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Starting Up in Myanmar: Hurdles and Way Forward

When I came to Myanmar nearly three years ago, there was no talk about “start ups” and “tech revolution” or “Myanmar leapfrogging to 4G”. As in many other ways, Myanmar has taken the fast route and the situation has shifted dramatically. Just two weeks ago “Sule Tech,” a tech community space, was inaugurated. It will house incubation and training programmes among other things as well as an ICT Hub for innovation. Hundreds of people attended the launch. Still, there is far too little information out there about what is happening in the tech sector in Myanmar, how can it be used for social, economic and ecological developments and what all stakeholders can do to use it to the best of the country in the future. That is why we have written the “First Myanmar Start up Guide,” as a tool, info map and exchange platform to contribute to the tech revolution in Myanmar.

Generally, the start up world is still in its infancy in Myanmar. However, the launch of Ooredoo and Telenor networks and the expected upgrade of MPT’s network based on its new joint venture with Japan’s KDDI and Sumitomo will be a big leap forward for the entire tech-entrepreneur ecosystem to connect to better IT infrastructure. The growth figures of the first weeks and months are impressive; thousands of masts are being built all over the country, and in the first three weeks of operation Ooredoo has reached millions of new mobile customers.

Myanmar’s start up entrepreneurs are tapping a hungry market: the country already has about 100 tech-based entrepreneurs/start ups, and about 500 Myanmar language apps have been developed for Android phones. International investors are looking for opportunities among start ups, and a number of deals have been signed. However, is the picture for Myanmar’s start-ups therefore all rosy? There is certainly a lot of potential and enthusiasm, however, it will be key for both local and international actors to find a way to link up the new influences with the “Myanmar way of doing business” which will continue to shape Myanmar’s business environment, at least for a couple of years to come.

Generally, initial costs to setting up shop in Myanmar are, compared to the rest of Southeast Asia, relatively high, while infrastructure is limited. At the same time competition is increasing quickly. In our interviews, we have identified five main hurdles for start ups.

Legal and regulatory environment

While it is becoming easier to set up shop in Myanmar, optimised and further simplified procedures can give an additional boost to the establishment of an innovative ecosystem in Myanmar based on its specific needs and strengths.

Shortfalls in the technical infrastructure

A weak communications infrastructure and unstable electricity supply have been huge impediments to the development of the IT sector. Furthermore, there is confusion between Zawgyi, the market accepted Myanmar font encoding, and Unicode, the international encoding standard. Zawgyi is incompatible with Unicode which makes it difficult for Google’s Myanmar-language search engine to attract users.

Cultural hurdles for local entrepreneurs

Entrepreneurship was not, until recently, always accepted by society as a preferred way to earn a living. Furthermore, some start up entrepreneurs mentioned that there are not yet enough “heroes” and success stories of entrepreneurship in media and public life who can act as role models in Myanmar.

Human resources

Access to skilled labour is extremely challenging in Myanmar, and business skills at mid-management level in particular are missing. Two main problems were identified: firstly, Myanmar is currently experiencing a brain drain of skilled and/or trained Myanmar employees to seek higher salaries abroad. Secondly, the education system is not producing qualified graduates to fill the necessary jobs in the IT sector.

Access to finance

Myanmar remains a cash-based society. Most entrepreneurs have difficulty finding sufficient financing. Interest rates are exorbitantly high and loans are often not available on transparent terms. At the same time, investors have observed that funding is available but businesses are not yet well prepared for such investment. International capital looking at Myanmar has to understand the context and recalibrate high expectations.

What needs to be done?

Change is real in Myanmar and the tech revolution will go on. Certainly, the role of large corporations will be important to strengthen the start up environment, to make the necessary investments and help to launch promising initiatives that foster a kind of open innovation network structure.

At the same time it will be key for the public side to provide a stable legal framework, efficient institutions and working conditions for the sector to become a motor for jobs, growth and innovation in Myanmar, which will in turn benefit the socio-economic development of the overall country.

Harald Friedl is an observer of the Southeast Asian startup world, an angel investor and a regular contributor about economic developments in the region. He is the Managing Director of a renewable energy company, and has been living in Myanmar for more than two years after moving from New York. Harald has 20 years of experience in senior positions in public, private and non-for-profit sectors. The full Myanmar Start Up Guide is available at https://www.facebook.com/myanmarstartupguide.

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