The Economics Of International Business Economics Essay

Myanmar was once known as Burma located in Southeast Asia Country. The state has been under military regulation for 49 old ages since 1962 to 2011. It situated between India, Thailand, and China. Even though state located its strategic location, but Myanmar still is the poorest states in Asia because with about a 3rd of its population estimated to be populating in poorness ( U.S State Department, 2012 ) .

In 1989, the governments Burmese officially changed the state name from Burma to Myanmar. But in 2010, the Myanmar state became the Republic of the Union of Myanmar. After Myanmar independency from Britain, the state became one of a member in many international organisations such as the United Nations ( UN ) , the Association of Southeast Asiatic Nations ( ASEAN ) and the World Trade Organization ( WTO ) ( U.S State Department, 2012 ) .

As a taking transnational nutrition Nestle Company, before get downing concern in Myanmar, there are five elements should understanding their:

a ) Political Economy

B ) Economy Systems

degree Celsius ) Legal System

vitamin D ) Culture

vitamin E ) Religion

Political Economy

Myanmar is a autonomous state and besides is a specialist state which had different political compared to other state. Myanmar is a spiritual state because bulk is Buddhism. However, the political system of Myanmar is different from other state.

The political system of Myanmar can be spliting into three phases in the timeline from independency to the current. Harmonizing to the timeline provided by BBC News Asia-Pacific ( 2012 ) , Myanmar was independency at 1948 from Britain. During that clip, the political of Myanmar is more toward to the democratic. Normally, they had general election on their state and the party who was wined in the general election will automatically pattern the authorities and the leader will go the premier curate of the state. However, the pattern of democratic political system did non last for a long clip. Harmonizing the timeline provided by BBC News Asia-Pacific ( 2012 ) , the democratic political system merely pattern until 1962. During twelvemonth 1962, Myanmar starts turn their political system from democratic to the military or dictatorship. The first individual who patterns the military political system is Gen Ne Win and he abolishes the federal system and organize the socialist or dictatorship state. He had officially launched “ The Burmese Way to Socialism ” in 1962, which is meant the nationalising the economic system, that is, resources owned by authorities and merely authorities have the power to regulate the state in Myanmar.

The socialism of the Myanmar had been continues for more than 48 old ages. During the socialism, Myanmar had become a autonomous and military state. The economic system of the Myanmar is worst and merely had limited scope for economic system to turn. The chief ground of Myanmar ‘s economic system became worst is Myanmar switched the political system from socialism to the rightist dictatorship. After the military return over the state, Myanmar is started slow down their economic system even turn the economic system back to last economic system subdivision with the slow grow. Myanmar decrease their trade with others state and started restrict the economic system activities in the state. Besides that, the authoritiess besides try to take over the economic system activities and command all the trade so that there is limited freedom for their citizen or concern. In add-on, harmonizing to the study from Asia Report NA°231 ( 2012 ) , Myanmar is related to the state that has similar political system and economic system system, such as China, Thailand, and Vietnam. Myanmar is strongly related to those states because they believed that work together with the states that have similar political system and economic system will obtain more benefits. For this ground, the man of affairs from these three states is really easy to get down their concern in Myanmar and will coerce less problem during the concern activity. However, non all of the concern activity can be done in their state. The chief ground is non because of the military or totalitarianism political system but is the faith. This is because the citizens in Myanmar, either ground forces or politician are really respect to the Buddhism. Therefore, there are some concern activity which is opposite the Buddhism ‘s regulation is non allowed to run in Myanmar. Furthermore, due to the strong faith religion, Myanmar trading with the others state decreased and more toward to self-economy system which is merely produce adequate goods for self state. Although Myanmar is rich in natural resources, but they did non utilize their natural resources for international trade in order to boost-up their economic system.

During these few old ages, Myanmar is started altering their political system because they believed the military or dictatorship does non supply benefits and human right for them. Besides that, the military political policy besides make Myanmar became the poorest state in the universe and unable to maintain up with the development of its vicinities state like Thailand and Vietnam that is now developing faster and going really rich. In order to develop the state from hapless to rich, Myanmar started regulates the democratic policy on twelvemonth 2010 ( BBC News Asia-Pacific, 2012 ) . Myanmar attempt to change over their authorities from military to the civilian authorities because they believed the citizen play an of import functions in the aid of develop their state. After the democratic policy is regulated, Myanmar rapidly organizes a general election in the state. Harmonizing to the BBC News Asia-Pacific ( 2012 ) , the Union and Development Party ( USDP ) won the election and the junta had said the election is the procedure of passage from military regulation to a civilian democracy. After the election, Aung San Suu Kyi who is taking portion for organizing the democracy authorities is been released from house apprehension after a long clip arrested by military authorities. The released of Aung San Suu Kyi can be determined as Myanmar start moved toward to human right state and can protect man of affairs when they are do their concern activity in the state and had more opportunities for international trade done at Myanmar.

The democracy political system is giving many benefits to Myanmar. The first of the benefits is the chair of ASEAN in 2014. Harmonizing to Nehru and Endowment ( 2012 ) , ASEAN sent a message to Myanmar, said Myanmar need to concentrate more on human rights and democracy in order to chair ASEAN in 2014. If Myanmar successful becomes a chair ASEAN, there will hold many benefits for them. The first benefit is they can make their trade with others ASEAN state easy and forming activities events at Myanmar and more people will cognize more about Myanmar. The 2nd benefit is ASEAN is a free agent for advertizement because after fall ining the ASEAN, Myanmar wills easy pull the possible investor to put their concern to its state.

Although Myanmar open more opportunities for other state for making concern in their state, there are still non plenty to turn out that Myanmar is a good topographic point for making the concern. This is because Myanmar still had the limited on making concern in their state and the policy for protect the investing and concern is still really weak and some is non truly utile. Myanmar still does non had a good policy for the concern subdivision and some regulations for the concern is really tight and do the concern less possible for development. Besides that, non all country of Myanmar is acceptable to the current authorities and immigrant ‘s citizen, some of the country still had the battle with the authorities so the safety of that country is negative. Furthermore, the costs of execution the mill in Myanmar is really high because need wage more ( payoff ) Da loong u mean payoff? to the federal authorities and local authorities. Besides the costs, the procedure for acquiring approved of making concern in Myanmar is taking long clip, so this will impact the net income and effectivity of the company.

Harmonizing to the Asia Report NA°231 ( 2012 ) , Myanmar ‘s political passage and economic Reconstruction is interrelated. Asia Report NA°231 ( 2012 ) besides mentioned that there is difficult for imagine a successful political passage unless the authorities guarantee the economic stableness and betterment of the development of the state and needed of the citizen. So, Myanmar is a really ambitious state if start a concern in the state although Myanmar had a rich on natural resources.

When Myanmar compared to the United States, both state had different political system at the beginning but similar in these few twelvemonth. Both of the state is democratic state whereas U.S. is stronger than Myanmar and more stable in the political state of affairs when comparison to Myanmar which is new to democratic. In economic system, United States is more effectiveness and better so Myanmar. This is because U.S. authorities had provided a batch of policy or art for the trade or concern activity such as Free Trade Agreement ( FTA ) , Asia Pacific Economic Cooperation ( APEC ) , North American Free Trade Agreement ( NAFTA ) , and others ( Feinberg, 2003 ) . For Myanmar, they merely have few Acts of the Apostless or policy to protect the trade and the concern activity, so it ‘s hazardous and dearly-won to put the mill or concern in Myanmar. However, there is a peculiar thing that the Myanmar had more advantages than United States, that ‘s Myanmar ‘s resources rich than U.S, so when implement the mill in Myanmar, the cost for the stuff will be cheaper and easy to acquire compared to United States. Therefore, there are had hazard when implement concern in Myanmar by the position of political economic system.

Economy Systems

Harmonizing to McEachern, there will hold three cardinal inquiries when come to economic system: 1 ) what goods and services are to be produced? 2 ) How are they to be produced? 3 ) For whom are they to be produced? Economy systems can explicate as the manner that one state used to reply this three cardinal inquiries. Every state in the universe will under at least one type of economic systems. For this ground, to spread out our concern to Myanmar we must foremost cognize what economic system system Myanmar under. The three footing types of economic systems that by and large recognize by the economic experts are market economic system, command economic system and assorted economic system ( Hill, 2012 ) . Now, allow ‘s discourse them one by one before we look at economic system system of Myanmar.

Traditional economic system system

In add-on, there was an old economic system known as traditional economic system system, society that under this system answers the three key inquiries harmonizing to their ascendants ‘ act, imposts, rites, beliefs and rites. ( Mxcastro, 2010 ) In short, they copy the ways that did by their old coevalss. Traditional economic system system was used in the past but now still will be in the states that are farm-based or rural. For an illustration, Native people of Brazil ‘s rain wood, the harvests they planted, manner to harvested, and the goods distributed to who were decided by their past coevals and remains unchanged ( Tucker, 2010 ) . Therefore, this system decreased the rate of differences among members but its restricted single enterprise, so will unable to bring forth advanced goods, new engineering and so decelerate down the economic growing. So so, spread out our concern to the state that under traditional economic system system is non recommended because a state ‘s pattern may differ greatly from a state.

Market Economy

Furthermore, market economic system is a system that allowed an person to do determination of economic. In market economic systems, interaction of the force of supply and demand determines the monetary values and the monetary values are used to reply the 3 cardinal inquiries. That is, what to bring forth is based on the popular tendency and profitable, the manufacturers will bring forth a merchandise more when the demand for a merchandise exceeds supply because the monetary value of a merchandise will lift and ensue in higher net income. The inquiry of how to bring forth is depend on the manufacturer ‘s picks, if the monetary value and demand for a merchandise is high, manufacturers may utilize machine to bring forth in order to salvage the labour cost because machine can bring forth more in lower costs. The inquiry of for whom they produce is based on the demand or wants of the purchasers and the monetary value the purchasers willing to accept. In add-on, under pure market economic systems, intercession of authorities is absent. A pure market economic system is besides referred to as pure capitalist economy because both of the systems are market replies the three cardinal inquiries. Furthermore, in pure market economic system, mean of production is owned by private, purchasers and Sellerss can do determination or picks every bit good as free trade for their trades. Besides, harmonizing to Adam Smith, a state ‘s resources can be use expeditiously and have better economic public presentation under market economic system because it ‘s provided inducement for each person to prosecute his or her self-interest, known as “ unseeable manus ” . However, pure economic system system has some defects such as people would endure if without resources, stronger manufacturers may extinguish the competition to monopolise the markets and people no inducement to bring forth public goods.

Command Economy

In bid economic system system, the three cardinal inquiries are non answered by market force but authorities or people with cardinal authorization. In more specific, production, distribution, monetary values and others determination is controlled and regulated by authorities. In add-on, province that under pure bid economic system owned all the concern, there is no private ownership. Besides, pure bid economic system emphasizes on corporate ends more than single ends, so sometime called communism or socialism. Furthermore, pure bid economic system besides has some defects such as resources do non utilize expeditiously or wasted, absent from cost control, unable to run into the demands or wants of consumer because these resources owned by province, so people have no inducement to make so.

Assorted Economy

In assorted economic system system, both market and authorities replies the three cardinal inquiries, so this system involved both capitalist economy and communism. Government regulated merely some of the markets in assorted economic system system and resources in this system are owned by private ownership and public ownership. In add-on, authorities usually take over the things is of import to state in this system such as provide national defence, birth cert recording, main road building. Most of the people in the universe will hold or accept these things to command by authorities. Besides, authorities may take over the private house that is neglecting if the private house considered of import to state ‘s economic, for illustration, house that have many employees, the authorities will take over the house in order to forestall the addition of unemployment rate. Thus, assorted economic system system provides the advantages of freedom without the demand of authorities to give up its power.

Myanmar Economy Systems

Since twelvemonth 1988, Myanmar has adopted the market-oriented economic ( Aung, neodymium ) with small authorities ordinances which has replaced the centrally planned economic system – bid economic system. So that, the three cardinal inquiries is replies by market force and each person can do the economic determination. After adopted the market economic system, the initial measure that Myanmar takes is advancing and develops the private sector. Now in Myanmar, private activity has approximately 75 % , chiefly in light industry and agribusiness and has approximately 25 % of activity controlled by province, chiefly in foreign trade, heavy industry and energy ( WebWhacker, neodymium ) . Since Myanmar has adopted the market economic system system which allows persons to do economic determinations, so expand our concern to Myanmar may be considered because as a transnational company, we has a batch of experiences of doing economic determinations in many different state. Furthermore, foreign direct investing is allowed after Myanmar adopts the market economic system system and the Union of Myanmar foreign investing jurisprudence allows foreigner to to the full owned company at there or can be joint venture with a state-owned endeavor, a private company or any Myanmar people, ( DPS, 2006 ) so that we can easy put up our concern at at that place. Furthermore, in order to be line with the market economic system, private persons or endeavors are permitted by Ministry of Commerce to implement import and export concern which was monopolized by the province in the yesteryear. ( Aung, neodymium ) For this ground, we can bring forth our goods at Myanmar with lower costs and export our goods to others state with higher monetary values. Besides, others ground to spread out concern to Myanmar such as sufficiency of labour force and low labour costs.

Economic Condition – Myanmar V United State

United State

A

Unit of measurement

Union of burma

A

Unit of measurement

GDP ( buying power para )

A

15290.00

A

Billion USD

A

83.74

A

Billion USD

A

A

A

A

A

A

A

A

A

GDP – existent growing rate

A

1.7

A

Percentage

A

5.5

A

Percentage

A

A

A

A

A

A

A

A

A

GDP – per capital ( PPP )

A

49,000

A

US dollar

A

1,300

A

US dollar

A

A

A

A

A

A

A

A

A

Labor Force

A

153.6

A

Million

A

32.53

A

Million

A

A

A

A

A

A

A

A

A

Unemployment rate

A

9

A

Percentage

A

5.5

A

Percentage

A

A

A

A

A

A

A

A

A

Exports

A

1497.00

A

Billion USD

A

8.21

A

Billion USD

A

A

A

A

A

A

A

A

A

Imports

A

2,236

A

Billion USD

A

5.98

A

Billion USD

A

A

A

A

A

A

A

A

A

Population

A

313.847465

A

Million

A

54.58465

A

Million

A

A

A

A

A

A

A

A

A

Inflation rate

A

1.7

A

Percentage

A

5.8

A

Percentage

A

A

A

A

A

A

A

A

A

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Legal System

In the yesteryear, Myanmar was reported holding the universe ‘s worst legal system for making concern. Harmonizing to The Economicss Time ( 2012 ) , a British hazard analysis group, Myanmar was offering the least legal protection for foreign companies. But during the recent reforms of Myanmar, new Torahs are enacted, and the legal patterns are altering quickly. Technical aid and preparation which include investing and finance jurisprudence reform, foreign exchange controls, and the simplification of trading are giving a manus for Myanmar to better the legal system.

The first legal act for aliens puting in Myanmar are two types of foreign investing defined: 1 ) a exclusive proprietary entirely owned by a foreign investor providing 100 % foreign capital, and 2 ) a joint venture in the signifier of either a partnership or limited company, in which the foreign capital invested must be a lower limit of 35 % of the entire equity capital ( Chandler & A ; Thong, 2012 ) . Foreigners who interested to put in Myanmar are required to put through a local incorporate company which stockholders and managers are controlled by them, non through the usage of local campaigners. The invested company will be blacklisted if the Foreign Investment Law is non accorded. Besides that, aliens are out to purchase land in Myanmar.

The 2nd are the relaxations of international countenances. Investing in Myanmar was restricted by countenances implemented by the United States, United Kingdom, European Union, Canada and Australia since twelvemonth 1997. CITATION? In 2012, the countenances are relaxed. CITATION? United States has authorizes the new investing in Myanmar, but subjected to certain demands and restrictions ; United Kingdom has suspend the limitations of some cardinal industries and assets freeze on about 500 people ; CITATION? European Union has lifted all the countenances except the weaponries and equipment trade stoppage ; Canada has allows import, export, investing and fiscal minutess to Myanmar ; and Australia has take the travel prohibitions on Myanmar citizens but weapon trading is still prohibited.

Furthermore, general Torahs of making concern in Myanmar. The general concern jurisprudence of Myanmar must be complied by the foreign investors and besides domestic investors. First is the Myanmar Companies Act ( 1914 ) . CITATION? A Myanmar investor who wants to construct a concern through a limited company may register under this act, but foreign stockholder and foreign manager is prohibited. Meanwhile, a foreign investor who wants to construct a concern in Myanmar through a locally incorporated limited company may register under the Myanmar Companies Act excessively, but the company must be incorporated under the Particular Companies Act ( 1950 ) CITATION? and be approved by the Foreign Investment Law. In add-on, Particular Companies Act ( 1950 ) is an act that governs all companies in equity portion capital. CITATION? Besides, the labour Torahs that bing in Myanmar which include: Employment and Training Act ( 1950 ) , Employment Restriction Act ( 1959 ) , Employment Statistics Act, ( 1948 ) , Factories Act ( 1951 ) , Labour Organization Law ( 2011 ) , Leave and Holidays Act ( 1951 ) , Minimum Wages Act, ( 1949 ) , Oilfields Labour and Welfare Act ( 1951 ) , Payment of Wages Act ( 1936 ) , Social Security Act, ( 1954 ) , Shops and Establishments Act ( 1951 ) , Workmen ‘s Compensation Act ( 1923 ) and the new enacted jurisprudence, Labor Dispute Settlement Law ( 2012 ) ( QuickMBA, 2010 ) .

*****Please make commendation and alter the sequence for those jurisprudence to avoid plagiarize. **** The Torahs above trade with all labour related jobs like working hours, vacations, one-year and ill foliages, rewards and overtime, societal public assistance and more. Citation? Furthermore, minimal rewards are provided for workers in certain Fieldss like agribusiness and more.

Comparing to the United States, this has a more stable legal system because Myanmar is more ambitious and hazardous to be invested in but besides provides a higher return than United States due to lesser competitions. Furthermore, Myanmar has seen to be a possible investing topographic point with its bettering legal system and few advantages like rich natural resources and immature labour forces. Last, United States could be a safe topographic point to put, but if as a net income searcher, Myanmar could be a better pick to put in.

Culture

Myanmar is a 100 cultural groups state ; each has their ain typical cultural traditions. Many of the tribal groups have produced the first-class handcrafts, dancing and musical public presentations. Myanmar civilization which is non-tribal ‘s has been significantly influenced by the Buddhism. The alone thing about Myanmar civilization is that it is free from racial or sex favoritism from childbearing throughout their life-time. Everyone is allowed to be rights, chance and intervention whether at work or at tribunal. Sing the Myanmar ‘s history, in traditional Western societies, adult females played a stronger function than adult male. From early on they could hold ain belongings and were independent in economic activities. Myanmar adult females enjoy the same position with their male opposite numbers and do non needfully hold to maintain their family names ( JourneyMart.com, 2001 ) .

For American, their civilization is Western civilization, which based on British civilization with influences from other parts of Europe, the Native American peoples. American Culture is known around the universe are the movies, shows, and musical public presentations. Furthermore, the most popular metropoliss in American civilization are New York City, Los Angeles, Chicago, Florida, and Las Vegas ( Frost, 2004 )

Food in Myanmar

Basically, Burmese nutrient is really appetizing such as blend of Chinese and Indian nutrients. The basic nutrient of Myanmar is chiefly rice and curry. Some of the curries are spicy and frequently served with salad, vegetable soup and fish paste cooked in assorted ways. Among the favourite nutrient is mohinga ( rice noodles with fish gravy ) which is eaten at any clip of the twenty-four hours. Another popular dish is ohn-no- khaukswe, which is a poulet curry based on coconut milk served with field poached rice or eggs noodles. Therefore, sweets that they normally eaten include sanwin-ma-kin ( Myanmar Sweet bars made of semolina, sugar, egg, butter and coconut ) , Myanmar-style banana bars, and kyaukchaw such as sea weed jelly ( JourneyMart.com, 2001 ) .

In Myanmar towns, Chinese eating house can be easy found at that place. They serve Cantonese and Hokkienese manner Chinese nutrient. Indian nutrient like kabobs and briyani are besides popular among the Myanmar. European nutrient is available merely at eating house in the hotels. Chettyar nutrient is besides popular among the Myanmar. For Myanmar state, meal normally integrated soups and curries are frequently finished off with fresh fruit such as sugar cane juice. Therefore, most eating houses will shut by 10pm although some tea and java stores will still open.

Language

Burmese or Myanmar is the chief linguistic communication in Myanmar. However, English is widely spoken. The largest of the population are utilizing this linguistic communication, so there are so many cultural groups in Myanmar, and it is hard to astonishing that the state has a figure of other linguistic communications and idioms. Each state has its ain idiom, the most common idiom in Myanmar are Kachin, Chin, Karen, and Shan idioms. The Karen is renowned for the usage of adult females have oning heavy brass spirals around their cervixs, get downing from the age of five. In fact, such ornamentation reveals them to be Padung, a sub-ethnic group of the Karen ( Defense Language Institute Foreign Language Center, 2008 ) . English besides one of the linguistic communications that normally used in urban countries.

Religion

Myanmar is a chiefly Buddhist state which the Buddhists stand for 80 per centum of the population. Citation? Today, the most common signifier of Buddhism in Myanmar is Theravada Buddhism. Besides that, excepting Buddhism ; there are other faiths that have followings in Myanmar such as Christians, Muslims, Hindus and some Animists, but this full four are minority faiths ( JourneyMart.com, 2001 ) . Theravada Buddhism is the more traditional of the two major divisions within this faith, such as it believes itself to be closer to the original instructions of the Buddha. Harmonizing to Woodward & A ; Hopfe ( 2009 ) , for Theravada Buddhism people must accomplish enlightenment for themselves without trust on the Gods. Religion plays an of import function in a typical Myanmar Buddhist ‘s life that his or her everyday can non be separated from Buddhist rites. There is besides a Buddhist Lent on Myanmar calendar which lasts for three months in the rainy season, from around July to October, during which fasting is preserved, matrimonies and traveling place is by and large set off.

However, in United States, the chief faith is Christianity. Naturally, a faith that encompasses so many people contains a great assortment of beliefs and pattern. Christians portion a common belief in the singularity of Jesus of Nazareth, that he in some manner provided for the salvation of world by his decease and was himself resurrected from dead ( Woodward & A ; Hopfe, 2009 ) . In Christianity, Roman Catholic is the largest denomination. When Myanmar compared to the United States, both state had different faith whereas Myanmar is more familiar in Buddhism, but United States their largest faith is Christianity.

Decision

In past decennaries, Myanmar was known as hapless state in Asia and many investors do non make bold to step-in and get down their concern because they predict their concern will non derive any net income, so they alternatively of choose neighborhood states like Thailand, Vietnam, and China to spread out the concern. With the late released of house apprehension Aung San Suu Kyi, the state human right re-born once more because Aung San Suu Kyi battle for human rights for the citizen, so this can give more chances to all foreign investor to make their concern in Myanmar easy.

As many investors instead choose vicinity states to spread out the concern, this proves that in Myanmar concern environment have really few rivals to vie each others to derive for the buying power from the consumer. So, with fewer rivals in market, we can easy rule the Myanmar market before other foreign investors does.

Therefore, Myanmar is an ideal state to spread out the concern because due to the state rich in natural resources, low costs, and fewer rivals. As the goods produce in Myanmar and export to others state, or even to our place state it will derive net income in the shortest clip. By comparing to United States, its require take tonss of clip to derive net income and cover back all the costs to bring forth the goods.

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