The Ministry of Commerce (MOC) has opened retail and wholesale trading to foreign-owned companies and joint ventures, creating new opportunities in a sector that was tightly restricted several years ago in Yangon.

Though a marginal decline of 0.22 per cent occurred in Q2 2018 - given the rise in stock, the citywide occupancy rates remain strong at 93 per cent.

Forecast at a glance:

• Demand: Colliers thinks that further liberalisation of restrictions for foreign trading should fuel demand in the succeeding years. 
• 11,200 sqm of retail net take-up recorded in first half of 2018.
• Foreign firms wishing to sell goods in Myanmar must have retail distribution area of at least 929 sqm.

Meanwhile, the net take-up rates continued to trail downward route, recording a total of more than 11,200 sqm (120,954 sq ft) recorded in the first half of 2018.

In the next two years, Colliers expects that net take-up rates will considerably ramp up given the sheer volume of upcoming supply.

Source: Colliers International Myanmar

Recently, MOC issued Notification 25/2018, which allows 100 per cent foreign ownership of businesses operating in the wholesale and retail sectors, privy to certain conditions

Previously, retail and distribution had been permitted in joint ventures, subject to Myanmar Investment Commission (MIC) and MOC approval.

In contrast, the 2018 Notification marks a welcome step in the liberalisation of the sector, following other recent developments designed to attract foreign capital into the country.

The 2018 Notification removes several unnecessary processes and structures undertaken by foreign-invested businesses in the past in importing and selling their goods in Myanmar.

This legislative action may prove significant in ramping up retail activities and encouraging a more conducive business environment going forward.

Related reading: Legislative developments to "propel" demand and competition

Since 2017, foreign investors had been able to operate limited types of trading businesses with MOC approval.

However, the 2018 Notification liberalises the sector further, permitting foreign entities and joint ventures to now conduct trading and distribution of all commodities (whether locally sourced or imported) without further approval, but subject to certain capital and registration requirements.

The foreign firm must have a retail distribution area of at least 929 sqm, a minimum capital requirement of USD3 million for retail ventures, and USD5 million for wholesale.

Overall, Colliers believes this liberalisation is an encouraging move from the government, which will drive demand for retail spaces with the expected rise of foreign and local joint venture businesses in the country.

Click here to view Colliers International Myanmar Quarterly Review Yangon Retail Q2 2018.

For more information or to discuss the report, phone or email Karlo Pobre Deputy Managing Director or The Htet Oo, Manager for Research and Advisory for Colliers International Myanmar via the contact details listed below. 

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