Due Diligence – reducing your risks


Many things in Myanmar are not what it seems. The followings are just some of the incidents that we have encountered working with our clients all of whom are foreign businessmen who don’t speak Burmese:

Selecting the right industry segment – our client wanted to supply industrial components that are essential to the renewable energy business in Myanmar – this is a business that one of the partner is doing in their home country. Our investigation shows that the market demand is mainly infrastructural in nature and the supply is dominated by 3 Myanmar companies that are controlled by 3 giant construction/engineering groups here in Myanmar via cross shareholdings. On top of that 99% of the products are made in China and there is no brand loyalty among professional buyers who are the decision makers in this kind of purchase. Our investigation convince our client to abandon this segment and to focus their resources on another industry segment where they have the technological know how as a foreign company and is able to differentiate themselves in Myanmar

Verifying that you are negotiating with the decision maker. Many a time we have been approached by clients to verify that the Burmese person that they are negotiating with is really the decision maker in their company or family. It is not unusual for a Burmese person Mr X to carry a name card that says that he is the Managing Director of ABC Co Ltd and when we dig further we find that there is no such company called ABC Co Ltd registered with the Myanmar Company Registrar. When we pressed further – Mr X says that ABC Co Ltd is just a trade name the actual name of the company is DEF Co Ltd and when we check – we find that Mr X is only a director in the company – his name is also not on the shareholder list.

Verifying the reputation of potential partners – our client is a listed company in Europe and we have helped them to shortlist several potential partners based on their selection criteria. Before deciding to appoint the shortlisted candidates as their dealers and possibly future JV partners, we were asked to check the reputation of the potential partners with the suppliers and customers and to ensure that they were not owned by people on the sanction list of major Western powers. We provided reports on the reputation as well as possible shareholding issues of the of the potential partners so that our client can make an informed decision.

Verifying ownership of rental property – our client wanted to rent a house for a period of 3 years and found a broker who showed them a piece of property that met their requirements. It was agreed that our client paid US$5,000 upfront so that the owner could renovate the place according to my client’s requirements, after which my client will pay US$18,000 for 1 year of rental in advance. The broker forwarded a standard lease agreement in Burmese for my client to sign that excludes all the conditions that our client requested and the broker claimed that the landlord had agreed to. The “landlord” that the broker introduced to our client who was supposed to sign the rental lease and collect all the upfront payments turned out to be not the real property owner after our investigation but a friend of the landlord. We managed to convince the broker to ask the real property owner to appear before our client in our office the next morning. We drew up the rental lease agreement with all the conditions requested by our client such as built-in agreed upon yearly rental increase plus penalty clause if the landlord terminate the lease early – so that our client can sign a legally binding 3 year rental agreement with the landlord. Our advice to our client was to not go ahead with the property rental if the “property owner” that turned up at our office is unable to produce the necessary legal documents in Burmese that we could verify showing that she is legally the owner and has the right to rent the property to our client.

Verifying the legal status of a piece of land. Our client is a developer and he came across this very enthusiastic land owner “Mr B” who showed him this strategically located piece of land along the the beach. We found that the piece of land was registered under another person’s name “Mr A”, this person had sold the land to the “Mr B” 12 years ago using just a simple transfer agreement that has no transaction price on it and did not register the sale with the local land record office in order to avoid paying stamp duty. So the current owner “Mr B” that our client was dealing with is not legally the owner of that piece of property as his name was not recorded at the local land record office even though he may have a simple transfer agreement with the previous owner “Mr A” and has bought the property for a fair consideration! Moreover no transaction price was stated on the transfer agreement and no stamp duty was paid on the transaction – which according to the law is required if the document is to be admissible in court as evidence. The transfer happened more than 12 years ago and we are not sure if “Mr A” is still alive, if alive is he still mentally sound or if “Mr A” is a crook and has sold the same property to 12 other person using the same ploy over the last 12 years? We advice our client not to rely on the simple transfer agreement as it is not admissible in a court of law and he is opening himself to a lot of unnecessary risk.

Verifying local company registration of JV partner – our client was entering a JV with a local Myanmar tycoon who offered to use one of his many subsidiaries to sign the JV agreement. A check on the company registration showed that the company had not submitted a financial statement with the Company Registrar in the last financial year and the object of the company was not suitable for the purpose of the business my client wanted to pursue. Moreover the ultimate owner of the company was not reflected in the shareholder or director list. We advised our client accordingly apprising him of all the risks and outlining what he could do to minimize his risks and this includes listing out what his local Myanmar partner must do to make sure that my client interest is protected and everything is legal – so that our client could make an informed decision on whether to go ahead with the JV with this very influential tycoon in Myanmar.

Take note that it is not unusual for many local conglomerates and foreign-owned companies to have complex shareholding in order to circumvent certain aspects of the law or existing US sanctions and to hide the identity of the ultimate owner. However, all these veils of secrecy can easily be penetrated by the authorities if they are adamant about it. It is therefore in your interest to know what your risks are and how to mitigate them especially:

  • if you are a US company with regards to working with people under US government sanctions (as of 7/10/2016 only Myanmar citizens or entities that are involved in Narcotics are left on the US SDN List, most economic and financial sanctions against Myanmar military and tycoons have been lifted. See US terminated remaining sanctions against Myanmar on 7 Oct 2016) or
  • if you are partnering a Myanmar person or company in a segment that is forbidden to foreigner
  • if you have a choice of entering a few industry segments and need help to ascertain which segment has the lowest barrier to entry and given your strengths will have the highest chance of success
  • If you are about to sink your hard earned money into a high-risk investment fund that provides you with an unaudited financial statement or prospectus about all the “high potential” businesses that they have invested in in Myanmar and you want a second opinion – we can provide you with on-the-ground fact finding and verifications.

There are risks in investing in any emerging market but one should go in knowing the full facts and taking intelligent risk rather than going in blindly and hoping for the best.

You can see a sample of our Client Report at page “Actual Sample of Client Report”.

To reduce your risks in Myanmar on your business dealings please fill up the form below:

If you are a developer and you want to check on the legal status of a piece of land please provide the followings: at least a Land Grant Certificate, Form 7, or the older Form 105 or 106 or the land grant certificate (give us as much documentation are you can that can conclusively show that you have clear title over the land in question, we only need a scan copy of the document) and a copy of the land owner's National Registration Card (NRC).



We respond to all forms received during office hours within 2 hours.