, Naypyidaw. For smaller or medium projects, there is a wide range of subsidiary offices at the state, regional, district, and township levels that deal with the whole process, starting with the provision of operating licenses.
For nonbusiness areas, such as health or education, the first stop should be the director-general’s office. Whatever a foreigner wants to do in Myanmar, whether to introduce a new kind of drug or equipment, to make a presentation, hold an exhibition, open a school or perhaps a liaison office for a foreign educational institute, it will need the approval of the ministry concerned. If the director-general thinks he needs approval from higher up, it will go right up to the minister or the president, but he should be your starting point.
Until recently foreigners were not allowed to set up projects by themselves. These had to be joint projects or investments with a Myanmar firm or person. So the foreign investor had to find a local partner. Before he could see the minister he would have to meet the director or director-general of the relevant ministry first and explain his case. By the time he got to meet the minister, that preliminary meeting would already have taken place. Most of the time, the minister meets only the person whose project has a likelihood of being accepted. This meeting with the minister is more of an introductory “getting to know you” occasion, and, aside from the ministerial exchange of pleasantries, the details have already been taken care of by the ministerial staff. Of course, there are exceptions. Sometimes businessmen can go directly to a minister without going through the red tape if they can pull the right strings at the right time.
The prospective foreign investor should arrive at the government office accompanied by a local intermediary or his representative. Formal Western dress with jacket and tie is expected. Wearing casual clothes to a business or official meeting will be taken as an insult, unless you can give a convincing reason for it, such as your suitcase being lost in transit. For women, a knee-length skirt and blouse or a trouser suit is the norm. Some foreign businesswomen wear a htamein skirt, which helps to break the ice, as Myanmar people appreciate foreigners wearing Myanmar dress.
Arrive at least ten minutes early. Usually, guests will be greeted by junior officers and wait for the senior person to arrive. If there are three or four people meeting you, you should be able to judge from their body language who the most important person is. Usually that person will be the minister himself, his deputy, or the director-general.
Shake hands and present your business card to him with a few polite words. Some government officials are good at small talk; others are not. Some will speak through an interpreter, even if they can speak English well. Basically, they will show respect to their guests and will expect the same from a business counterpart. Most government officials, army generals, and brigadiers play golf, so it is not a bad idea to mention it in conversation if you know the person you are meeting is a golf enthusiast. You will be introduced to the others in the room, and you should introduce your team members. Take a seat only after being invited to do so and after the minister has sat down.
The meeting can be expected to last between thirty minutes and an hour at the most, whether it is to consider an investment proposal by a foreign company or a foreign businessman’s bid for a national project. If it is the latter, the minister will meet the successful bidder only. He will outline the salient points from the government’s point of view, which will be supplemented with additional information by his deputies or directors. The rest will be looked after by the officials concerned, and you may not see the minister again until the time of signing the contract.
It is very important to get names and titles correct, particularly as many Myanmar have similar or identical names, and woe betide the businessmen if he gets them mixed up! For instance, the president’s name is U Thein Sein, the former president is U Than Shwe, and there are some ministers and businessmen with similar names, such as U Thein Swe, U Than Swe, and U Thein Shwe. U Thein Nyunt is the minister of the President’s Office, and there are two other ministers of the President’s Office, U Soe Maung and U Soe Thein, and a new minister of religious affairs whose name is U Soe Win. Such names may sound similar to the foreign ear, so it is a good idea to get everyone’s business cards and jot down brief descriptions next to their names to distinguish them from one another. Always remember the importance of distributing business cards when doing business in Asia. If your project is successful, or you set up a local office, you should consider printing cards that are partly in Myanmar script.
Nepotism is rife in Myanmar official circles, especially among people in the business world. Don’t be surprised if you find out that the intermediary you are supposed to deal with is the son, nephew, or son-in-law of a minister. Make sure you know a person’s background before you start gossiping about people at the top. You might be saying something bad about the father to his son.
Since the country has been run by generals for decades, everything is assumed to be done the army way, consciously or subconsciously. Civilians in government offices are treated as subordinates, or other ranks in the army, no matter how highly educated they are. In some offices, a director-general will ask his civilian staff members to line up every morning and salute the flag, just like soldiers, before they start work. Many civilian departments are still run by ex-army officers, who demand respect as if they were in uniform. Status and hierarchy are very important to them. For instance, if the minister is giving a pep talk no one dares to interrupt. People just look on with glum faces, even if he is saying something unnecessary. Ministers do say stupid things, and these are reported in the newspapers. Some are quite funny or not “politically correct.” For example, an agriculture minister asked farmers who complained about not being able to repay loans due to rising food prices, “Why don’t you all eat one less meal a day?” Another boasted, “I was known for my physical strength in the army. I can go the length of Myanmar slapping people.” Both remarks were directed at people in rural areas while the ministers were on tour.
Myanmar people tend to get carried away during lectures, speeches, and performances. Their speeches tend to be lengthy—a general once gave a speech that lasted more than three hours—but things have improved a great deal, and local officials seem to be trying harder to stick to the timetable as they become more experienced in dealing with foreigners. Myanmar presentations are quite formal: overhead projectors, charts, and all kinds of visual materials are used. Until recently, most presentations were one-sided affairs, in which the speaker just talked and talked without interruption. Those listening just sat with straight, motionless faces, and didn’t ask many questions, though discussions on specialized topics were different.
Now things are changing, due to the reforms and because young reporters from local journals and newspapers are always eager to put their hands up and ask questions. Sometimes the floor seems to be occupied principally by media people, especially at ceremonies where new products are being introduced. Presentations tend to overrun the time allotted, so it is better to factor in extra time for such occasions.
If the presentation is by a foreign company, or the speaker is a citizen of another country, permission is required, and the venue, time, and date have to be negotiated with the relevant ministry or group that the company wants to invite. There are now local public-relations companies that can give advice on everything, including drawing up a guest list, inviting the appropriate chairperson or native speaker, finding a master of ceremonies, searching for a relevant venue, and handling the nitty-gritty of sending out invitations.
Your presentation should be neither too long nor too short. One and a half hours, including an audio-visual display, is the limit. Myanmar people, who are eager to learn new things, don’t mind sitting through a long PowerPoint presentation, but it’s better to keep it short. A bullet-point summary at the end is always appreciated. The Myanmar audience will listen attentively but will grow restless if things go on long beyond the expected time, especially if it is a Myanmar-language presentation. At that point you may start to notice people talking at the back, although this rarely happens when a foreigner is speaking. The audience generally waits until the end to ask questions. It’s a good practice to leave at least fifteen minutes for questions, and advisable to mention it at the start of the program so that people are expecting it.
Most decisions are made at the ministerial level. The president himself can be the decision maker if it concerns a major project involving billions of dollars. The Myanmar side will want to weigh up the pros and cons, and the presenter will need to spell out all the things that can go wrong if, for example, either the authorities or their local partners change their minds halfway through, don’t stick to the agreement, or can’t meet the deadline for any reason. The Myanmar will want to take the upper hand and to wield as much control as possible. Negotiations tend to go smoothly if the minister is a technocrat. (In the past, negotiations often came unstuck because the Myanmar side—that is, the government—demanded a huge profit margin for joint projects.) Some ministers may expect to receive a certain percentage from the pot, although they won’t mention it. Some may want to bring in their sons or other family members as liaisons. In the past, foreign businessmen would send out feelers to middle-ranking officers in the ministry to find out what the minister would like, such as a bottle of Blue Label whiskey, diamonds, or cash. Ministers today are reputed to be less brazen than their predecessors in terms of their expectations or demands.
You may find the Myanmar way of doing things different from other Southeast Asian countries with more experience of dealing with foreign investors. Most contracts will be made with the government, or people close to it. At the moment, foreign investors are screened exhaustively, and straight import–export trade deals are not yet allowed. Myanmar’s new Investment Law, which replaces the previous Foreign Investment Law of 1988, allows overseas firms to own their own ventures fully and offers tax breaks and long land leases.
The contract should be drawn up by professional lawyers, and can take many months to negotiate. Investors should scrutinize every clause before signing. If anything goes wrong, dealing with Myanmar courts can be a lengthy and tiresome process. In the past, the courts had a very bad reputation for bribery, corruption, bias, and injustice. As a result, most foreign companies held off, waiting for the right time to do business in the country.
Generally, once contracts are signed and sealed they are regarded as set in stone and followed to the letter. But as Myanmar opens up, everything is open to negotiation, and terms may be amended or suspended if necessary. Again, it depends largely on who you are and whom you know. There is no situation that cannot be resolved, but sometimes a foreign investor might need to lay down options on the negotiating table in case of a deadlock.
Most of the time, Myanmar officials are very cordial and pleasant to deal with. But if they think the other party is too demanding, unreasonable, or rude, they will close ranks and cut him off totally. If there is discord while discussing a project, or over an agreement, the best thing is to postpone the discussion for a while and make another appointment to go over it again. It is not advisable to repeat the same argument, no matter how right you are.
You must behave with tact when dealing with Myanmar people, who don’t like being talked down to or hurried up to complete things on time. Not “losing face” is very important, and they don’t like either confrontation or a verbal tug-of-war. Disagreements can be time-consuming to sort out, and foreigners may find themselves the losers if they have not scrutinized their contracts carefully and ensured that every detail is correct.
It’s important to spell out the dos and don’ts when you first hire staff. The best thing is to let them know from day one where they stand and what sort of disciplinary action will be taken if they break the rules in the office. If, despite the precautionary warnings, a conflict breaks out, the best course is not to show annoyance. There is a good chance the problem will be solved if you act in a calm manner, especially if the perpetrator is a local subordinate.
Most of the time, local office workers are very meek and mild and would never rock the boat. They also tend to respect the people working above them. But they won’t accept injustice. If a head-on clash occurs in the office or factory it’s advisable to settle it immediately before it snowballs into something bigger. If the person running the business treats subordinates with kindness and compassion it creates a pleasanter environment and the staff will reciprocate the feeling.
Since the new quasi-democratic government took over, bribes and kickbacks have reduced quite astonishingly. Corruption was rife after the first military coup. Bribery has not disappeared totally, though, so it is a good idea to have an intermediary, who knows how to handle things like this. Levels of bribery vary from ministry to ministry, and from department to department. An anticorruption law was issued recently, but “palm greasing” is an accepted practice in the business world.
Junior staff expect small amounts of cash as “tea money” for shifting papers from desk to desk. Mid-level officers in departments such as immigration, customs, transportation, and even schools, are known to accept gifts and medium-size packets of cash for normal things they have to do as government workers. Senior staff and top decision makers have been known to accept car keys or title deeds to apartments. One well-placed source says that officials nowadays don’t ask for anything; however, if it arrives as a gift on their desk they will never refuse it. Poe-soon, or “delivered alms,” is the term people use for the kind of bribe that some authorities accept as gifts.
You are strongly advised to test the waters before attempting to offer a bribe, since it is clear that what is acceptable today may be different from what was done in the past, and offering an inducement of any sort lays the bribe-giver open to prosecution.
There is no discrimination against women in business in Myanmar. However, men run the biggest companies and banks, with the exception of a successful supermarket chain. Some hospitals and medical centers with male professionals at the top may include a wife as a team member. There is a well-known computer company run by a woman, but only a few women are at the very top of the business world. Many head small to medium-sized businesses such as wholesale companies, jewelry shops, beauty parlors, tailoring services, and hardware or grocery stores. Women also run a few well-known restaurants.
Many educated Myanmar women become professors or lawyers. Men and women are treated equally in government offices and earn the same for the job. A handful of women have entered the new parliament as MPs, and a few have been given ministerial roles for the first time in fifty years. The highest post a woman can achieve in the armed forces is the rank of colonel, and the army has selected two female officers to sit among its 25 percent quota of unelected members in parliament.
There are a few foreign women doing business in Myanmar. They are treated with due respect by most officials. Visiting women dignitaries, ambassadors, or professors, tend to wear Myanmar outfits, a htamein, and a jacket made from Myanmar textiles, on special occasions, which is well received by the local people.