ZENITH ASIA COMPANY LIMITED

Summary

Zenith Asia provides professional services in Consultation, Government liaison, Administration and resource management with promoting client's products and services.

We provide and promote market expansion services of Product and services. We help companies who are looking for a reliable outsourcing partner to grow their businesses in new or existing markets.

Under the win win policy, Zenith Asia also acts as a distributor, or agent in some case, to shake hands with its worldwide business partners with a ‐view to better promotion in Myanmar (Burma). If you are having any problem or question on where to start your business in this country, please feel free to contact us for support.

We are looking forward to cooperate with the clients, companies, importers from every part of the world.

We can be your local partner or Service Provider for the Oil & Gas Projects, Mining Projects, Construction Projects, Manpower and Training Services, Marine Services (Logistics & Shipyard), Pharmaceutical, Cement Plant, Agriculture Business (Teak Wood, Rubber and Palm Oil) and Real Estate, Construction, Port & Terminal and other opportunities for your business requirement. It is our pleasure to serve you and honor to cooperate with you.

SERVIVES

Zenith Asia provides following services in Myanmar:Data Management and Consulting ServicesOil field coating products and pipeline field servicesMaterial Supply (Drill Pipe, Steel Pipe, Crushing Machines, Container & Trailer)Consultation and Government liaison for market entry into Myanmar Business Development for New Ventures and ProjectsExport and Import Trading

SALIENT POINTS OF THE REPUBLIC OF THE UNION OF MYANMAR FOREIGN INVESTMENT LAW

According to the Myanmar’s Foreign Investment in Myanmar can take one of the following three forms:

•Partnerships Limited Companies or wholly foreign-owned subsidiaries. A partnership firm or a Limited Company incorporated outside Myanmar can conduct business as a foreign branch by bringing in the total capital required by such a branch ( 100% Foreign owned)

•Production sharing contracts with one of the State-owned Economic Enterprises (SEEs) for Exploration, extraction and sale of petroleum and mining operations.

•Joint ventures, either as Partnerships or Limited Companies with any Myanmar partner individual, firm, cooperative ,or state-owned enterprise of Myanmar. (If the joint venture is formed , at least 35% of total equity shall be owned by the foreigner.)

HOW DIFFICULT IS DOING BUSINESS IN MYANMAR

The difficulty of doing business in Myanmar really depends on the sector you’re interested in. Foreign investors involved in the manufacturing sector say the hardest part about doing business in Myanmar is the poor infrastructure, especially electricity. It can be frustratingly difficult to manage an efficient factory with frequent power cuts and other infrastructure issues.

Entrepreneurs involved in other industries often cite cultural differences in work ethic as being a difficult part of doing business in Myanmar. Many foreign investors arrive with high expectations about the work output of their staff, but many find that there are competency issues, and it can be difficult to motivate people to excel.

Another difficult part about doing business in Myanmar, is dealing with bureaucracy and red tape. For businesses that need to get permits and approval from particular ministries, it can be frustrating to wait weeks or months in order to receive a permit that would take hours and other countries.

Other entrepreneurs cite the lack of rule of law in Myanmar as a major difficulty. In many different sectors in Myanmar the law can be very ambiguous, and even where there are laws, the practical application of those laws can vary widely.

But this isn’t to say that there are no positives in Myanmar. Many entrepreneurs who have been in the country for 10 years or more cite the camaraderie they’ve built with a core group of employees as a major factor for staying in the country. Foreign business owners are often delighted to find that Myanmar employees are very respectful in general and follow company protocols well.

Before making the decision to invest in the country it’s essential to spend some time on the ground looking at a particular sector. Some industries (for example oil and gas) are accustomed to dealing with foreign investors, so things tend to be standardized and relatively easy to understand. Other sectors are just starting to open up, and will require large reserves of patience from foreign investors. However, those willing to exercise this patience will find industries with low competition that could make for excellent investment opportunities.

IMPORT & EXPORT SECTORS

Many foreign manufactures interested in the Myanmar market are curious as to what Myanmar already imports.I’ve profiled a few of Myanmar’s important import sectors below:

Machinery

Due to the rapid pace of new construction projects and the continual changeover from manual to mechanized labor in agriculture, Myanmar has a huge need for light and heavy machinery.Government factories and private enterprises do not have the capital or expertise to manufacture quality machinery in Myanmar. Much of the machinery that is imported intoMyanmar comes from China, with secondary suppliers being Japan and Thailand. There is still a lot of construction work that needs to be done to upgrade Myanmar’s infrastructure, so Iexpect these machinery imports to remain high for the foreseeable future.

Oil and Fuel

Although Myanmar does have its own oil resources, production is not able to meet demand, and Myanmar is a net importer of oil and fuel. The Myanmar government has offered subsidieson gasoline for a long time, making it cheaper in Myanmar than in other Asian countries. As the government’s budget has recently been made public, many are starting to question thissubsidy, as obviously the treasury loses a lot of money with this system. The retail side of this market (i.e. petrol stations) has recently been opened up to private enterprises; however thereare still no international oil companies in this market.

Textiles

Any visitor to Myanmar will notice the abundance of brightly colored fabric worn by both women and men. Myanmar is one of the few remaining countries with a lively tailoring industry, and many people prefer to buy raw fabric and then have it tailored, rather than buying ready-made clothing. This has created a lot of demand for fabric which is only produced in Myanmar in small quantities. A large import market has opened up with China, India, and Thailand to fill this need. Fabric is usually imported in large rolls by traders who then sell these rolls to retail shops -which in turn sell the fabric by the yard to individual customers.

Consumer Products

An economy that cannot produce its own consumer goods will necessarily have to import them. Over the last decade, as incomes have been rising for middle-class and wealthy Myanmar, a large market has opened up for branded consumer products. Because of sanctions, not all international brands are available in Myanmar at the moment, but investors should understand that Myanmar people are just as brand conscious as consumers anywhere else in the world. Walking into pricier restaurants and cafés, you will certainly see young Myanmar with their iPods and brand-name jeans. Besides these branded goods, Myanmar also imports necessities like shampoo, beverages and light bulbs.

In general Myanmar remains an export-based economy. The government has a structure in place where trading companies need to export before they are allowed to import, which allows Myanmar to establish a positive trade deficit.Although other industries have the potential to become big export earners, currently the biggest foreign income earners are:

1. Natural gas2. Gems and Jewelry3. Beans and pulses4. Hardwood (especially teak)

You will notice that three of the four exports listed above are based on natural resource extraction. Ultimately, in order for Myanmar’s economy to grow, it needs to branch out of pure extraction based businesses and into services and manufacturing. But the transition into a more manufacturing-based economy has been so far limited by the lack of infrastructure. Because of its long term isolation, there are many domestic industries operating in Myanmar where one would expect to find international firms – for example in soft drinks and fashion.

Since 2010, the government has further privatized many industries that were formerly under State control, and has sold off many of the government’s assets. The privatization process continues today– with the telecoms industry seen by many as next on the chopping block.

NATURAL GAS

The biggest foreign income earner for the Myanmar economy is its natural gas exports. Natural gas is extracted offshore by international companies (Total, PTT, Daewoo, etc.) who are in joint venture agreements with the State run oil and gas company Myanmar Oil and Gas Enterprise (MOGE). Most of the extracted natural gas is exported to Thailand, which is reliant on Myanmar natural gas for 30% of its energy needs. The Chinese are also constructing a pipeline which will pump natural gas from the Bay of Bengal to China’s Yunnan province, and other exploration efforts are currently in progress in other offshore blocks.

Natural gas is also quickly becoming a political issue in Myanmar as many citizens have started to wonder why Myanmar doesn’t utilize its natural gas resources for domestic consumption – especially given its unreliable electricity supply.

Gems

Gems and jewelry is another huge export earner for Myanmar, particularly the jade sold to China. Myanmar has also long been world-famous for its rubies and sapphires which are primarily mined in the Mogok valley – which remains closed off to foreigners. There is so much illegal activity in this sector that it is almost impossible to calculate statistics accurately, but many believe this to be Myanmar’s second largest export earner behind natural gas. We expect that in the future this industry will see much more regulation, causing illegal black market trading to decrease. The current government realizes the potential tax revenue to be gained from a fully legal gems trade and has already taken steps to further legalize and consolidate the industry. One of these steps was the opening of biannual gem fairs in Naypyidaw which allow international traders to buy Myanmar gems legally at good prices. Like in most Myanmar industries, the majority of gems are sold are raw and uncut – they are cut and polished in other countries that have better technology. Gems cut in Myanmar are generally for the local market only.

Beans and Pulses

The beans and pulses sector has recently become big business in Myanmar. Currently Myanmar is the second largest exporter of beans and pulses in the world behind Canada. Over 70% of bean exports go to India, which has huge market demand that cannot be met by domestic production. The remainder of bean exports goes to Singapore, Pakistan and other countries. The beans and pulses market can be highly volatile, with market prices dependent on global production. Currently Myanmar faces competition from African nations who have seen their market share increase in recent years.

The beans and pulses market usually operates on futures contracts, where Myanmar traders agree to sell at a certain price on a fixed date. The supply chain for beans and pulses usually works like this: farmers cultivate 1-2 bean crops per year and sell them at farm gate prices to local traders. These traders collect the beans from individual farms and then sell them on to large wholesalers who store them in large warehouses. These large wholesalers are exporters who then negotiate contracts with foreign buyers and export the beans. Almost every major bean wholesaler in the country is based out of the Bayinnaung Wholesale Market in Yangon. Foreign investors looking to get into this market will find relatively few options, as currently all beans and pulses trading companies in Myanmar are locally owned.

Teak and Hardwood

Myanmar is one of the world’s largest exporters of wood, and Myanmar teak is world renowned for its quality. While most other countries in the region have gone to farming teak in plantations, Myanmar still exports ancient teak trees grown in the wild. Obviously there is a finite supply of this teak, which makes it very valuable on the world market. Teak is mostly used in the construction of outdoor furniture because it is very resistant to moisture and rotting. Historically teak has also been used in shipbuilding and it is still used for this purpose today – albeit in smaller quantities – for the decks of yachts and smaller boats.

Limited Liability Company

Limited liability companies can be either private or public in Myanmar. Private limited liability companies must have a minimum of two shareholders, and public limited liability companies must have a minimum of seven shareholders. There are currently no foreign public limited liability companies present in the country. Limited liability companies can be 100% foreign-invested. There are basically two types of companies in Myanmar: A company who has received approval from the Myanmar Investment Commission (often called an MIC company) or a standard company which is registered under the Myanmar Companies Act (often called an MCA company or a DICA company because it is registered with the Directorate of Investment and Company Administration.) The difference between these two types of companies is that MIC companies have higher minimum capital requirements and are usually large companies working on large projects. MIC companies are eligible to receive investment incentives under the foreign investment law, whereas MCA companies are not.

Registered Branch

Companies opening a registered branch in Myanmar do not need to obtain permission from MIC if registered under the MCA, so establishing a presence in Myanmar is less time consuming and difficult. Companies under this structure can also be registered as manufacturing or service companies. Foreign branches are taxed at a higher corporate tax rate than a normal company—35 percent in comparison to 25 percent per annum for companies incorporated under the CA or MFIL.

Representative Office

Representative offices are not allowed to perform direct commercial or revenue generating activities within Myanmar so are limited in their functions. Nevertheless, they are relatively easy to set up. The representative office is able to act as a liaison between its overseas head office and is able to perform market research on ground and establish a presence without profit-earning ventures through that specific representative office.

Joint venture

Joint ventures can be formed as partnerships or limited companies with a Myanmar individual, private company, cooperative society or state owned enterprise. There are two camps in the current government: those who want to encourage investment and open up the country, and those who want to protect local businesses against foreign dominance. The main driver of the former camp is the President’s office, while the main driver of the latter is the parliament. The risk for foreign investors is that the protectionist camp eventually wins out and foreign investors are put at a disadvantage.

Nationalization

This was a major concern in the past, and indeed foreign businesses have been nationalized in Myanmar before. Understanding that this is a key risk to foreign investors, the government has taken a few key steps to make sure that nationalization won’t happen again in the country. The first of these is that Article 36 of the Constitution guarantees that the government will not nationalize businesses in Myanmar. The second is that the text of the Foreign Investment Law also includes such language. The chance of a small business being nationalized in today’s investment climate is virtually zero, but it is always useful to think of this as a possibility if political winds change.Rule of Law

While there has been some improvement in this area recently, it must still lags behind its neighbors in terms of rule of law and law enforcement. Foreign investors should be aware that in case of a dispute in Myanmar, their rights are not guaranteed to be respected. A key step that the new government has taken in this area is to sign the New York convention, which means that international arbitration decisions must be upheld in Myanmar. Foreign investors in industries that may result in lawsuits or litigation should be careful.Over Zealousness

Since 2012 there has been a huge wave of investor interest in Myanmar and all sorts of shady characters have washed up. We are there is no doubt that the country holds a lot of potential, it can be a sobering experience to actually visit and see how far behind its neighbors Myanmar is. Investors looking at Myanmar should be optimistic but understand that there are still many infrastructure problems and other issues, and it is not a place to make quick money.Stepping on the Wrong Foot

Many foreign investors barge into the country and attempt to implement their agenda. In doing so they unwittingly step on the foot of the wrong person, which then makes life very difficult for them. Don’t do this. Make sure you know who you’re dealing with before you offend somebody and be cautious when dealing with government officials and others in positions