No July Welcome to a new edition of our weekly newsletter!

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1 No July Welcome to a new edition of our weekly newsletter! Again sent out a bit later than usual, this newsletter contains, amongst others, the second part of an article in the Myanmar Times written by us concerning restrictions on trading activities of foreigners; in this part, we look at ways around the trading restrictions. Myanma Electric Power Enterprise (MEPE) is looking for construction companies to build a gas pipeline in Thilawa; please find the bid notice in our newsletter and on our homepage. The project is financed by Japanese ODA. Myanma Posts and Telecommunications (MPT) has put out a tender notice for the provision of IP transit services (cross-border Myanmar/Thailand and Myanmar/China). Please find the announcement in our newsletter and on our homepage. Other noteworthy news: MPT, KDDI signed a joint operating agreement on 17 July ( British Chamber of Industry and Commerce opened in Myanmar ( YCDC to ban street vendors from September ( KBZ and CB to raise interest rates for saving and fixed deposits ( We are sure that you will find this newsletter informative and hope that you will enjoy reading it

2 The Fine Print The Fine Print is our weekly column in the Myanmar Times. This time, we take look at how foreigners are barred from trading - next week's edition will explain some alternative structures. All articles are archived on our homepage ( Ways around the trading ban By and Phyu Phyu Mar Monday, 14 July This article is part two of a two-part series begun last week, with How foreigners are barred from trading. It is well-known that foreigners cannot establish trading companies. There have, however, been schemes in the recent past whereby foreign investors successfully set up retail outlets in Myanmar. This window of opportunity is probably closed now, though. A foreign department store chain, for instance, established a joint venture with a local company in the beginning of The merchandise has to be imported by the local company as the joint venture company, having a foreign shareholder, cannot register as importer with the Ministry of Commerce. It is then sold, however, by the joint venture company. This works as it was apparently possible, at the time, to set up a foreign-invested services company and register retail services as its business scope. Nowadays, however, DICA would, in all likelihood, not allow such a business scope. It is possible to set up joint ventures to participate in the Myanmar retail market. Sojitz, for example, announced last year that it had set up a joint venture company in Singapore together with the City Mart group to purchase consumer goods in bulk in order to distribute them through the City Mart network. Retail is also possible through a franchising structure. The foreign partner (franchisor) and the local partner (franchisee) conclude a franchise agreement by which the franchisee pays a franchise fee to the franchisor; the franchisor allows the franchisee to use the franchisor s trademark; and the franchisor provides the franchisee with a business concept (e.g. design of the shops, assistance with sourcing goods at a low price, marketing services, training of employees, etc.). Franchising is still uncommon in Myanmar and not regulated. However, it is a legal business model and foreigners are not prohibited from entering into franchise agreements with locals. Internationally, franchise models are tried and tested models in the retail sector; for example convenience stores in Japan are often operated as a franchise. The idea of a franchise is appealing as there is a wealth of experience with franchise models internationally from which the parties can draw. The services provided by the franchisor usually justify a substantial remuneration, meaning that the franchisor is entitled to a substantial portion of the profits of the - 2 -

3 retail business. The local partner, in return, may, amongst others, acquire access to cheap financing (if the franchisor extends a loan at advantageous conditions), profit from low purchase prices when acquiring stock (as the franchisor is usually able to buy in bulk), profit from the franchisor s reputation with producers (if, for example, the franchisor is already their distributor in other countries) and use the franchisor s experience in setting up and managing a chain of retail stores. Foreign manufacturers cannot set up a distribution company in Myanmar in order to sell their goods if these goods are manufactured abroad. However, a manufacturer of machines could set up a services company in order to install the machines and provide customer support. The machines would have to be imported by a local importer or the customer. Foreign sellers wishing to support their local distributor so as to increase sales can provide marketing and management assistance. The authors can be contacted at sebastian@pwplegal.com and phyu@pwplegal.com. Tender invitation to build a gas pipeline in Thilawa (financed by Japanese ODA) BID NOTICE Date: July 17-23, Loan Agreement No: MY-P3 on June 7, Myanma Electric Power Enterprise (MEPE) of Ministry of Electric Power (MOEP) invites sealed Bid for Construction of Gas Pipeline in Thilawa Area under Infrastructure Development Project in Thilawa Area. It is intended that part of the proceeds of Japan International Cooperation Agency (JICA) loan will be applied to eligible payments under the Contract for Package 4: Gas Pipeline of Sub-project for Electric Power Development in Thilawa Area under Infrastructure Development Project in Thilawa Area (Phase 1) (MY-P3) 2. Bidding will be conducted through procedures in accordance with the applicable Guidelines for Procurement under Japanese ODA Loans, and is open to all Bidders from eligible source countries, as defined in the lone Agreement. 3. Completion of the Works as below: Eligible Bidder Minimum average annual construction turnover of 12 Million US$, calculated as total certified payments received for contracts in progress and/ or completed, within the last five (5) years. A minimum number of (3) similar contracts that have been satisfactorily and - 3 -

4 substantially completed as a prime contractor (single entity or JV member) within the last five (5) years prior to the Bid submission deadline. The Works - Procurement of Materials and Equipment of Gas Pipeline - Construction work of Gas Pipeline with HDD (Horizontal Directional Drilling) - Other services included Non Destructive Test (NDT), Cathodic Protection System and Nitrogen Purging 4. Interested eligible Bidders may obtain further information from and inspect the Bidding Documents at the office of Thermal Power Department for the technical matter and Material Planning Department for the bid procedure matter, Myanma Electric Power Enterprise, No. 27 Building, Nay Pyi Taw. Technical Matter - Contact Person: Chief Engineer of Thermal Power Department - Ph thilawagt@gmail.com Bid Procedure Matter - Contact Person: General Manager of Material Planning Department - Ph mepemp@moep.gov.mm 5. A complete set of Bidding Documents can be purchased by interested Bidders on the submission of a written application to the address above at office hour and upon payment of a non-refundable fee of two hundred fifty thousand Myanmar Kyats (Ks /-) during: - From 9:30 to 16:30 on July 21 (Mon) August 21 (Thu), (except for Government holiday) 6. The provisions in the Instructions to Bidders and in the General Conditions of Contract are the provisions of the Standard Bidding Documents under Japanese ODA Loans for the Procurement of Small Works. 7. Bids must be delivered to the above address on or before at 2:00 p.m on August 21, and must be accompanied by a security two hundred forty thousand US Dollars (240,000 US Dollar). The bid security shall be provided by any bank, which should be related to Myanma Foreign Trade Bank (MFTB). - Attention: Myanma Electric Power Enterprise (MEPE) 8. Bids will be opened in the presence of Bidders representatives who choose to attend at 2:00 p.m. on August 21, at No.1 Meeting Room of Myanma Electric - 4 -

5 Power Enterprise at ground floor. Myanma Alinn Daily, Jul 21 14, Mon Tender invitation to provide IP transit services (cross-border Myanmar/Thailand and Myanmar/China Invitation to Open Tender for IP Transit Services -II for Myanma Posts and Telecommunications. 1. Myanma Posts and Teleommunications(MPT), Ministry of Communications and Information Technology invite open tender for IP Transit Services that to be used for Internet Backbone and this services should be provided via the links those are described in the below table. MPT will pay in foreign currency for those services. Sr Link Capacity 1. Myanmar-Thailand Cross Border (Tachilake) 1x10 G 2. Myanmar-China Cross Border (Muse) 1x10 G 2. Bidder should submit the open tender (Technical and requirement Proposal) on August 15, during (09:30 to 16:30) at Overseas Communications Department, Head Office Building of Overseas Communications, Myanma Posts and Telecommunications, Near 8 mile junction, KaBaAye Pagoda Road, Yangon, Myanmar and MPT will deny the tender that is submitted over the assigned period as above. 3. Bidder should submit the price proposal when we call you the day of price bargaining. 4. Tender documents are available from (21.7.) at Overseas Communications Department,, Head Office Building of Overseas Communications, Myanma Posts and Telecommunications, Near 8 mile junction, KaBaAye Pagoda Road, Yangon, Myanmar and detail can be asked to telephone number , during office hours. Tender Evaluation & Selection Committee The New Light of Myanmar, 22 Jul 14, Tue - 5 -

6 New tender invitations We scan local publications for tender invitations. On our homepage ( you will find, amongst others, tender invitations for the following goods and projects: Myanma Posts and Telecommunications: Provision of IP transit services (crossborder Myanmar/Thailand and Myanmar/China) - see the bid notice above Road Transportation Department: Lease of 9.21 acres of land in Bago. The announcement invites tenders from local entrepreneurs. Foreigners wishing to bid have to inquire whether bids by joint ventures are accepted. Myanma Electric Power Enterprise: Construction of a gas pipeline in Thilawa funded by a Japanese ODA loan (see the bid notice above) Ministry of Livestock, Fisheries and Rural Development: Purchase of vehicles, motorbikes and water supply accessories Upcoming events Date Place Title Topic Speaker 26 September Bangkok Legal, tax and business aspects for investments in the Mekong Greater Sub-Region: Focusing on Myanmar Business contracts in Myanmar 3 November Singapore Anti-Corruption & Anti-Bribery Compliance Asia Masterclass Anti-corruption efforts in Myanmar - Corruption index: The story of a lie - The Anti-Bribery Law and the Anti-Bribery Commission - Where you find corruption in practice - How to do a due diligence of your business partner 10 November Tokyo Investing in Myanmar (seminar for Japanese companies; together with Miyake Law Firm) Topics still to be decided 11 November Osaka Investing in Myanmar (seminar Topics still to be decided - 6 -

7 Date Place Title Topic Speaker for Japanese companies; together with Miyake Law Firm) The power point presentations for some seminars held in the past are uploaded to our homepage ( - scroll down to about the last third of the page). Past newsletters Past newsletters are archived on our homepage ( Polastri Wint & Partners Legal & Tax Advisors No. 52, Yaw Min Gyi Street, Royal Yaw Min Gyi Condo, Unit 104, Dagon Township Yangon, Myanmar Phone: +95 (9) Internet: info@pwplegal.com To unsubscribe, please click on the unsubscribe button or send an to sebastian@pwplegal.com - 7 -