June - July 2013 - Association of Dutch Businessmen

Events
on the list, so I can take it off the list.” The interest of the
country goes before all.
Worst Myanmar experience: the number of power cuts.
We had a small office in a condo, which the owner said had
a generator. When a one-hour meeting got interrupted by
fifteen power cuts, I asked him about the generator. His
reply, “Yes, we do have a generator, but we do not switch
it on!”
Discussing the financial, political, regulatory
and tax landscape
After the panel member introductions, the different key
challenges to consider in Myanmar were discussed.
As the panel unanimously agreed, Myanmar offers
enormous possibilities, with all the signals pointing in the
right direction. Now is the time to start doing business
in Myanmar in order to gain an early mover advantage,
or at least stay on par with competitors. However, as
put forward by Mr van den Akker, “Everything still needs
to happen”. The infrastructure is lacking, with only one
main road, no mobile network coverage, and it is a real
cash economy where you have to pay with brand new
US dollars. Furthermore, the 2015 elections provide an
overarching uncertainty on Myanmar’s way forward. As
summarized by Mr van den Akker, “We will go in, but with
our eyes open”.
“As business people, it is very important to understand
the barriers and issues before going in, for example,
regulatory versus logistical,” mentioned Mr. Erazo. He is
very positive and believes change is irreversible due to the
access to and dissemination of information. A key concern,
however, is brand exposure. For Philips, its brand is a
major asset, which is especially sensitive in the healthcare
industry. So Philips needs to understand the exposure.
On the political side, his Excellency Mr. Boer
emphasizes the positive developments, like more freedom
of the press, which is actually overtaking the current
system. There is no government fabric yet. The only
institutional structure is the military. The West needs
to understand these dynamics, and that demobilizing
the army, for example, would not be the way to go. The
elections in 2015 will shape Myanmar’s future political
landscape. However, at this stage there is a lot of room for
real transition. From personal discussions with opposition
leader Aung San Suu Kyi, his Excellency has learned that a
strong sense of “Realpolitik” exists.
Concerning the regulatory landscape, Mr van der
Bruggen points out that even for restricted activities
you can own up to 80%, which is high compared to
countries like Vietnam and Thailand. However, the current
regulatory situation is not perfect, and will not be perfect
soon. Some laws and contract acts stem back as far as
1872, which often leads to interpretation difficulties. On
the other hand, the new laws have never been applied,
including the Foreign Investment Law, which means
nobody knows how they will be interpreted. But, as Mr
van der Bruggen shares about his clients, “About a year
ago our clients were very uncertain about Myanmar, not
sure about the risks and whether to enter. They now say,
they cannot consider not getting in there. They need to go,
almost at any price, right now.”
For tax regulations specifically, there are a lot of
problems and misunderstanding due to the enormous gap
between theory and practice. 80% of any deal is based on
your relationship with the government, 20% is having a
good lawyer.
(In)formal business etiquette, culture and
partner selection
Moving from the key challenges within the formal
landscape to the more social context, the panel discussed
the culture, style of negotiating and selection of potential
partners.
As experienced by His Excellency, you can have very
straightforward discussions with the people in Myanmar,
provided you are not complaining. Be prepared for the
conversation, as questions asked will get answered. Mr van
den Akker further highlights the huge sense of learning and
business savvy, both of government and business people.
An example is an issue for Cargill with the FIL, as trading
is not allowed. This would make it impossible for Cargill to
manage supply chains in Myanmar. The solution: don’t use
the word trading, just say buying and selling!
Regarding cooperation with local partners, Mr Erazo
stresses the effort required for the channel partner
selection. An important consideration is the kind of market
Myanmar is for your business. Is it an export market in the
long term or do you want to establish a local presence?
As partner due diligence is very expensive and time
consuming, Mr Erazo shares a key lesson learned by Philips
when selecting partners. Get your market insights locally
by installing local risk assessors on the ground. Also, the
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