Asia

MYANMAR [BURMA] : SP
Introduction

TLIGHT

The recent political change in Myanmar has seen it turn a corner. The opening of the country and the relaxing of international sanctions have resulted in a flurry of excitement from potential investors. IDC called it an unpolished gem and promised high levels of growth within the IT industry this year. Several companies have already entered the market, including Coca-Cola, but many are wary and unsure about entering the market so soon. To test opinion on Myanmar, we interviewed 54 IT and business professionals, asking if they thought the countrys IT market had great potential.

Yes

No

Dont Know

66.7%
31.4%
1.9%

90%
10% Outside Myanmar 38%
2.3%

Inside Myanmar

59.1%

Do you think there is great potential for IT in Myanmar [Burma]? [source: IDG Connect] Country Breakdown: Inside/Outside Myanmar [Burma] source: IDG Connect

Findings
As Myanmar is barely a year into its newfound freedom, creating a wide-ranging sample from the country itself proved difficult. We did however, get a decent response from professionals further afield, many of whom have first-hand experience of the country. This provides valuable insight, and helps illustrate the situation. The general consensus is that Myanmar does indeed hold great potential within its IT sector, with a total of 66.7% agreeing with the statement. People within the country itself are overwhelmingly positive- 90% think their country holds potential for the future. When looking only at respondents outside of Myanmar, the levels of negativity rise, with 38% disagreeing with the statement. But overall the results point to a positive future for the country.

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Reasoning
When asked for their reasons, both sides agreed that the country offers what is essentially a clean slate; there is a lack of infrastructure, industry and skills. But it seems how this void is viewed affects the answer. The interviewees who feel positively about the opening up of the country think a workforce willing to learn, the ability to enter a competition-free market and growth in other sectors that will inevitably require IT presents a great opportunity. One interviewee explained, Burmese companies are just at the nascent stage of their development and most of them dont even have access to the World Wide Web. Think about how much IT it would need to just bring them so that they can compete at the world stage.

Most Burmese companies dont even have access to the World Wide Web. Think about how much is needed in IT so that they can compete at the world stage.

One response from within the country said, IT is very popular within Myanmar as a commodity. However, there is poor infrastructure and grounding in the basics to be able to understand and develop the new and novel applications Myanmar needs to address its problems. Much is needed in the areas of education, training and development of standards.

On the other hand, the negative responses cite skills shortages, poor infrastructure and a lack of industry as barriers for investment. Several respondents also commented how they didnt feel the country was ready yet because there was so little on the ground, but possibly would be in the future around 10 years from now. The government was the most dividing subject among interviewees. Some cited a fresh government and a wave of new legislation as a boon, however it seems some are distrustful of the government and reluctant to believe things will change. One interviewee explained, This is one of the most repressive regimes on the planet. Until democracy comes to Myanmar I plan on boycotting any business involved there.

Background
Despite Myanmars checkered past, in the last 12 months the country has turned a corner. The release of the pro-democracy party leader Aung San Suu Kyi after nearly 20 years of house arrest, free elections and the easing of international sanctions on the country have seen the nation take a U-turn.

As well as greater freedom and the hope of improving the lives of the people, companies around the world are seeing real potential for the country to become the next major emerging market. Companies such as Coca-Cola and ad agency WPP are already starting to build a presence, and executives are flying out on a regular basis to scope out the landscape.

IDC has called Myanmar an unpolished gem; virtually one of the last untapped ICT markets in the APAC region

15%

$268.45m
2013 2016

2011

2012

15% expected growth in Myanmars IT sector in 2012 reaching $268.45 million in 2016, [source: IDC]

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An Unpolished Gem
One of the big areas opening up is IT. IDC recently released a report into the countrys IT sector, calling its greenfield market an unpolished gem. Myanmar is virtually one of the last untapped ICT markets in the Asia/Pacific region with fast rising potential. For IT spend alone, IDC is expecting 15% year-on-year growth in 2012, and the market is expected to reach US$268.45 million by 2016. That represents a massive annual growth rate of 14% over five years. IDC predicts Yangon and Mandalay will be the two leading IT hubs for foreign market-entry and IT consumption, with telecoms, government, utility and energy, financial services, hospitality, and media sectors all major areas for growth. The government has taken steps towards the future, with both a long-term plan looking to 2030 set up in 2005 and a more near-term one that addresses the plans for the next few years. These kind of goals help focus initiatives and funds, and with so much change on the table coming all at once, focus will definitely be needed. The telecoms area may be the first to take the leap, with Myanmars Post & Telecommunications Department Director General, Khin Maung Thet, saying a new communications law is being studied to create four new telecommunications licenses in the country that are open to both local and foreign investors. Previously foreign investors were barred from holding a license.

Blind Spots, Stumbling Points and Dangers

550,000

mobile subcriptions

1%

mobile penetration
[source: World Bank]

Despite the buzz and talk of potential, Myanmar has been an information black spot for IT, and the information that is available is usually either outdated or comprised of sketchy estimates. World Bank data shows there were around 100,000 internet users as of 2009, a number which had stayed level for the previous few years, while broadband is virtually non-existent. Mobile subscriptions stand at around 550,000, which equates to a penetration figure of around 1%. Socialbaker, a site providing regular Facebook figures, doesnt have any Myanmar figures, although as the things open up this is bound to The government wants to triple change. According to StatCounter, mobile access to the internet has risen sharply from practically nothing at the start of the year to just under the size of the economy in the next five years, but things are 9%, with Android being the most popular user choice. For desktops, Windows is king, and web browser choice is split 50/50 between IE and moving so quickly that the Firefox. country risks overloading its Piracy levels in the area remain murky; neighbours such as Vietnam have software piracy levels around 80%, meaning some companies, such as Microsoft, are nervy about entering the market. Introducing an IP system, trademark registry and corresponding intellectual property law may help to alleviate fears, but that in itself could bring more problems. The government wants to triple the size of the economy in the next five years, and to facilitate that has been passing dozens of new bills. Things are moving so quickly that according to Reuters, the country risks overloading its rickety institutions.

rickety institutions.

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These rapid changes could lead to a host of problems. The fast rate at which new bills are being passed could lead to poorly thought and inadequate legislation, which would only put off investors and cause trouble for people and companies on the ground. The government recognises their lack of knowledge and expertise in many areas and have been recruiting help from neighbours such as Singapore and Japan, but other dangers remain. The country has a serious unemployment problem, and expanding too quickly into areas that require specialist skills will create a major skills shortage. Already vast amounts of people are unemployable for skilled work, many in general are unfamiliar with modern technology such as smartphones and desktop computers. Sustainable growth and education are essential to prevent future problems.

Expert Opinion
John Naing, Citrix Systems Systems Administrator

I grew up in Burma, and left around 17 years ago. I have lived and worked in the States since. My whole family are still back home, and I will soon be joining them. The current situation in the country is very promising, and so I want to go and give it a try. My two elder brothers work in real-estate and selling motor vehicles, and are both doing very well. They say things are looking bright and asked me if I wanted to come back and work with them and have a go, so I agreed. My field of work is IT. Currently I work as a Citrix systems admin; I do a lot work with application deployment and managing servers, as well as enterprise data centres. If my brothers want to do something in IT, I will go down that road, if I want to do something myself, they have said they will help me out. If we find a partner from overseas that wanted to come in and do something in IT, wed be open to engaging with them. Under current laws outside investors need a local partner- they cant come in by themselves. A lot of companies from Asia are coming into Burma and testing the water, but so far there is very little indication of major US or UK corporations making the move. So far only a handful of companies, such as Coca-Cola have started up, just to test. I think all of them are waiting for the new bill to come from the government. The new investment law, amongst other things, will remove the requirement for a local investor, should be out by the end of August, but there are no confirmed details yet. For IT in the country, there is actually nothing really solid, almost no companies that are doing IT as a main business. Although there are a few modern pop shops. I think its very open for any companies who start doing business in Burma.

Conclusion
By 2015 the government is hoping for 50% of the country to have wireless access. But with around 80% of the countrys 60 million people living in rural areas, many of them in poverty, there are several issues that first need to be addressed: Fixing the chronic lack of decent infrastructure, including the rolling power cuts; further relaxing internet censorship; and dealing general lack of familiarity with technology. These are thing that wont happen overnight. To fulfil its potential, Myanmar has to move at the right pace and think things through, not charge ahead blindly.

About IDG Connect

IDG Connect is the demand generation division of International Data Group (IDG), the worlds largest technology media company. Established in 2005, it utilises access to 35 million business decision makers details to unite technology marketers with relevant targets from any country in the world. Committed to engaging a disparate global IT audience with truly localised messaging, IDG Connect also publishes market specific thought leadership papers on behalf of its clients, and produces research for B2B marketers worldwide. For more information visit: http://www.idgconnect.com/