Is Myanmar the next destination for investment in telecoms, media or technology?
Following recent political reforms in Myanmar and the recent electoral success of Aung San Suu Kyi‘s National League for Democracy, Myanmar is currently flavour of the month as an investment destination, and could soon see significant investment in telecoms infrastructure. However, whilst there are opportunities Myanmar is starting out on a long journey that could be derailed very easily.
Whilst after nearly half a century of economic stagnation there is certainly scope for growth, it must be remembered how poor Myanmar actually is today and where it is starting from. With a PPP GDP of c. USD 82 bn and a population of c. 60m its annual GDP per head is somewhere in the region of USD 1,300. To help understand this, that means that Myanmar’s peer group mainly consists of countries in sub-Saharan Africa such as Rwanda and Mali.
Transparency International ranks Myanmar alongside Afhanistan (above only North Korea and Somalia) as a highly corrupt country and its infrastructure is very underdeveloped.
Alongside the holding of elections, Myanmar has also undertaken or announced a number of general economic reforms including:
- liberalisation of foreign exchange controls, floating the Kyat from the 1 April;
- proposed reform of the foreign investment code to allow foreign investment in more sectors of the economy, tax breaks, nationalisation protection and removal of requirement for a local partner.
In addition, with the news today that the government has met with leaders of the Karen National Union, to the extent that Myanmar is able to start to peacefully resolve internal ethnic conflicts the combination of this engagement together with democratisation and economic reforms means that there is a real prospect of the lifting of economic sanctions.
In terms of opportunities across the telecoms, media and technology sectors, given the state of Myanmar’s infrastructure investment in new mobile networks is both the most necessary and the most likely. In an interview with the Wall Street Journal, Khin Maung Thet, director-general of Myanmar’s Post & Telecommunications Department said:
“A new communications law is being studied to create four new telecommunications licenses in the country, with the licenses available both to local and foreign investors. Currently, foreigners aren’t allowed to hold telecom licenses in Myanmar.
The new law was sent to Myanmar’s attorney general last month and is awaiting his approval now. Once that is obtained the law will be sent to Myanmar’s cabinet and then on to Parliament for approval.
[Mr. Khin Maung Thet said] he wasn’t sure when the attorney general would finish reviewing the law.”
With estimates of mobile penetration between 1-5%, and internet access <1% Myanmar will need significant external investment if it is to stand any chance of hitting its objective of 50% penetration by 2015. I’ll be watching with interest the detail of the new law when it becomes available.
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