Telco infrastructure a bright spot amid slow infrastructure growth

THE lack of roads and other key infrastructure threatens the sustainability of Myanmar’s economic growth, which has been accelerating at over 7 percent for the past several years, according to a November report by the Economist Corporate network and Baker McKenzie.

It said the country’s “ positive economic trajectory will be challenged by a massive infrastructure need that the government does not have the resources to meet alone.”

“While Myanmar’s economic growth is predicted to continue to sit above an average of 7pc for several years to come, sustaining this growth will depend on massive investment from the government, development finance institutions and the private sector,” it said.

“If it is not forthcoming, the growing infrastructure gap could put the brakes on Myanmar’s economy.”

Emerging opportunities

Nevertheless, there are still a lot of opportunities for investors to engage in infrastructure projects in the country. One of bright spots for Myanmar is its telecoms sector.

“Prior to the reform period, Myanmar had one of the world’s lowest rates of connectivity, with very limited internet access and active SIM cards measured in the thousands,” it said.

“This has changed virtually overnight and Myanmar now has more than 50 million active SIM cards, as well as the region’s fastest mobile internet speeds,” it added.

Among the infrastructure that the Myanmar government has prioritised are the areas of power, as well as water and transport, the report said, adding that the government is actively seeking foreign investors in these sectors.

Jo Daniels, Managing Partner, Yangon, Baker McKenzie, said Myanmar is undergoing “huge transition” and its economy is moving rapidly, “opening to international investments, systems and ideas.”

“It is not without major challenges, but for a huge number of Myanmar people, they are gaining access to life changing infrastructure improvements, and for international investors, some unique opportunities at the nexus of two of the most important economies in this region, and the world,” she said.

Rakhine violence

The report also acknowledged the challenging conflict in the northern Rakhine State in Myanmar where over 600,000 people were forced to flee to Bangladesh following the recent outbreak of violence in the area.

The violence erupted on August 25 when fighters of the Arakan Rohingya Salvation Army (ARSA) attacked government security outposts in three towns in the area, triggering clashes with the security forces that resulted in the killing of hundreds of people.

However, the violence in Rakhine is unlikely to spread to the country’s political and economic centers, it said.

In the meantime, “improved infrastructure is perhaps the most important requirement for the continuation of Myanmar’s positive economic trajectory. Economic development, as we have seen across Asia, leads to social development and a real improvement in the quality of life for millions of people,” Andrew Staples, director of The Economist Corporate Network, Southeast Asia, said.

Source : Myanmar Times

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