ICT Investment Opportunities in Myanmar

Presented By Ye 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 Population 680,000 m2 (1.8 times Japan) >60 Millions

Capital
GDP/Capital Economic Growth Rate Unemployment Inflation

Naypyidaw
$821/Capital (estimated IMF:2011) 5.5% (estimated IMF:2011) 5.5% (estimated CIA:2011) 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 for Development: The Framework

Fundamentals
Good Governance Clean Government Transparency Fair Competition Inclusiveness

Impact (Values)
Economic Development Food Clothing Shelter Transportation Social Development Education Health Entertainment (Leisure) Political Development Participation

Capital
Human Capital Technology & Telecommunication Infrastructure Organization Legal Infrastructure Financial Capital

ICT Index Access Literacy Use

ICT Industry Development

Millennium Development Goals Sector Development

Agriculture Trade Manufacturing Transportation Service Health Education Reduce Cost Improve Productivity Gain Competitive Advantage 1. Eliminate Poverty and Hunger 2. Ensure primary education for all 3. Promote gender equality 4. Reduce juvenile mortality 5. Better maternal care 6. Combat diseases 7. Ensure sustainable environment 8. Build global partnership for development 5

Access to Knowledge Access to Market Access to Technology Better Communication

ICT Development Index (IDI), 2008 and 2007

8 Economy 7 Sweden Rank 2008 1 IDI 2008 7.85

Singapore
Brunei Darussalam Malaysia IDI 2008 Thailand Viet Nam

14
42 58 76 86 90 107 118 119

6.95
5.07 3.96 3.27 3.05 2.87 2.46 1.74 1.71 1.7

IDI 2007

2 Philippines 1 Indonesia 0 Lao P.D.R Myanmar

Cambodia

120

IDI access sub-index, 2008

Economy
9 8 7 6 5 4 3 2 1 0

Rank 2008 1 10 43 62 72 80 86 106 118 121 132

IDI 2008 8.82 8.02 5.92 4.38 3.76 3.41 3.3 2.6 2.06 1.91 1.74

Hong Kong Singapore Brunei Darussalam Malaysia Viet Nam

IDI 2008
IDI 2007

Thailand Philippines Indonesia Cambodia Lao P.D.R Myanmar

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

ICT skills sub-index 2008 & 2007

8 7 6 5 4 3 2 1 IDI 2008 IDI 2007

Economy Korea (Rep.) Thailand Brunei Darussalam Singapore

Rank 2008 IDI 2008 1 52 78 71 9.84 7.74 6.91 7.07

Rank 2007 2 52 75 68

IDI 2007 9.74 7.56 6.9 7.07

Philippines
Indonesia Malaysia Viet Nam

83
95 98 105 112 120 121 159

6.72
6.33 6.19 5.85 5.05 4.33 4.28 1.36

82
99 98 104 112 120 125 159

6.73
6.19 6.19 5.83 4.99 4.27 4.06 1.34

Myanmar Lao P.D.R Cambodia Niger

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

Economy
6

Rank 2008

IDI 2008

Rank 2007

IDI 2007

Luxembourg
5

1
5 36 44 83 86

7.09
5.81 3.29 2.43 0.93 0.89

3
8 31 42 74 78

5.52
4.84 2.8 2.18 0.77 0.74

Singapore Brunei Darussalam Malaysia

3 IDI 2008

Viet Nam
IDI 2007

Thailand

Philippines
1

99
106 116 145 159

0.51
0.39 0.29 0.06 0.01

103
111 141 154 159

0.32
0.25 0.06 0.02 0.01

Indonesia Lao P.D.R Cambodia Myanmar

We may still need to improve awareness that ICT is key for development and systematic efforts need to be invested.
9

ICT Price Basket 2009 & 2008

ICT Price Basket

Rank

Economy
2008 2009

3 Singapore
46 Malaysia 88 Thailand 98 Indonesia 113 Philippines 114 Viet Nam 137 Lao P.D.R 145 Cambodia 159 Myanmar

0.33
1.65 4.15 5.81 9.25 9.34 37.24 41.86 58.18

0.41
1.93 3.25 7.65 10.68 11.9 38.09 43.01 N/A

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

10

Status :Human Resource Development

(2011-2012) Students intakes

25 Computer Universities and colleges in through outMyanmar
Type Bachelor Honors Master Ph. D Total B.C.Sc. 21103 8447 2337 178 32065 B.C.Tech 5495 1826 535 54 7900 Total 26588 10273 2872 232 39965

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

Status : ICT Industry

Type of Business Co.s by Region/State Companies Training Software Trading Computer Books Web & Internet Service Network & Maintenance Service Hardware Total 2008 57 300,000 200,000 500,000 2009 59.13 327,000 218,000 545,000 2010 60 210,000 390,000 600,000
12

62 63 10 2 8 5 207 357 Remark Million

Yangon Region Mandalay Region

Sagaing Region Shan State Ayeyarwady Region Mon State

357 82
37 26 16 46 564

PC Penatration Population Household Desktops Notebooks Total number of PCs

2006 55.4 258,000 172,000 430,000

2007 56.5 276,000 184,000 460,000

Status: ICT Application

Public sector is lagging behind private sector e-Government at the initial stage

Increasing effort on development of e-Commerce systems

Trading Finance : Only big supermarkets use IT :Private banks are ahead of public banks

Manufacturing :Use only in traditional data processing area Little use of CAD,CAM,MRP,ERP Education Health :Increasing very rapidly :Starting with medical education Private clinics are ahead of public hospitals Regional :Concentrated only in Yangon and Mandalay

13

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.
14

SWOT Analysis of Myanmar ICT Environment

Strength
- High demand in ICT services - High profitability of mobile industry - The governments 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

Weakness

-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 -Publics lack of ICT knowledge

Opportunity
-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 sectors determination on informatization -Increasing demand for ICT outsourcing

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

15

Focused Areas
11 e-Society 10 Informatization
Utilization Industry Promotion Infrastructure Building

9 e-Government 8 e-Commerce 7 e-Education 6 Standards 5 Liberalization 4 ICT Industry

3 Legal Framework 2 1

ICT Human Resource Development ICT Infrastructure

16

Utilization Industry Promotion Infrastructure Building

Strategic Direction
Inclusive Social Economic Development & Poverty Reduction

Necessary Outcome Potential Sectors Enabling Environment Basic Elements

Productivity Agriculture Legal Framework Human Rights Mining Oil/GAS HRD Good Governance

Quality Products Forestry Logistic Clean Governance Life Stock & Fisheries Telecom Infra Transparency

Good Service Finance & Service Electricity Fair Competition Manufacturing Trade Capital Investment Inclusiveness

Involvement in ICT HRD in Myanmar?

Inclusive Social Economic Development & Poverty Reduction

Necessary Outcome Potential Sectors Enabling Environment Basic Elements

Productivity Agriculture Legal Framework Human Rights Mining Oil/GAS HRD Good Governance

Quality Products Forestry Logistic Clean Governance Life Stock & Fisheries Telecom Infra Transparency

Good Service Finance & Service Electricity Fair Competition Manufacturing Trade Capital Investment Inclusiveness

Assistance in HRD Projects Establishment of IT educational Institutes Internship programs

Investment in ICT Infrastructure Development?

Inclusive Social Economic Development & Poverty Reduction

Necessary Outcome Potential Sectors Enabling Environment Basic Elements

Productivity Agriculture Legal Framework Human Rights Mining Oil/GAS HRD Good Governance

Quality Products Forestry Logistic Clean Governance Life Stock & Fisheries Telecom Infra Transparency

Good Service Finance & Service Electricity Fair Competition Manufacturing Trade Capital Investment Inclusiveness

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

Involvement of Capital Investment in IT Sector?

Inclusive Social Economic Development & Poverty Reduction

Necessary Outcome Potential Sectors Enabling Environment Basic Elements

Productivity Agriculture Legal Framework Human Rights Mining Oil/GAS HRD Good Governance

Quality Products Forestry Logistic Clean Governance Life Stock & Fisheries Telecom Infra Transparency

Good Service Finance & Service Electricity Fair Competition Manufacturing Trade Capital Investment Inclusiveness

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

Involvement in Development of economic Sectors?

Inclusive Social Economic Development & Poverty Reduction

Necessary Outcome Potential Sectors Enabling Environment Basic Elements

Productivity Agriculture Legal Framework Human Rights Mining Oil/GAS HRD Good Governance

Quality Products Forestry Logistic Clean Governance Life Stock & Fisheries Telecom Infra Transparency

Good Service Finance & Service Electricity Fair Competition Manufacturing Trade Capital Investment Inclusiveness

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

Involvement in Myanmar Development?

Inclusive Social Economic Development & Poverty Reduction

Necessary Outcome Potential Sectors Enabling Environment Basic Elements

Productivity Agriculture Legal Framework Human Rights Mining Oil/GAS HRD Good Governance

Quality Products Forestry Logistic Clean Governance Life Stock & Fisheries Telecom Infra Transparency

Good Service Finance & Service Electricity Fair Competition Manufacturing Trade Capital Investment Inclusiveness

Bring in Japanese Technology Knowhow, Work Ethics and Quality Consciousness

Opportunities in Myanmar
Myanmar Attractiveness Changes in Strategic Elements

Strategically Located between China, India & ASEAN

Significant Market of 60 Million People

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

Young and Dynamic Work Force

Untouched Natural Environment and Historical Significance for Tourism Agricultural Fertile Lands Natural Resources

Cooperation for mutual benefits

Myanmar Problems & Weakness Weak Infrastructure ICT HRD quality Awareness Cyber Law Technological know-how Job Creation Entering international Market Financial resources Technical Transfer Financial Assistant Consultation Outsourcing Investment Investors Problems & Weakness Demography Shortage of ICT HRD High cost

Outsource Human Resource Link to ASEAN Globalization

Legacy Systems Req. New Applications

Language Culture

Advantages

Advantages 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

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%
Outsourcing Activities
22% 28% IT 9% HR

Sales & Marketing 11% 15%

16%

Finance
Administrative All Others

ACE Data Systems Co., Ltd. Source : www.offshoreitoutsourcing.com

Top destinations for IT Outsourcing/Offshoring in Asia

World Rank Country Overall Index Cost Competive ness 7.1 6.7 6.5 6.4 6.3 8.3 8.6 6.4 7 9 Resource & Business & Skill Economic Environme nt 6 4.3 5.7 5.6 2.8 4.2 4.4 9.4 5.6 3.9

1 India 2 Indonesia 4 Singapore 5 China 7 Philippine

8 Thailand
10 Malaysia 17 Vietnam

5.9
5.8 5.4

8.2
7.9 7.4

2.3
2.2 2.5

5.9
6.9 4.5

Current Myanmar Situation

Cost Competitiveness Index HR Cost Competitiveness Telecommunication Cost Competitiveness

Transaction Cost Competitiveness

Resource & Skill Index Basic/Beginner Levels Highly competitive professionals Business & Economic Environment Index Benefits & Incentives Tax, Standardization, Transparency, Financial Services, Infrastructure, Legal Institutions

ACE Data Systems Co., Ltd.

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!