fbpx

Irish building up a head of steam in Myanmar

When Kieran Rabbitt stepped off a plane and into the heavy Yangon heat four years ago, little did he think he’d still be in Myanmar today, at the cutting edge of the country’s digital revolution. From offices in downtown Yangon, the Athenry native – along with Karim Ainsworth from Belfast – runs Cube Digital. The start-up is developing more than 20 apps and projects in fintech and other digital services, as well as Myanmar’s first video-on-demand platform.

Four years ago, Myanmar was a very different place. “My intention was to see if it was possible to come out here and do digital and web-based work, but it wasn’t feasible,” says Ainsworth. “The internet connection wasn’t good enough, and there was no penetration at that time.”

Ainsworth returned to Belfast for several years. But the rapid changes in telecommunications continued apace. Ainsworth’s sisters, who live in Myanmar, and Rabbitt, who worked for Digicel at the time, were on the phone regularly to relay news of the advancing infrastructure.

“Everyone was telling me the internet was better but I wouldn’t believe them. When I came back in February of last year, I was immediately handed a Sim card – boom, there’s 4G,” Ainsworth says. “It’s like night and day compared to four years ago.”

Myanmar has been an international pariah for more than 50 years, but the walls that cut it off from the wider world began to crumble when the ruling military introduced a political reform programme in 2011. Nobel prize laureate Aung San Suu Kyi was released from a decades-long house arrest, while the EU ended a long-standing trade and economic sanction regime in 2013.

A resounding election win for Suu Kyi’s pro-democracy National League of Democracy in 2015 has set a platform for political change and openness that’s allowed multinationals and foreign businesses to establish a solid foothold in Myanmar.

In 2016, trade between the EU and Myanmar reached €1.55 billion, with garments and agriculture products making up 69 per cent of imports to Europe.

Dubbed “Asia’s last economic frontier”, Myanmar is one of the fastest-growing emerging markets in the world. And while highly-skilled Myanmar expatriates are returning in droves to start businesses and to experiment, Irish interests, from start-ups to established corporations, are getting stuck in, too.

Cash-to-electronic

Such was the demand for cash-to-electronic transactions in Myanmar that, within a year of launching in 2015, Red Dot Network – founded by Corkman John Nagle and partly backed by Digicel – could be found at 10,000 locations around the country. The company facilitates mobile money transfers, bill payments and online purchases for people who don’t have access to mainstream banking facilities.

“Cash acceptance networks traditionally take five to seven years to match the products required to the communities they serve,” says Nagle. “After only four years, we are the largest payments network in Myanmar. We currently have 19,000 retail outlets using Red Dot services and expect to grow this to 30,000 over the coming two years.”

The company plans to expand into payment services for concert, airline and bus tickets, and to collaborate with main-street banks. It builds on the experience of Nagle in Ireland with Payzone and, previously, Alphyra – though he was undone by the financial crash. A subsequent venture, Zapa Technologies, which focused on near-field communications, also failed. And, in 2013, he was declared bankrupt in London.

Though Irish experience and background in Myanmar is skewed towards telecommunications, as a result of Denis O’Brien’s ambitious ventures through Digicel from 2009 to 2015, elements from other sectors are also descending on the country.

Last autumn, Mayo-headquartered workwear group Portwest opened a new factory in Bago, a 90-minute drive north of Yangon, at a cost of around €10 million. The facility is expected to employ 1,000 people by the end of the year.

“There were a lot of factors [in choosing Myanmar], wages being one of them,” says Peter Clendon, Portwest’s supply chain manager. “Duty-free access into Europe and continuity of the supply chain were other important reasons.”

Since 2013, multinationals such as Nissan and Suzuki have begun or resumed vehicle production in Myanmar, and Ford has opened a dealership in Yangon. Pepsi and Coca-Cola have returned amid a broader scramble for market share that ranges from the energy to hotel development sectors, to alcoholic beverage production, where Heineken now runs a €50-million brewery outside Yangon.

Though trade between Ireland and Myanmar amounted to just €9 million between January and July 2017, observers say collaboration in energy and electricity generation holds significant opportunities for Irish interests, including for ESB International.

Digital infrastructure

Still, in one of the last greenfield telecommunications markets in Asia, it’s the demand for tech and digital infrastructure, sectors in which Irish interests already have a head start, that remains very robust.

“There are some big global brands – Grab and Uber – that have already come in in the last six months, and some smaller Myanmar digital developers are cutting their teeth,” Rabbitt, of Cube Digital, says. “But there’s no one grabbing the mass market with something that’s relevant and localised.”

He says the access his company has built up through marketing, as well as its local context, gives Cube Digital “a little bit” of an advantage. “For [local] businesses, e-commerce is very attractive. If you’ve got a platform to buy, sell and market your product, and apps to support them, that’s better than someone playing around on Facebook trying to do transactions through social media,” he says. “But that’s a massive change for people – Myanmar saw the world for the first time through Facebook.”

As to what local businesses, venturing out into the global marketplace for the first time, want from international collaborators, a main focus right now is on picking up skills.

“Companies here want to develop and learn as much as they can,” says Terenure native Gary Hartnett, a telecoms consultant at the state-owned Myanmar Posts and Telecommunications (MPT). “They’re trying to take ideas from other companies and organisations to see how things are done properly. Experience and trustworthiness are what companies are looking for when dealing with internationals.”

While there are clear opportunities to mine for all sides, the path to success is far from smooth. In October, Portwest voiced concerns for its Myanmar operations as a consequence of the state violence carried out against Rohingya Muslims in the western Rakhine state.

And while Myanmar aims to crack the World Bank’s Doing Business Top 100 rankings by 2020, it currently sits in 171st place. Troublingly, foreign direct investment fell by 28 per cent to €2.8 billion in the nine months to December 2016.

Experts say currency fluctuations are an issue worth following, with the kyat falling 35 per cent against the dollar since 2013.

Significant infrastructure shortcomings remain. To walk along Yangon’s main streets is to dodge huge generators that kick in during inevitable power outages.

Shipping container

A German viticulturalist working in central Myanmar says that while transporting a shipping container of goods from Europe to Myanmar costs him $3,000, getting it the last 600 kilometres from Yangon to site means shelling out another $2,000. Around 80 per cent of the country’s roads are unpaved.

“You need to be very careful coming in. There are lots of opportunities here, but you’d need a local partner,” says Hartnett, who has more than a decade of experience working in telecoms in emerging markets in southeast Asia and the Pacific. “Things take time here. In 2013, they realised that they didn’t have a [telecoms] permit process in place – they had to invent all this.”

Among the major challenges facing the Irish contingent in Myanmar, a country where two-thirds of the population has no reliable access to electricity, is that however fast the recent changes have come about, it remains one of the least-developed countries in the world.

“When I first arrived in 2012, you couldn’t get a Sim card,” says Hartnett, who has travelled extensively throughout the country mapping out Myanmar’s telecoms infrastructure. “And if you could, it cost $500-$600,” he says. “Charming times.”

Nagle, of Red Dot, wouldn’t be drawn on whether his Myanmar ventures constitute his bouncing back in business, but says: “Our goal to build a cash-to-electronic transactions business in a country where cash dominates commercial services has been difficult. It still takes time to build a new concept in a new country.”

A lack of Irish community representation and organisation in Myanmar is something that’s holding back deeper ties and opportunities.

“Ireland does not have a presence here. We don’t have a chamber of commerce, we don’t have consular services in Myanmar,” says Rabbitt. “We’ve to go to Malaysia or Thailand. There’s a real opportunity to look at establishing a better trade link between Ireland and Myanmar.”

Source: The Irish Times

To see the original article click link here

NB: The best way to find information on this website is to key in your search terms into the Search Box in the top right corner of this web page. E.g. of search terms would be “property research report”, ”condominium law”, “Puma Energy”, “MOGE”, “yangon new town”,”MECTEL”, “hydropower”, etc.

.

Looking for foreign investors to invest in your business in Myanmar