32 Business Views

THE MYANMAR TIMES October 27 - November 2, 2014

OPINION

Unleashing entrepreneurships potential

Henrich Dahm
henrich.dahm@gmail.com
THE economy requires structural
change and technological catch-up for
growth to be inclusive in Myanmar.
Economic policy and development partners need to promote entrepreneurship
in order to unleash the potential of a
growing private sector. Whats more,
the stranglehold of the current political elites must be eased and economic
policy must benefit all.
In the past, economic policy has
been used to reinforce the dominance
of the predatory elite and weaken the
entrepreneurial groups that could
threaten the status quo if they became
too affluent.While some people argue
that working with the crony companies
is the only way to quickly develop the
economy, others insist that it does the
opposite. But another option is often
overlooked unleashing the potential
of entrepreneurship to build up a new
class of businesspeople, which can have
a multiplier effect on the economy.
There is substantial unrealised potential within Myanmars private sector that just needs a more favourable
environment and targeted support to
flourish. Decades of restrained energy,
talent and aspirations are just now being released. People around the country
are eager to seize the moment to create
a future for themselves and their families by starting a new business.
Current activities encouraging entrepreneurship and start-up activities
are successfully focusing on organising
events, doing trainings and basically investing in catalytic individuals. One of

the most compelling ways to help firms

succeed is by increasing the power of
the linkages and networks they are
part of. Networks support indigenous
and private systems of learning, so that
entrepreneurs can be encouraged to
learn from their peers. Many business
ecosystems bypass weak regulatory environments by creating private capacity
for regulation and enforcement within
the network.
But there is a need to think systematically about what it takes to support
a start-up ecosystem. To flourish, entrepreneurial activity requires a concentration of talent, infrastructure, capital,
and networks key success factors of
a start-up ecosystem, as epitomised by
Silicon Valley. Additional research on
entrepreneurship is needed to better
understand the interplay of entrepreneurial characteristicsand the business
environment in Myanmar.
A great opportunity for levelling the
playing field is the fast rising usage of
ICT in Myanmar. Mobile technology especially is generating new possibilities
for entrepreneurs to change the local
business landscape by opening up new
markets and finding new innovative
ways to compete within the established
power structures.
The disruptive force of ICT entrepreneurship may be a chance to bring
innovation to sectors that otherwise
will be dominated by connected companies for years to come. But the government holds the key to ICT infrastructure development and will play a
decisive role in shaping the direction
of the industry and its potential for innovative disruption.

ICT is also holding great promise for

deepening financial access in the country. ICT offers new ways to finance for
local people and enterprises that previously had no access to flexible financing
due to rigid banking regulations and
the information monopolies of government and connected businesses. ICT
offers innovative ways to open up the
financial sector and put private capital
to work where it is needed most.

There is a need to
think systematically
about what it takes
to support a start-up
ecosystem.
Putting aside the regulatory issues, new financial arrangements
like business angels, crowd financing,
start-up equity funds and venture
capital can be mobilised to provide
entrepreneurs with targeted financial
solutions outside the banking sector.
Waiting for the current banking system to provide effective services to
SMEs will take years to come. Only a
substantial shift in government policy can addressthe systemic failure
affecting access to finance for SMEs.
An interesting phenomenon of
Myanmars entrepreneurship scene is
the unusual strong presence of social
enterprises. This is driven by a large
number of young people with a busi-

ness education, a plethora of social issues and the governments increasing

acceptance and support of independent social businesses. In an environment like Myanmar, social enterprises can achieve social impact more
efficiently than the government, more
sustainably and creatively than notfor-profits, and more generously than
business. Its potential to contribute to
inclusive growth is huge.
But for current social enterprises to
grow into a sustainable economic force,
substantial challenges have to be overcome. Most of the social enterprises
are owner-driven, focusing on small
niche or regional markets with limited
growth potential. While they can make
a big impact in a short amount of time
by focusing on niche markets, in the
long-term they will need to transform
from niche to mass markets, develop
repeatable business models, improve
funding and develop into professional
run businesses.
To support the rise of the social enterprise sector beyond its nascent stage
more systematic and long-term support
with increased cooperation between
government, development partners,
and enterprises will be necessary.
Development partners in Myanmar
have a responsibility to ensure that a
favourable business environment exist
for all private sector actors. A businessas-usual approach will not be enough
to generate the higher and more inclusive growth patterns needed to make
substantial and sustainable inroads
into reducing poverty. They therefore
need to be aware of the key constraints
for different private sector entities to

contribute to broader growth.

The momentum created by current
reforms is unlikely to be sustained unless non-connected enterprises find
the space to innovate and operate on a
level playing field. While there are welldocumented examples of crony companies, there are also companies who
succeeded by identifying and exploiting
legitimate opportunities, albeit within
a climate of corruption. They are very
effective at recognising opportunities,
mobilising resources, managing risks,
crafting compelling strategies, and
building strong business models.
These companies show innovative
ways of working in this country that are
well worth being replicated and scaled
up as best practices. They may well
define a new age for entrepreneurship
and innovation in Myanmar that could
redefine the paradigm of the economy.
Entrepreneurship can help to unleash some of the countrys great potential, but whether the economic development will be more broad-based will
ultimately depend on the role SMEs will
play in future.
Substantial work is needed to develop targeted support, regulations, investment and policy initiatives that are
actively designed to level the playing
field and help all businesses to equally
grow and prosper.
Henrich Dahm is an independent private
sector development expert based in Yangon
who specialises in SME development,
entrepreneurship development, incubators
and business development services. He
has 25 years of experience in Southeast
Asia, especially in Vietnam.