Spotlight on Myanmar: Advancing with Global Connectivity

Myanmar's economic development has been gaining pace since 2011 when the government adopted budgetary and tax reforms and implemented regulatory changes in the financial sector to liberalise trade and investment.

Bordering China, India, Bangladesh, Laos and Thailand, Myanmar is the largest country in mainland Southeast Asia with great untapped economic potential featuring fertile lands, significant opportunity for increased agricultural production, and a rich endowment of mineral wealth and natural gas.

A World Bank report estimated that the country’s economy is set to grow an average of 7.1 per cent per year in the next three years as inflation pressures recede and private and public investments rise. The implementation of the new Myanmar Investment Law (MIL 2016) provided additional economic fillip by opening up more sectors to private investment.

Nowhere was the impact of the reforms and the resulting investments more evident than in the ICT sector with significantly improved network availability and dramatically lowered prices of ICT services.

The first sign of improvement was the steady decline in the cost of a SIM card. The government’s target of 80 SIMs per 100 people over five years was achieved in three-and-a-half years after commencement of the reforms.

According to a nationwide sample survey conducted by LIRNE-asia, a regional ICT think tank, 83 percent of Myanmar households had mobile phones by July 2016 and mobile phone ownership in rural areas had doubled. More than 90 percent of villages were within coverage areas.

In an IDC report2 , the commercial segment captured an estimated 42.4% of IT spending share in 2016, led by the transport and communications sectors, including telecom and media. Other notable sectors with high IT spending include banking and financial services, manufacturing and trading.

The primary ICT spending drivers are hardware sales which is expected to hit US$256.41 million by 20192 (a 12.4 percent CAGR), and software services which is forecasted to reach US$15.07 million in the same period (24.1 percent CAGR). According to IDC, stronger growth in hardware spending continues in next few years as business end-users look to upgrade their corporate IT capabilities.

The IDC’s Myanmar Business End-user Survey 2015 has shown some key ICT adoption trends:

● Increase in sales efficiency & IT alignment are most prioritized

● Majority of end-users are spending less for CAPEX, as business customers are becoming more price-conscious

● Majority of end-users are also spending the least for OPEX, which means in-house development is likely to be more prevalent

● With low penetration, IDC sees potential in IT Maintenance & Support to develop in the ICT sector

According to a Market Snapshot from the British Chamber of Commerce, the fact that Myanmar’s modern economic development is starting in the digital age gives it the potential for “digital leapfrogging” for economic growth.

For example, many enterprises in Myanmar today - even the large conglomerates - are making use of basic ICT systems while small and medium enterprises are looking for cost-effective and easy-to-deploy ICT solutions. These scenarios present opportunities for digital leapfrogging.

To accelerate this growth, one of the strategies that the government is adopting is to make use of technologies like cloud computing and unified communications to drive development in different sectors such as logistics, financial services, education and healthcare.

According to a report1 by the United States Agency for International Development (USAID), key sectoral opportunities for ICT investments include:

Mobile Money
Myanmar has drafted regulations and license frameworks to allow mobile money and to accelerate economic growth. Mobile money establishes a platform for services beyond payments, including remittances, insurance, savings, and lending.

The Financial Institutions Law in January 2016 established mobile money operators as “non-bank financial institutions”. These operators are expected to make modest gains in the first years of mobile payment deployment but should expect profit margins as high as 20 percent in five years’ time.

Agriculture
Mobile apps could improve extension services in Myanmar‘s agricultural sector by disseminating information and assessments of pastures and crops, that could lead to higher yields, improve access to markets, and reduce exploitation by middlemen. The challenge for mobile technologies in rural Myanmar, however, is that installation of fibre networks in remote areas is expensive, and thus coverage is scarce.

Education
Remote schools, principals, teachers and parents will benefit from fibre optic and mobile technology which facilitates the use of basic ICT tools like email, chats, cloud storage, and even voice and video conferencing to share educational resources and extend centralised training programs for teachers.

Healthcare
The current Health Management Information System relies on recently distributed computers, fibre optic lines, and asymmetrical digital subscriber lines (ADSLs) located in main population areas. However, the medical ICT infrastructure is less established in rural areas and ICT equipment maintenance is hampered by limited availability.

Logistics and Transport
Myanmar has abundant extractive resources and agricultural goods for export, and its consumer demand for imports is growing. But the country’s logistics and transport facilities suffer from a dearth of sensors and data to drive ICT-enabled customs procedures, electronic transfer and storage of vital documents and accountability systems for its roads, rail and maritime resources.

Foreign businesses operating in Myanmar need global connectivity to participate in the data economy and to access ICT resources and cloud services which will enable them to operate more effectively and boost productivity. Singtel is building a gateway that will allow businesses operating in Myanmar to connect to the rest of the world, and for companies around the world to connect into the country.

The Singtel point of presence (PoP) enables partners and customers in Myanmar to plug into a network of more than 428 PoPs in 362 cities around the world, ensuring enhanced network availability, diversity and reliability for data connectivity.

Global connectivity will be a key driver for continued growth and as Myanmar gears up for the future, the availability of these connectivity options will deliver significant advantages to businesses looking to extend their reach and position themselves to seize new opportunities.

1 USAID-ICT Development For Innovation And Growth In Myanmar, June 2016

2 IDC Executive Summary Myanmar ICT Market Landscape Study, August 2016