Entry into a Foreign Market

1. Determine which institutional and risk factors Cameron must consider and whether they support entry or not.

For a company such as Cameron International Corporation to enter Myanmar’s oil and gas industry to provide flow equipment and pressure control for land and sea oil rigs, it must understand the institutional environment. Institutional environment include political institutions; economic; and socio-cultural institutions. Politically, Myanmar is at a critical juncture. Newly elected President Thein Sein will attempt to transform his country ruled by a junta for decades to a functioning democratic state. Since assuming power, He restored multiparty politics. He is determined to achieve a ceasefire to the ethnic conflicts that have destroyed the country for decades. His cabinet is trying to design a strategic framework to replace the military dominated and long mismanaged economy. However, imperfect, Thein Sein’s administration represents Myanmar’s best chance. These changes represent a positive change for foreign companies wanting to invest in Myanmar. It is not easy for companies to succeed in an environment not familiar. There are many differences in formal and informal institutions and the way they govern the rules of an industry. Cameron needs to understand that, although risky, the partial lifting of sanctions against Myanmar (formerly Burma), makes investing a risk positive for sectors such as oil and gas. Myanmar's oil and gas sector has come a long way from being given to the children of powerful junta officials to now auction by the state through an open bidding process. The government has the right to allow foreign investment through joint ventures, via production sharing contracts with state-owned Myanmar Oil and Gas Enterprise (MOGE). There is no doubt that political risks are a major concern when is time to transfer product onshore. Locals with ties to the old regime control many of the ports, and an ongoing struggle for control of the ports is likely to see non-transparency in ownership structure. This will make it difficult to identify counterparties. Tariff increases on transport through the different territories is likely as the states look for more gain as foreign investment rises. Myanmar new session of parliament is voting in the most profound change in the country’s history. Opening up of the country to foreign business and investment through a series of legislative reforms where two pieces of legislation are on debate, the first is a new foreign investment law. The new foreign investment law will be critical. It will set out parameters for foreigners to buy land, and invest in banks and telecommunications companies. The second is a foreign exchange law. Representatives of the International Monetary Fund, the World Bank and the Asian Development Bank have been in Myanmar to advice on financial sector reforms, with the purpose of helping the government to unify the country’s