Myanmar News Articles: Authorized Apple Sellers Must Compete With Black Market Counterparts

A family sits in front of a computer store in Rangoon in May, 2012. (Photo: Reuters)

RANGOON—New stores selling Apple computer products are hoping to tap into Rangoon's nascent consumer class, but these authorized distributers say they face competition from so-called black market competitors offering lower prices.

An authorized reseller of Apple's laptop and desktop computers, mDrive—part of conglomerate Make It Happen International—is set to launch on Sept. 28 at downtown's Junction Maw Tin shopping center.

Myat Htoo, president and CEO of Make It Happen International, told The Irrawaddy he is hopeful that the store will be a success.

"Actually, we expect people queuing in front of the shop," he said, adding that he was certain wealthier Burmese would take to Apple computers, whose popularity elsewhere has made US-based Apple Corp. the world's second most valuable company.

"I think there is a market for Apple [in Burma]."

Myat Htoo expects to open one more store in Rangoon soon, before expanding to Mandalay and Naypyidaw. He also hopes to get permission to sell Apple's tablets and smartphones in Burma in the near future.

But Apple computers are already available in Rangoon. They are sold in numerous stores without authorized reseller status, alongside products from most other world-renowned electronic brands, often at prices well below the prices in neighboring countries.

According to Myat Htoo, the only way these retailers are able to sell them at such prices is by "smuggling" them into Burma. Goods are brought in, undeclared at customs, from low-tax regimes like in Hong Kong, he said.

"There's no commercial tax that they pay, there is no import tax that they pay, and there is no VAT that they pay as well. So with these three taxes, if you miss it, if you can go around it, it will be very cheap," he said.

Authorized retailers like mDrive, however, have to pay all applicable taxes, which can amount to between 10 and 12 percent of the cost of the product and importing costs combined, he said.

Although he said prices in the store were not yet set, Myat Htoo said mDrive's prices would not be more than 1 or 2 percent higher than buying authorized Apple goods in Bangkok or Singapore, and said paying more for the products than at unauthorized dealers would be worthwhile for customers.

"I think people will find it more expensive, about $10 more expensive than what we call the black market. The problem is, if you go and buy from the black market, there's no warranty. They don't do warranty service for you, but we will do warranty service," he said.

Myat Htoo says his store will be the first authorized reseller, but One Futureworld Myanmar, a store based in Sakura Tower that bears the brand Futureworld—a regional Apple retailer—has been open since February.

The store sells laptops, desktop computers and iPod MP3 players and carries an "Authorized Reseller" Apple sign. Assistant store manager Cherry Aung said the store had been officially authorized by Apple last month.

"The middle class and high class are interested in Apple," she said.

She also said that the store had to charge higher prices that other shops in Rangoon, since they pay all relevant taxes on products brought into the country.

However, she said, "Most of the people want to buy at the authorized reseller because they want the warranty."

The cheapest model of the Macbook Pro laptop sells for US$1,749 at Futureworld, but Macbook Pros can be found for less than $1,300 elsewhere in Rangoon.

The man behind mDrive, Myat Htoo, said it was likely smuggling would mean cheaper Apple products will be available in Burma for another year or two. However, he said, the government, aware that it is losing out on tax revenue, had set up teams at customs checkpoints to tackle the problem.

"Now, [the authorities] have a new group to go and check. They are trying to fix the leak of the smuggling into Myanmar," he said.

"Let's say, in the past, if you carry 10 iPads into the country, the customs wouldn't say much to you. Now, these guys go to chase them at customs, so they start to tighten it up."