Second-tier South Korean law firms are eyeing Myanmar as an attractive destination to set up offices because of the growing opportunities for companies to form joint ventures and enter the country following the regulatory changes, five Seoul-based lawyers interviewed by mergermarket said.
“Myanmar is a hot place for businesses to find investment opportunities,” said Yi Seong-Hoon, a partner from South Korea-based Shin & Kim. He pointed out that smaller peers may consider direct market entry into Myanmar while large law firms are likely to opt for remote cooperation with local firms.
Jipyong Jisung disclosed this month that it established a bureau in Myanmar making it the first South Korean law firm to enter the country. The firm employs local Myanmar lawyers, accountants and consultants with Korean staff in the Southeast Asian country. Jipyong Jisung was ranked as the top six in terms of deal volume last year, according to mergermarket’s 2012 South Korea M&A League Tables.
This comes following the aftermath of the revised Foreign Investment Law that was enacted last November. The regulation aims to provide increased foreign investment opportunities to induce economic reform in Myanmar.
The improved relationship with the US government and the amended Foreign Investment Law have spurred active movements among foreign companies to aim for market entry in Myanmar, according to Jeong Cheol , a partner at Jipyong Jisung.
Consequently, increased joint venture investments, especially amongst the energy sector and power plant companies in Myanmar are expected and large Korean companies such as Daewoo International and POSCO are already in business there, he said.
There are still 42 industry sectors which require JVs when entering Myanmar, and that will offer more opportunities for legal firms, Jeong said.
Small and mid-sized law firms would aim to set up a presence in Myanmar or other regions in Southeast Asia because having local bureaus may give the impression that much better advisory service can be provided to Korean companies that are seeking market entry, lawyers said.
First tier law firms remain focused in Korea
This is in contrast to the fact that top tier South Korean law firms such as Kim & Chang are not as compelled to expand into Myanmar or Southeast Asia by setting up own regional offices at this juncture, said a partner at Kim & Chang.
“We can handle the deal case by case by collaborating with local partners,” said the lawyer at Kim & Chang. The focus still remains in Korea to satisfy the constant demands of their solid local networks and expertise from both foreign and domestic clients, he added.
Yi Joon- Ki, a partner from Bae Kim & Lee (BKL), one of the leading law firms in South Korea, supported these views saying that their priorities lay in finding superb law firms and experts in Myanmar and building a good network with them. Direct entry is an issue that needs to be considered more, Yi said.
A partner at Lee & Ko also pointed out that the increased competition in domestic corporate services amid international law firms’ expansion into Korea also has highlighted Southeast Asia such as Myanmar and Vietnam as niche growth areas for mid-sized Korean law firms.
Large law firms, however, feel relatively less threatened since international law firms’ entry into South Korea is expected to bring increased cross-border deals as counter partners for them, he added. The top three would not necessarily invest into the smaller regions for now. Partnership with local players could be possible in the medium term, he added.
The South Korean legal market was opened to American and European law firms after two free trade agreements between South Korea and the European Union and the United States in 2012. Since last year, international law firms such as Ropes & Gray, Sheppard Mullin, Clifford Chance and Paul Hastings have opened up offices in Seoul.
Power & resources under spotlight
When it comes to attracting foreign investment, the electric power sector is a priority for the Myanmar government because of the shortage, said Jeong at Jipyong Jisung. Aside from electric power, there will be increased joint venture activities primarily in the energy sector, power plant sector and the manufacturing sector, he added.
An industry banker also pointed out that Myanmar is noted for its natural resources and the location of its ports will likely become the major distribution centers. Manufacturing and exporting would be promising sectors in the future in addition to a growing demand for construction projects, he added.
Moreover, Myanmar’s low cost of labor is an attractive factor for foreign companies that have plants in other Asian countries such as Vietnam, China, and Indonesia, said the partner. Myanmar is surfacing as a new alternative to expand and set up plants for foreign companies, he added.
Kim & Chang, Lee & Ko, Bae Kim & Lee, Shin & Kim, Yulchon were named as the top five law firms, according to the 2012 South Korea M&A League Tables provided by this news service.