CONSUMER HABITS AND BUSINESS CUSTOMS IN MYANMAR
In many ways the Myanmar of today is little changed from the Burma that emerged after World War II. Some visitors say traveling to the country is like going back in history. You can still find wind up cars and trucks. Much of the farming is still done by hand and animals without machines. In villages television and even electricity can be a rare sight. Many people favor traditional clothes. But now that Myanmar is reforming finally things are changing—and they are changing very fast, in the words of the World Bank: at “warp speed.”
In Yangon according to the Washington Post: “electricity functions erratically and abandoned government offices and colonial-era edifices molder and blacken in a peculiar form of urban leprosy. Decades-old cars sputter along with wires poking out and monsoon waters sloshing around below the passenger seats.The junta sharply restricts car imports, which means that a 1988 Toyota Camry can sell for upwards of $20,000, according to local residents. A memory card needed to make a cellphone function costs anywhere from $2,000 to $3,000. [Source: Washington Post, August 16, 2008]
The currency of Myanmar was demonetized (declared unusable) several times making savings worthless overnight in most cases with little or no compensation. The reason for the practice was to strike at black market traders who withheld large amounts of currency outside the banking system. To this day people in Myanmar have little faith in the currency or banks and choose to keep their savings in gold, jewelry or real estate. At one time banks capped interest rates at 10 percent when inflation was running over 50 percent.
Myanmar still uses English accounting systems. Things can be slow. People follow rubber time. New consumer purchases are so prized that people show them off by leaving the brand name stickers on them. Household income or consumption by percentage share: lowest 10 percent: 2.8 percent; highest 10 percent: 32.4 percent (1998)
Cost of Living in Myanmar
Takashi Shiraishi wrote in the Yomiuri Shimbun, “Myanmar's per capita income is far below that of Laos and Cambodia in terms of market-based foreign exchange rates to the dollar. However, the quality of people's diets in Myanmar is no different from that in Cambodia, Laos and Vietnam as far as consumption of oils and fats, seafood, fruit, eggs and drinks are concerned. The only difference seems to be that people in Myanmar eat a little less meat than Cambodians, Laotians and Vietnamese. [Source: Takashi Shiraishi, Yomiuri Shimbun, February 10, 2008 +]
“Consumer spending by the upper 20 per cent of Myanmar's households is about four times the comparable amount spent by the lowest 20 per cent. Despite such a big disparity, there is almost no difference between the two groups in terms of the ratio of food expenses, thereby challenging Engel's Law, which states that as income rises, the proportion of income spent on food tends to go down. In other words, the income gap mostly translates into differences in the choice of foods and the fact that the rich are eating better. +
“These findings reflect the insufficient state of the country's infrastructure, such as electricity, tap water and housing. People are not buying TVs, refrigerators and other household electrical appliances because electricity is supplied to less than 20 per cent of the country's farming villages. In sum, everyone is eating every day even though they are poor, and the rich-poor divide has not resulted in major visible differences in lifestyles. Under such circumstances, a popular uprising may have difficulty catching fire.” +
Paul Theroux wrote in “The Great Railway Bazaar”:untry where no overt political talk is tolerated, it is a form of political discussion. "See this motorbike?" I was asked (it was a ten-year-old Triumph). "Guess how much?" I named a fair price. The Burman cleared his throat with pleasure, spat, and took me by the wrist. A month before he had paid 4500 kyats (approximately $935) for the battered machine. Then he lifted my wrist and said, "Omega"—a nice eye for watch brands: another Burmese characteristic—"how much?" I told him it wasn't for sale. [Source: Paul Theroux, The Atlantic, November 1, 1971]
Economic Daily Life in Myanmar
In August 2008, the Washington Post reported: “Today, the average household spends up to 70 percent of its budget on food. At tea shops or grocery stalls, people pull out bricks of local bills to pay for basics in an economy that the International Monetary Fund estimates suffered inflation of 40 percent in 2007. Fuel rationing and price controls have insulated the country from much of the recent shocks to the world economy. Nonetheless, black market prices for gasoline and diesel fuel have continued to spiral upward in recent months, residents say. [Source: Washington Post, August 16, 2008]
Analysts and Burmese residents say unemployment -- and underemployment -- is on the rise. Salaries that were already inadequate have failed to keep pace with inflation. To make up the shortfall, professionals such as government geologists double as taxi drivers, professors sell exam scores, civil servants demand bribes to process paperwork and prison guards run elaborate operations allowing the smuggling of money to inmates, in return for a 20 percent cut, local residents and former detainees said. Teachers sometimes sell lunch to their students. "Can you imagine asking your students for money? I couldn't do it," said a 26-year-old former elementary school teacher who switched to being a tour guide. So many people engage in corruption that the Berlin-based watchdog group Transparency International rated Burma in 2007 as tied with Somalia as the most corrupt country in the world.
For a long time purchased articles and food were placed in leaves, sometimes wrapped in string, rather than plastic bags or paper, in part because of a shortage of plastic. The effect on the environment was positive as people in Myanmar tend to litter a long and leaves quickly decompose while plastic does not.
Business and Employee Relationships in Myanmar
Friendship, trust and honesty are important in a business relationship in Myanmar as they are everywhere. Favours received, such as introducing a potential client or supplying a reference, must be repaid at a future time. When two Myanmar businessmen meet for the first time chances are that business may not be discussed in depth. Rather, the meeting may be spent evaluating each other’s personality and business strengths and weaknesses. In general it is easier for Asians to deal with Myanmar businesspeople than Westerners. [Source: Myanmar Travel Information ~]
Myanmar employees are hardworking a
nd loyal to their bosses. In return, a boss is expected to be a father figure and give help in times of need. Such help may be the giving advice to sort out personal problems or the granting of a loan in a financial crisis. As in all Asian cultures. Myanmar respect people who are older than them. To avoid friction in the workspace, make sure that a subordinate is not resentful of working under a younger supervisor. Negative communication is usually indirect. If it is necessary to discipline an employee, it is best to do it in private and with tact. Loss of “face” is a serious matter among Myanmar people. ~
Business Meetings, Introductions and Business Attire in Myanmar
Dirk Huds wrote in eHow: “When introduced to people in Myanmar it is considered polite to refer to them by their full title and full name. Myanmar names can be long, but should never be shortened in address. There are many different honorific titles in the Burmese language, but the most commonly used among business associates are “U” which is the equivalent of “Mr.,” and “Daw”, which can be interpreted as “Mrs”, “Ms” or “Madam”. [Source: Dirk Huds, eHow }-{]
“It is now commonplace for businessmen to greet each other with a handshake. It is, however, considered rude to offer one's hand to a woman. If a business woman offers you her hand first it is acceptable to shake it, but usually all contact will be avoided. A small bow would be the acceptable form of greeting. Business cards are used widely in Myanmar and should be exchanged upon greeting. Always use both hands to present and receive cards as this shows respect, as does taking a few seconds to read the card. Do not immediately place the card in your pocket as this is also considered disrespectful. }-{
“Attire should be conservative and formal. Myanmar has a hot, equatorial climate so lightweight suits for men are acceptable, if worn with a tie. Women should wear either a skirt suit or a blouse and skirt. Ensure that the skirt is of a conservative length (below the knee is preferable) and avoid bright colors. Most business people in Myanmar will dress similarly when dealing with foreigners, but some may still wear the traditional sarong-type garment with a western shirt or blouse. }-{
“There are certain aspects of body language which, while perhaps not usually an issue in business meetings, it is worth being aware of. Never point at any image of the Buddha, and do not use your feet to point at anyone or anything, this is considered an insult. Indeed, the people of Myanmar consider the upper part of the body more sacred than the lower part, so you should not mix up things that are used for different parts of the body, such as towels or water basins. Never touch anyone on the head or face; this is considered the height of rudeness.” }-{
Myanmar Military and Business
The military has a stake in nearly all the profitable enterprises in Myanmar. For Burmese to get a job they must a good friend or relative "with the rank of sergeant or above." Hundreds of state-owned companies and private firms are controlled by senior military generals. Cross-border business deals must be approved by the military. The generals often take bribes. They have been involved in border casino businesses.
To do business on a high level you need to make a deal with a general. On the lower level you have pay a 5 percent commission to a uniformed officer. A British firm advised businesses to "align yourself with individual members” of the military regime. A Burmese businessman told National Geographic, " Go day by day. What is true today could be false tomorrow. Do not look forward or back. Accept the risks. Accept the way things are or go crazy. Then you ca make big money." [Source: Joel Swerdlow, National Geographic, July 1995]
In the 1990s, the generals reduced red tape and made the licensing process easier for local and foreign businesses they favored. They were especially accommodating after sanctions were imposed. One son of a hotel owner told Newsweek, "If they like you, they'll give you so many facilities. If they don't like you, they'll send you to jail.”
See Corruption
Land Tenure and Property in Myanmar
According to Countries and Their Cultures: “In areas under Burmese rule, land traditionally was held on the basis of service to the court and could be leased or sold and passed on to one's heirs; it also could be taken away by the court. In more remote areas, land ownership tended to be related to continual cultivation and occupancy. Under the British, private ownership became widespread in the central areas and a system of land taxation was introduced in which failure to pay property taxes could result in the loss of land. Before World War II, in the southern delta area absentee ownership of productive land was widespread. In the central area, agricultural land tended to be in the hands of small-scale owner-producers. Shortly after independence, the government passed a land nationalization act that was intended to turn land owned by wealthy landlords over to those who worked the land. However, that act was not implemented. A second act passed in 1954 met with only partial success. [Source: Countries and Their Cultures
everyculture.com~*~]
“The revolutionary government that seized power in 1962 nationalized the larger commercial and manufacturing establishments, including those of Indian traders. This created a large black market economy as people attempted to circumvent government control of commerce. The revolutionary government attempted to remove the landlord class and turned all land over to peasant producers while retaining ultimate ownership for itself. In practice, agricultural tenancy was not eliminated, and producers had the added burden of state intervention. After 1988, the government allowed a greater role for the private sector and foreign investment. While these reforms have allowed greater private ownership, considerable insecurity remains among those who own property. ~*~
Commercial Activities and Local Markets in Myanmar
According to Countries and Their Cultures: “Since 1992, the military regimes have emphasized self-sufficiency and tried to limit imports. The largest companies and financial institutions are state-owned, with the private sector limited mainly to small-scale trading. In recent years, however, more imported goods, especially from China, have appeared in local markets and there has been growth in the private sector. The main cities and many smaller towns have one or more central markets that sell a wide variety of domestic and imported goods, including clothing and cloth, tobacco, food, baskets, jewelry, toiletries, and electronic goods. There are also specialized markets, such as the iron bazaar in Rangoon's Chinatown. [Source: Countries and Their Cultures
everyculture.com]
Describing a a local market in the 2000s, Steven Martin wrote in Time magazine, “Dawn brings a daily tremor of activity to the streets...and the market is its epicenter. Crowds poured in both directions through the market gates, and I followed Myo Aung in his wake as he pushed through the crush of shoppers haggling for merchandise. [Source: Steven Martin, Time magazine, 2002]
Describing a a local market in the 1920s, George Orwell wrote: “Vast pomelos hanging on strings like green moons, red bananas, baskets of heliotrope-colored prawns the size of lobsters, brittle dried fish tied in bundles, crimson chilis, ducks split open and cured like hams, green coconuts, the larvae of the rhinoceros beetle, sections of sugarcane, dahs, lacquered sandals, check silk longyis, aphrodisiacs in the form of large, soap-like pills ...” [B. D. Chapter 11, par. 10]
Stacks of Banknotes and Changing Money on the Black Market in Myanmar
Before recent exchange rate reforms, the black market value of the kyat could be as high as 160 times the official rate. The official rate in 2002 was about 6 kyats to the U.S. dollar while the black market rate was around 1000 kyat to the dollar. This system fueled inflation. In some cases the situation was so bad that bosses could not pay their employees and businesses could not pay their suppliers.
Reporting on how all this affected tourists, Brigette and Robert wrote in their blog Brigette and Robert on Tour: “Exchanging foreign currency is only possible on the black market and besides US$ (and increasingly the Euro) you cannot exchange any other currency in Myanmar. If you go to an official bank, you would currently receive ~450 Kyat (the local currency) per 1 US$. On the black market you receive around 820 Kyat per 1 US$. Big difference, huh? And withdrawing money directly in Myanmar is also not possible. There are no ATM machines and credit cards are unheard of. [Source: Brigette and Robert on Tour, Blog }={]
“The so called “Money Dealers” on the black market only accept certain serial numbers of US$ notes. They are extremely picky! The notes have to be crisp and brand-new – no breaks or folds. Conforming to all of these requirements was a bit challenging… back in Bangkok, we had to find several bank branches, which were able to give us new dollar bills with the correct serial numbers. It was definitely not easy! Once we arrived in Yangon, it took us several hours to find our “right secrecy traders” – we needed honest guys, as the dealers we met on the street corners were simply not trustworthy. They have their special tactics and all of them had one goal: to rip us off!! It was crazy and we could write one full blog about their cheating techniques, but there are more important things to discuss here.” }={
“Well, finally we found some shops and we started our money deals. Still, we felt like members of the Mafia!!! We changed smaller amounts of US$ in several different street-side shops. Once we entered the store, we were brought into a shady corner. They offered us three chairs – one for money stacks, one for Robert to sit and count, one for Brigitte to sit and count. (This scene must have been hilarious if we would have it on tape, but obviously this was not possible). The “corner”, in which we sat, was not a real hidden corner. It was still damn visible from pedestrians walking by, because all of these street shops (usually selling water, snacks or magazines) are tiny. By the time we sat down, around 4 to 6 men surrounded us. We negotiated, bargained and finally agreed on the rate. Then the counting and dealing began: Robert on one seat counting the Kyats (hundreds of 1,000 kyat notes for a couple hundred US$), Brigitte on the other seat piling 10,000 kyat stacks, separating them with a rubber band. The shop owner – alias “The Godfather” – sat only a few meters away from us. He constantly pulled out tons of money stacks from black plastic bags and handed them over to us. Of course, the entire gang (all of them were Indo-Myanmari guys) didn’t stop staring at us. They closely watched all our movements or actually, they stared. It was so annoying that we felt like punching them in the face, but after the dealing was over, they grinned over both ears and probably thought: “Ahhh, these meticulous German dudes!” We didn’t care anymore. This was actually fun and we left their “secret corner” with black plastic bags of money in our hands! Gosh, this was surreal almost… and for sure unforgettable! }={
Banking on Gold in Myanmar's Dodgy Economy
Rob Bryan of AFP wrote: “Housewives huddle over jewellery counters in Yangon's bustling Chinatown, but fashion is not foremost on their minds. This is banking in Myanmar's dysfunctional economy. On nearby Shwe Bontha Street, the heart of the gold market since colonial times, Nyan Tun is more than just a trader: he is an unofficial banker in the military-ruled country. "Normally, the major buyers are farmers. They will buy gold with a little bit of extra money to sell before the next harvest," he said. "Second are the housewives, who love to buy jewellery as savings." [Source: Rob Bryan, AFP, September 28, 2010 ]:[]
“Between 2005 and 2009 the annual inflation rate in Myanmar, formerly known as Burma, averaged 20 percent, according to the Asian Development Bank. "If you want to catch up with inflation, you buy gold. If you save money in the bank you lose money," said Nyan Tun. "People have much more trust in gold as a store of value," added the trader. Nyan Tun said the value of a gold "tical" -- about half a troy ounce -- had increased more than 30-fold in the local currency, the kyat, since his early days as a gold trader in the late 1980s. ]:[
“For the average Myanmar citizen, there is still no economic stability, or decent alternative to their trustworthy treasure. "Gold has been the ultimate reserve asset, the ultimate insurance against bad government policy. It goes back to the colonial era -- it's seen as being dependable and independent of the state," Sean Turnell, a specialist in Myanmar's economy at Macquarie University in Sydney, told AFP. ]:[
“With the precious metal playing such a key role, the regime keeps a close eye on its trade. Nyan Tun said plain-clothed special branch police lurk on Shwe Bontha Street and pressure traders to stop selling when prices go up. "Maybe the government thinks inflation is due to the price of gold, but actually it's the other way round," he said. "The gold price is the index of inflation to citizens," agreed a business editor in Yangon who did not want to be named. "People don't know how else to judge inflation. The government gives no explanation." ]:[
“Myanmar's banking system has never really recovered from a major crisis in 2003, which saw three banks completely collapse and was exacerbated by the policies of the Central Bank, such as recalling loans from borrowers. People have also been hit hard in the past when the authorities scrapped certain currency units as legal tender. A mass uprising against the military in 1988, which was brutally crushed, escalated from protests over a major episode of demonetisation by the regime. "That wiped out the savings of a huge amount of people," said Turnell. "I have never come across a single Burmese person who saves money in the banks."For now gold remains the safest haven in Myanmar -- the reason why a fishmonger will wear her savings around her neck. "Gold: this is the only thing people trust," said the business editor. ]:[
Myanmar Goes Plastic with First Debit Cards
In September 2012, Reuters reported: “Myanmar launched its first debit cards, giving customers the chance to use plastic for shopping, dining and travel for the first time in the latest leap forward for its cash-dominated economy. The central bank announced the formation of the Myanmar Payment Union (MPU), in cooperation with 17 banks, which will let customers take out cash from any ATM machine nationwide and make payments in a small number of shops, restaurants and offices. "Now we still have a cash society, but we're heading towards a cashless one," Ye Min Oo, secretary of the MPU, said at the launch in the commercial capital, Yangon. [Source: Reuters, September 14, 2012 \\\]
“Debit and credit cards have been available for years in most neighboring countries but the arrival of plastic in Myanmar is a significant step for an economy lumbered with an antiquated banking system after decades of Western sanctions and disastrous fiscal policies under a military regime. Even ATM machines were virtually unheard of in Myanmar in 2011, ago, when cash had to be used for almost every transaction. ATM cards were launched in 2012, but holders were only able to use the machines of their own bank. \\\
“Use of the new debit cards will be restricted at first to 14 places in Yangon, including shopping malls, airline offices, computer shops, one hotel and two restaurants. Withdrawals from ATM machines will be limited to 1 million kyat ($1,152) per day, the central bank said. Plans are in place to offer credit cards in coming months after MasterCard Inc reached an agreement with Co-Operative Bank Limited, which has 24 ATMs, to issue the country's first branded cards. Foreign banks are still not allowed to offer banking services in Myanmar. A growing number have opened representative offices. \\\
Consumerism and Making Money Come to Myanmar
In March 2013, Aidan Jones of AFP wrote: “From toothpaste to tinned fruit, cosmetics to Coca-Cola, global firms have Myanmar firmly in their sights as the nation's 60 million people find themselves thrust onto the frontline of consumerism. Since the rollback of sanctions on the brutal former junta, big brands have swept into Myanmar determined to have a share of an anticipated boom and transform the nation's impoverished people into brand-savvy global consumers. [Source: Aidan Jones, AFP, March 14, 2013 <<]
“It is a mutual attraction, with many locals — rich and poor — hankering after the cache and quality of foreign goods, or simply tired of the limited range of local products on sale during the junta-era. "I'm facing a problem that No.7 foundation powder — the best powder I've ever used — is running out and I can't find it anywhere in Yangon," lamented 24-year-old Win Lai Phyu at one of the city's lacklustre shopping malls. Instead the office worker said she relies on friends to deliver the make-up from Bangkok. But in her frustration lies opportunity for brands looking to connect with Myanmar's people — whose disposable incomes are predicted to surge as investment pours in and the reformist government shakes-up the economy. <<
"There's a euphoria on both sides about the opening up," said Freddy Oh, of local firm Foodland Manufacturing, which recently started selling MacCoffee — a Singapore-based brand — on a licence. "The younger set are craving interaction with the outside world. That gives brands a chance to build awareness and market share," said Oh, adding that MacCoffee's 3-in-1 sachets have entered an instant coffee market worth $200 million a year. <<
“Neon-lit billboards now jockey for position above Yangon's bedraggled streets and more are likely to follow as the tastes of Myanmar's people diversify. Soft drinks giants Coca-Cola and Pepsi have already brought their rivalry to Myanmar, officially returning to the nation in-step with the end of sanctions. Mobile phone firms are eyeing entry once the government frees-up licences to the Asian country where an estimated 96 percent of the population do not have handsets.” <<
Trying to Make Money from Myanmar Consumers
Aidan Jones of AFP wrote: “Analysts say other consumer electronics, such as tablet computers and flat screen televisions, will soon be in hot demand among those who can afford them, although many are already imported from China. But the fortunes of cheap, everyday "convenience" items are equally instructive about a market on the move. Del Monte is introducing its canned pineapples, pasta sauces and catsup (ketchup). Toiletries company Lamoiyan is hunting for a partner to distribute "Hapee" toothpaste, while a fellow Filipino firm is offering skin whitening products. "The demand for all kinds of consumer goods is there," said David Webb, of UK Trade & Investment. "Myanmar's manufacturing industry has pretty much been wiped out by sanctions. Foreign companies have money and access to expertise, markets and knowledge of supply chains... it gives them an advantage." [Source: Aidan Jones, AFP, March 14, 2013 <<]
"Wealth doesn't spread to everyone but there is a lot of money... certainly in Yangon," said Damien Duhamel, of Singapore-based marketing consultancy Solidiance. Some firms are seeking to reap the benefits of early entry to an untouched market, such as making a quick impression on consumers in a bid to win longer term market share. But rushing in is laden with risk, according to Duhamel who says many companies who ploughed first into China and Vietnam had their fingers burnt by local conditions. <<
"A lot of cowboys will come to town hoping for a quick buck and 'pioneer advantage'," Duhamel said, adding regional firms from Taiwan, Hong Kong, Singapore and Thailand are likely to lead a risk-taking vanguard. "But that fades quickly and the MNCs (multinational corporations) will enter in a second or third wave once consumers have been educated. They won't take part in a feeding frenzy, but will look to steadily build market share." <<
“The risks are myriad: Myanmar's banks are in their infancy, infrastructure is threadbare and the population -- while English-speaking and willing -- lacks skills, such as basic computer literacy, to staff some operations. Meanwhile, foreign investors in many cases need a local partner in a country where detailed market information is non-existent and the legal system opaque. Despite the obstacles, Oh is adamant that Myanmar presents a unique opportunity in a crowded and competitive world -- provided companies have a long-term view. "Nobody has a crystal ball but people always need to eat, drink and brush their teeth," he said. <<
Image Sources:
Text Sources: New York Times, Washington Post, Los Angeles Times, Times of London, Lonely Planet Guides, The Irrawaddy, Myanmar Travel Information Compton’s Encyclopedia, The Guardian, National Geographic, Smithsonian magazine, The New Yorker, Time, Newsweek, Reuters, AP, AFP, Wall Street Journal, The Atlantic Monthly, The Economist, Global Viewpoint (Christian Science Monitor), Foreign Policy, burmalibrary.org, burmanet.org, Wikipedia, BBC, CNN, NBC News, Fox News and various books and other publications.
© 2008 Jeffrey Hays~Last updated May 2014
Ref:http://factsanddetails.com/southeast-asia/Myanmar/sub5_5g/entry-3125.html
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