How is Covid-19 transforming Myanmar’s digital economy?
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Thu, 30 Jul. 2020
Oxford Business Group
CONTRIBUTING PARTNERSOxford Business Group
Covid-19 has shaken up the development of the digital economy in Myanmar, with the pandemic leading to a rise in demand for home broadband in this traditionally mobile-first market.
As various containment measures were imposed, companies located in the main business hubs scrambled to ensure that employees were able to work remotely.
“Household broadband demand increased because businesses were afraid that their workers would not be connected. We have very good mobile coverage in Myanmar, but this system is not designed for working from home for 10 hours per day,” Shane Thu Aung, co-founder and chairman of the Yangon-based Global Technology Group – which includes high-speed broadband service 5BB – told OBG.
In addition to simply improving internet connectivity in the home, virus-related disruptions have also seen companies look to different products to enable a smooth transition for those working remotely.
In particular, cloud services are being utilised to help cope with spikes in data demand.
“Almost all companies are now using video conferencing tools, and they have also explored cloud services so they can access their work systems from home,” Aung said. “They need to connect through the cloud due to heavy user traffic. Most government and private sector applications are also going over to the cloud.”
Aside from a shift towards home broadband in a country that has traditionally focused on developing strong mobile internet connectivity, businesses have also sought to adapt to increased demand for digital payments – further accelerating the demand for internet services.
In order to avoid cash transactions, a number of restaurants and shops have pivoted towards e-commerce platforms.
These shifts in consumer demand and behaviour have led to fresh investment in the sector, with Singapore-registered, Myanmar-focused Ascent Capital Partners committing $26m to local internet service provider Frontiir.
The funding, announced in late June, will help Frontiir expand its internet services across the country. The company currently serves 1.6m consumers across 360,000 households in four states and regions.
In addition to this investment, Ascent Capital Partners has also set aside additional financing towards mitigating the economic fallout of the virus in Myanmar.
Government-driven digital expansion
The increased uptake of digital products and platforms has also been supported by Myanmar’s post-pandemic recovery strategy.
Among the seven goals that comprise its Covid-19 Economic Relief Plan, announced in late April, the government prioritised the promotion of “innovative products and platforms”.
This includes encouraging the use of mobile payment services, bank transfers and card payments for e-commerce sales, as well as increasing the uptake of e-commerce options among businesses.
Such measures will build on previous efforts to improve the country’s ICT infrastructure and connectivity, which in recent years have focused on liberalising the industry and incentivising private investors.
In terms of internet coverage, the country’s Myanmar Digital Economy Roadmap aims to increase internet penetration from 40% in 2019 to 50% by 2025.
However, much of this coverage stems from mobile internet, with fixed broadband penetration still in the single digits, indicating significant room for further growth.
Cybersecurity in the spotlight
While the virus spurred plans to upgrade ICT infrastructure amid the increased uptake of digital platforms and services, there are nevertheless some concerns about the country’s capacity to legislate for the digital transformation.
“Many small businesses are considering how to digitalise their businesses, including trade and import procedures. However, regulations do not really reflect this, particularly for trade and Customs,” Aung told OBG. “Some government officials are responsive to the need for change, but more needs to be done. If Myanmar’s laws do not reflect these changes we will fall behind. There is a time gap and Myanmar is losing its advantage.”
One particular area of concern amid the rapid shift online is that of data protection, with fears that many companies may be unprepared to address cyber risks.
The government has been working on developing a dedicated cybersecurity law since 2018, and while there have been efforts to increase awareness through the opening of the National Cybersecurity Centre, some believe the country remains exposed to a significant level of threat.
“Suddenly everyone is worried about data security, and the government is alarmed about data classification and storage. This shows the need for a comprehensive cybersecurity law,” Aung said.
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