KUALA LUMPUR (Oct 10): CNI Holdings Bhd has suspended its multi-level marketing (MLM) business activities in Myanmar after local authorities banned the use of such methods.
In a filing with Bursa Malaysia today, CNI said the Ministry of Commerce Myanmar had on Sept 18 issued a notification prohibiting the business of MLM in Myanmar.
As a result, its indirect subsidiary Creative Network International (Myanmar) Co Ltd has suspended its MLM business activities there to comply with the notification.
"Creative Network is actively seeking clarification from the Ministry to better understand their concerns and explore alternatives," it added.
CNI said its business in Myanmar is deemed to be immaterial to the group's turnover and profitability and therefore, it does not expect the suspension to have a material effect on its net assets, earnings, share capital, dividend and gearing for the financial year ending Dec 31, 2018.
According to Myanmar Times, action will be taken against all MLM businesses found to still be in operation after the date of the issued notification, under the Essential Supplies and Service Law.
The law states that those found to be in violation of the regulation could be punished with a minimum of six months up to a maximum of three years in jail. There will also be a fine not exceeding K500,000.
The move comes after the Food and Drug Administration (FDA) met with 41 MLM companies and conducted audits on the companies’ books in February.
CNI shares closed one sen or 6.67% lower to seven sen today, giving it a market capitalisation of RM49.89 million.