Myanmar is opening up for foreign investment in the recent year; this move has come after the government plans to boost the economic growth by permitting international firms to enter into the Myanmar market with their industry experience, techniques, skills and technology. Myanmar’s firms are actively partnering with international players in the industry combining the domain knowledge, technological edge, industrial exposure, & financial backing of the international organisations and the local expertise, human resource of the local company to enhance the business prospectives while financially profiting from the venture.
From a strategic perspective, both the local and foreign companies benefit from the joint business ventures in Myanmar as the goals for the two players align with the government’s frameworks to bring technology into the country to develop the nation’s infrastructure, enhance the competitive advantage for the companies operating in the nation.
What is a Joint Venture (JV)?
Joint Venture is a business entity formed by two or more organisations from different countries from the same or diverse industry to undertake a specific goal or task. The companies or businesses or individuals can form a joint venture by pooling their resources, expertise, and domain knowledge to develop a JV and work together as a single organisation towards achieving the objectives.
Usually, Joint Ventures (JV) are formed by a foreign company with a local company to enter into emerging markets for completing a project or operating in the foreign region with the local knowledge offered by the domestic partner. The JV offers unprecedented opportunities and advantages for the members in the business entity as each of the partners bring their assets, skills, and capabilities to the table making it easier for the business to succeed in their ventures.
A JV can be formed by corporations, businesses, partnerships, LLC and other business entities that are legally registered and have proper documentation. Regardless of the size of organisation JV can be formed between smaller companies and large corporations to undertake one or several large and small projects or perform research or complete deals.
Characteristics of a Joint Venture (JV)
The following parameters generally characterise a joint venture
- Shared ownership
- Joint board of directors
- Integrated operations
- Pooled resources and capabilities
- Shared returns and risks
- Shared governance
- Shared project goals
- Common pooling of intellectual property
Common Goals of a Joint Venture (JV) can be
- Achieving a dominant market share in the target region
- Teaming up to complete large and small projects
- Completing deals in the form of consulting, financing etc.
- Creating country-specific products & services
- Scaling up operations in the target country
- Deliver new services that are non-existent in the market
Why Start a Joint Venture in Myanmar?
Myanmar allows foreign companies to form JV with local partners for developing infrastructure and improving the lives of the people in the country. Establishing a Joint Venture is the best option for company formation in Myanmar because the state is so unique in its geography, culture and language that it is complicated for foreigners to understand and operate the business within a short time. By creating a JV with a local company or organisation in Myanmar, the foreign company can get insider knowledge about the business environment in the country.
Industries which you can form Joint Ventures
- Oil and Gas
- General manufacturing (i.e., mechanical parts, electronics, food products)
- Automobile manufacturing
- Engineering services
- Construction industry
- Energy sector
- Logistics and Shipping
- Information Technology
- Education & training
Advantages of Starting a Joint Venture in Myanmar
- Forming JV allows a foreign company to operate in a sector that does not allow 100 per cent foreign ownership in Myanmar
- Enable the business to cooperate with a local company with proper segregation of resources from your side
- Permits the business to work together on a joint-projects still maintaining the businesses apart from each other
- Gives you new insights and expertise
- Better resources and operational capabilities
- Both the parties share the risks and costs
- Joint Ventures are very flexible
- Easier to dissolve and exit the venture
- Increases the chances of business success in Myanmar
- Allows you to build relationships and networks
- Helps your business identify new opportunities in the market
- Scope for future mergers and acquisitions
- Breaks the competition barriers
Key Terms and Conditions in Negotiation Joint Venture Agreement
- The scope of the project and businesses of JV Company in Myanmar
- Roles and responsibilities of the foreign and local company
- Project goals of the JV
- Registration of JV
- Types of shares in the JV
- Number of Shareholders and their nationality
- Shareholding structure of the JV in Myanmar
- Investment capital and their payments
- Registered address of JV in Myanmar
- Location of the project and industry of operation of JV in the country
Requirements for Setting up a Joint Venture in Myanmar
The Directorate of Investment and Company Administration Myanmar is the governmental organisation that is responsible for forming the rules, regulations, compliances for allowing foreign investments into the country. DICA Myanmar permits international companies, organisations and businesses for operating in Myanmar through proper registration, legal documentation and procedures.
Currently, DICA has no restrictions regarding the formation of joint ventures with Myanmar businesses. There are no limitations on the share proportions for joint ventures between Myanmar Citizens and foreigners. According to the Myanmar Investment Law notification No.15/2017, the ratio must be 80% for the foreign and 20% for citizens. Section 20 of the Act states that the local partner or Myanmar citizen must invest a minimum of 20% of share equities in the form of Joint Venture Company.
Myanmar's current business environment favourable for foreign businesses, the best way to enter and succeed in Myanmar is by forming Joint Ventures with existing firms in the country. For detailed information on allowed share proportions for joint ventures contact us. Our experts in Myanmar can guide you through the procedures for forming a Joint Venture with Myanmar partners.