ICT Investment Opportunities in Myanmar(U Ye Yint Win)

ICT Investment Opportunities in Myanmar

Presented ByYe Yint Win

President , Myanmar Computer Professionals Association

September 14, 2012

Table of Contents

• Introduction• Changes in Myanmar• Analysis of Current ICT Environment• IT Investment Opportunities in Myanmar• Cooperation for Mutual Benefits• Conclusion

Introduction to Myanmar

Land Area 680,000 m2

(1.8 times Japan)Population >60 Millions

Capital Naypyidaw

GDP/Capital $821/Capital(estimated IMF:2011)

Economic Growth Rate

5.5%(estimated IMF:2011)

Unemployment 5.5%(estimated CIA:2011)

Inflation 8.9%(estimated CIA:2011)

Changes in Myanmar

• Changes in Political Environment– New Constitution and Elections– Balancing of the three branches of power is really

happening– Dialogues between Government & Opposition and

opposition participated in by-election– Freedom of Media

• Changes in Economic Environment– Improving Legal Framework– Improving the Infrastructure– Creating conducive environment for Foreign Investment– Privatization and Liberalization

ICT Industry Development

Human CapitalTechnology & Telecommunication InfrastructureOrganizationLegal InfrastructureFinancial Capital

Capital

AccessLiteracyUse

ICT Index

Good GovernanceClean GovernmentTransparencyFair CompetitionInclusiveness

Fundamentals

AgricultureTradeManufacturingTransportationServiceHealthEducation

Sector Development

Economic Development Food Clothing Shelter Transportation

Social Development Education Health Entertainment

(Leisure)Political Development

Participation

Impact (Values)

Millennium Development Goals

Access to KnowledgeAccess to MarketAccess to TechnologyBetter Communication

Reduce CostImprove ProductivityGain Competitive Advantage

ICT for Development: The Framework

1. Eliminate Poverty and Hunger

2. Ensure primary education for all

3. Promote gender equality4. Reduce juvenile mortality5. Better maternal care6. Combat diseases 7. Ensure sustainable

environment8. Build global partnership

for development

ICT Development Index (IDI), 2008 and 2007

Singa

pore

Brunei

Darussa

lam

Malaysi

a

Thail

and

Viet Nam

Philippines

Indonesia

Lao P.D.R

Myanmar

Cambodia

0

1

2

3

4

5

6

7

8

IDI 2008IDI 2007

Economy Rank 2008 IDI 2008

Sweden 1 7.85

Singapore 14 6.95

Brunei Darussalam 42 5.07

Malaysia 58 3.96

Thailand 76 3.27

Viet Nam 86 3.05

Philippines 90 2.87

Indonesia 107 2.46

Lao P.D.R 118 1.74

Myanmar 119 1.71

Cambodia 120 1.7

Singa

pore

Brunei

Darussa

lam

Malaysi

a

Viet Nam

Thail

and

Philippines

Indonesia

Cambodia

Lao P.D.R

Myanmar

0

1

2

3

4

5

6

7

8

9

IDI 2008IDI 2007

IDI access sub-index, 2008

It is learnt that Myanmar teledensity will reach 50% by the end of 2015. It may be a challenging job. If fulfilled, Myanmar’s ranking may go up.

Economy Rank 2008 IDI 2008

Hong Kong 1 8.82

Singapore 10 8.02

Brunei Darussalam 43 5.92

Malaysia 62 4.38

Viet Nam 72 3.76

Thailand 80 3.41

Philippines 86 3.3

Indonesia 106 2.6

Cambodia 118 2.06

Lao P.D.R 121 1.91

Myanmar 132 1.74

ICT skills sub-index 2008 & 2007

Thail

and

Brunei

Darussa

lam

Singa

pore

Philippines

Indonesia

Malaysi

a

Viet Nam

Myanmar

Lao P.D.R

Cambodia

0

1

2

3

4

5

6

7

8

IDI 2008IDI 2007

Economy Rank 2008 IDI 2008 Rank 2007 IDI 2007

Korea (Rep.) 1 9.84 2 9.74

Thailand 52 7.74 52 7.56

Brunei Darussalam 78 6.91 75 6.9

Singapore 71 7.07 68 7.07

Philippines 83 6.72 82 6.73

Indonesia 95 6.33 99 6.19

Malaysia 98 6.19 98 6.19

Viet Nam 105 5.85 104 5.83

Myanmar 112 5.05 112 4.99

Lao P.D.R 120 4.33 120 4.27

Cambodia 121 4.28 125 4.06

Niger 159 1.36 159 1.34

ICT skill index is not bad for Myanmar. We may able to improve considerably if we give priority to e-Education and ICT HRD.

Skill may be the deciding factor in the future.

IDI use sub-index 2008 & 2007

Singa

pore

Brunei

Darussa

lam

Malaysi

a

Viet Nam

Thail

and

Philippines

Indonesia

Lao P.D.R

Cambodia

Myanmar

0

1

2

3

4

5

6

IDI 2008IDI 2007

Economy Rank 2008 IDI 2008 Rank

2007 IDI 2007

Luxembourg 1 7.09 3 5.52

Singapore 5 5.81 8 4.84

Brunei Darussalam 36 3.29 31 2.8

Malaysia 44 2.43 42 2.18

Viet Nam 83 0.93 74 0.77

Thailand 86 0.89 78 0.74

Philippines 99 0.51 103 0.32

Indonesia 106 0.39 111 0.25

Lao P.D.R 116 0.29 141 0.06

Cambodia 145 0.06 154 0.02

Myanmar 159 0.01 159 0.01

We may still need to improve awareness that ICT is key for development and systematic efforts need to be invested.

ICT Price Basket 2009 & 2008

Rank EconomyICT Price Basket

2008 2009

3Singapore 0.33 0.41

46Malaysia 1.65 1.93

88Thailand 4.15 3.25

98Indonesia 5.81 7.65

113Philippines 9.25 10.68

114Viet Nam 9.34 11.9

137Lao P.D.R 37.24 38.09

145Cambodia 41.86 43.01

159Myanmar 58.18 N/A

Myanmar is the country whose citizen need to use highest percentage of their income to have access to ICT.

Status :Human Resource Development (2011-2012) Students intakes

Type B.C.Sc. B.C.Tech Total

Bachelor 21103 5495 26588

Honors 8447 1826 10273

Master 2337 535 2872

Ph. D 178 54 232

Total 32065 7900 39965

25 Computer Universities and colleges in through outMyanmar

Private training institutions also provide certificate, ungraduate, post graduate courses.

Status : ICT Industry

Co.s by Region/State

Companies

Yangon Region 357

Mandalay Region 82

Sagaing Region 37

Shan State 26

Ayeyarwady Region 16

Mon State 46

564

Type of Business

Training 62

Software 63

Trading 10

Computer Books 2

Web & Internet Service 8

Network & Maintenance Service

5

Hardware 207

Total 357

PC Penatration 2006 2007 2008 2009 2010 Re-mark

Population 55.4 56.5 57 59.13 60 Million

Household

Desktops 258,000 276,000 300,000 327,000 210,000

Notebooks 172,000 184,000 200,000 218,000 390,000

Total number of PCs

430,000

460,000

500,000

545,000

600,000

•Public sector is lagging behind private sector

•e-Government at the initial stage

•Increasing effort on development of e-Commerce systems

•Trading : Only big supermarkets use IT

•Finance :Private banks are ahead of public banks

•Manufacturing :Use only in traditional data processing area

Little use of CAD,CAM,MRP,ERP

•Education :Increasing very rapidly

•Health :Starting with medical education

Private clinics are ahead of public hospitals

•Regional :Concentrated only in Yangon and Mandalay

Status: ICT Application

Status: ICT Use

• At the early stage.• Functional systems.• Most have static Web page.• A few interactive systems. • Not at SCM, ERM, CRM, ERP• Not integrated.• Only in major cities.

SWOT Analysis of Myanmar ICT Environ-ment

Strength Weakness- High demand in ICT services- High profitability of mobile industry - The government’s high interest in ICT development

- Increase in number of well-educated human resources discharged from national universities and private institutions

- Relatively cheap labor cost in S/W area comparing with neighboring countries

-Limited and unstable telecom infrastructure -Weak ICT industry base -Strong regulation imposed on most of industry sectors

-Lack of national informatization strategy -Bottleneck from basic infrastructure industries: electricity, transportation, etc.

-Constant lack of ICT manpower supply and mismatch of supply and demand

-Less competent ICT human resources -Public’s lack of ICT knowledge

Opportunity Threat-New administration with new ICT policy direction

- Improving international cooperation environment

-Gradual growth in S/W and ICT services industry

-Strengthening regional cooperation with ASEAN, China, India

-Government and private sector’s determination on informatization

- Increasing demand for ICT outsourcing

- Intense competition from neighboring countries in ICT area

- Instability and low efficiency in macro economy

-Weak financial industry base and structure -Limited foreign investment due to U.S. and Europe’s economic sanction

-Outflow of ICT human resources to foreign countries (Singapore, Thailand, etc.)

Focused Areas

e-Education

ICT Industry

Liberalization

Standards

ICT Human Resource Development

6

7

5

4

2

Infrastructure Building

Industry Promotion

Legal Framework

e-Society11

Informatization10

e-Government 9

e-Commerce 8

ICT Infrastructure

3

Utilization

1Infrastructure

Building

Industry P

romotion

Utilization

Productivity Quality Products Good ServiceNecessary Outcome

ManufacturingTrade

Finance & Service

Life Stock & FisheriesForestryMining

Oil/GASAgriculturePotential Sectors

Capital InvestmentElectricityTelecom

InfraLogisticHRDLegal Framework

Enabling Environment

Strategic Direction

Inclusive Social Economic Development & Poverty Reduction

InclusivenessFair CompetitionTransparencyClean

GovernanceGood

GovernanceHuman RightsBasic Elements

Involvement in ICT HRD in Myanmar?

• Assistance in HRD Projects• Establishment of IT educational Institutes• Internship programs


ManufacturingTrade

Finance & Service








GovernanceGood


Investment in ICT Infrastructure Development?

• Assistance in Infrastructure Building• Any Companies should find opportunities to invest in Infrastructure Projects


ManufacturingTrade

Finance & Service








GovernanceGood


Involvement of Capital Investment in IT Sector?

• Creation of State Investment Funds or Private Investment Funds for Investment in ICT sector in Myanmar


ManufacturingTrade

Finance & Service








GovernanceGood


Involvement in Development of economic Sectors?

• Find opportunities in interested Sectors and conduct feasibility studies quickly• Find good business partners and build good relationship in interested Sectors quickly


ManufacturingTrade

Finance & Service








GovernanceGood


Involvement in Myanmar Development?

• Bring in Japanese Technology Knowhow, Work Ethics and Quality Consciousness


ManufacturingTrade

Finance & Service








GovernanceGood


Opportunities in Myanmar

Myanmar Attractiveness

• Strategically Located between China, India & ASEAN

• Significant Market of 60 Million People

• Young and Dynamic Work Force

• Untouched Natural Environment and Historical Significance for Tourism

• Agricultural Fertile Lands

• Natural Resources

Changes in Strategic Elements

• New Democratic Government

• Dedicated, Open Minded and People Oriented Head of State & Influential Public Leader working together

• Significant Improvements in Rule of Law and National Reconciliation

• Significant Improvement s in International Legitimacy

Cooperation for mutual benefits

MyanmarProblems & Weakness

•Weak Infrastructure•ICT HRD quality • Awareness•Cyber Law•Technological know-how•Job Creation•Entering international Market•Financial resources

InvestorsProblems & Weakness

• Demography• Shortage of ICT HRD • High cost• Legacy Systems• Req. New Applications• Language • Culture

• Technical Transfer• Financial Assistant• Consultation• Outsourcing• Investment

• Outsource Human Resource• Link to ASEAN• Globalization

• Cost Saving•Extension of Working Hours •Overcome Manpower shortage•Investment Opportunities•New Market

•Technology Transfer•Know-How and Experiences• ICT use•Job Creation• High Income •Growth in ICT industry•Increase Competitiveness of Myanmar

Advantages Advantages

Investment in IT outsourcing?

Global Outsourcing/Offshoring Industry Trend

• $425 Billion in 2010• $500 Billion Forecasted for 2011• The offshore outsourcing model can bring cost

saving of 50% to 70%

ACE Data Systems Co., Ltd.

28%

16%15%11%

9%

22%

Outsourcing Activities

ITHRSales & MarketingFinanceAdministrativeAll Others

Source : www.offshoreitoutsourcing.com

Top destinations for IT Outsourcing/Offshoring in Asia

World Rank

Country Overall Index

Cost Competiveness

Resource & Skill

Business & Economic Environment

1 India 7.1 8.3 6 4.2

2 Indonesia 6.7 8.6 4.3 4.4

4 Singapore 6.5 6.4 5.7 9.4

5 China 6.4 7 5.6 5.6

7 Philippine 6.3 9 2.8 3.9

8 Thailand 5.9 8.2 2.3 5.9

10 Malaysia 5.8 7.9 2.2 6.9

17 Vietnam 5.4 7.4 2.5 4.5

18 Sri Lanka 5.4 8.3 1.2 4.3

Current Myanmar Situation

ACE Data Systems Co., Ltd.

Index

HR Cost Competitiveness

Telecommunication Cost Competitiveness

Transaction Cost Competitiveness

Cost Competitiveness

Index

Basic/Beginner Levels

Highly competitive professionals

Resource & Skill

Index

Benefits & Incentives

Tax, Standardization, Transparency, Financial Services, Infrastructure, Legal Institutions

Business & Economic Environment

Current Myanmar Status

• Cost is the Lowest in Japan, China, Philippine, Vietnam, Sri Lanka, Myanmar

• Cost Performance is higher than China

IT Outsourcing

• Project Outsourcing• Personal Outsourcing• Oversea Development Centers

Approach :Low cost : Start with fresh graduates, train them

Conclusion

• Myanmar is really changing and reversal is impossible

• Development in Myanmar presents enormous Investment Opportunities in IT sector

• Any IT cos. is in the very good position to take those Opportunities by working together with Myanmar for Mutual Benefits

• Will be good we can do something by 2015.

Thank You!

Documents

ICT Investment Opportunities in Myanmar(U Ye Yint Win)