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Regulation, infrastructure hinder Myanmar's telecom ambitions

The unclear regulatory regime and ICT infrastructure that does not support business growth mean telcos and service providers looking to enter Myanmar need to advance with caution.
Written by Kevin Kwang, Contributor

Myanmar may be one of the few relatively untapped telecommunications market left in the world and its once-reclusive government is now opening up the sector for foreign investments. However, telcos and service providers need to tread with care given the hazy regulatory framework and lack of infrastructure for foreign players to scale their operations.

Irene Ng, head of Asia at GSM Association (GSMA), noted that there are not many greenfield telecom markets available today, and Myanmar was an exciting opportunity for telcos to invest in and "should not be missed".

According to the trade body's research arm, Wireless Intelligence, only 5.1 percent of the country's 60 million inhabitants, or 3.06 million, use mobile services. So the likelihood demand for mobile services will rise as Myanmar progresses is there, which gives telcos entering the market now an early-mover advantage, Ng noted.

The caveat, however, would be the corresponding risks of entering a market still in its early stages of development, she pointed out. There are many things that still need to be in place to provide the certainty that all investors look toward, not least ensuring a stable regulatory environment.

"While it is commendable the Myanmar government intends to focus on the telecoms sector as the first major sector to be liberalized and open to foreign investment, it is important for them to ensure that underpinning any successful reform process is a stable regulatory environment," the executive said.

At the same time, the government needs to strengthen its legal and institutional frameworks as these are the "twin pillars" supporting economic success," Ng added.

The country took an important step toward attracting more foreign investments when President Thein Sein signed off on a more business-friendly investment law which the parliament approved last week.

While not all details of the new legislation are known, Zaw Htay, an official with the President's office, told Wall Street Journal the new bill removed the previous requirement that foreign investors had to own at least a 35 percent share in joint ventures with local partners in unrestricted sectors. The shareholdings will now be split according to the business partners, he said.

Opportunities abound
ZDNet Asia also spoke to two companies which have dipped their feet into Myanmar and found the experience a mixed bag.

NTT Communications, for one, announced in October it had opened a branch office in Yangon. Working with local carriers, the Japanese company provides ICT offerings including system integration and international data communications services, said a company spokesperson.

Asked why it decided to enter the market, he said: "Myanmar is an emerging economy with huge demand and potential in the ICT sector, particularly for the business-to-business (B2B) arena. At NTT Communications, we recognize this potential alongside the numerous service requests made pertaining to Myanmar from our customers."

Cisco Systems have also jumped into the market as a service provider looking to develop the country's network infrastructure and make a connected Myanmar a reality. Tatchapol Poshyanonda, managing director for Thailand and IndoChina at Cisco, said while the market already has 3G voice services, there are opportunities to enable data services on mobile and Wi-Fi.

"Apart from the residential and mobile services, there are also big opportunities for the business customers such as banks and enterprises including companies in the public sector," Poshyanonda noted. Banks, for example, can tap the data services to offer online banking as they prepare for when the banking industry opens up.

He added the networking giant has local partners in Myanmar, and it is helping them to develop their knowledge and skills certification. It has also been banking on its Cisco Networking Academies there to train and develop a skilled workforce that can manage and work on the network platform, thereby jumpstarting the local ICT market, the executive added.

Teething problems need sorting out
The NTT Communications spokesperson did note there were "certain limitations and teething problems" in Myanmar, despite its attractive potential.

He said: "Fundamentally, Myanmar's ICT infrastructure is not well-equipped to support the business activities that growth brings, resulting in its lack of readiness toward foreign investors like us. Existing network service providers are not established enough to propel the industry to greater heights for now.

"Also, their Internet and telecoms markets are not completely ready to receive foreign investors, which hamper our progress in establishing our operations."

GSMA's Ng reiterated the need for the clarity in the country's regulatory framework, as well as the ease of doing business and obtaining the necessary approvals for things such as building network infrastructure and companies being able to bring in the necessary equipment of their choice.

"Government policies that facilitate positive economic growth, ease of doing business and competition in the market would certainly contribute to the establishment of a thriving telecoms sector, which then creates long-term job prospects for the people of Myanmar," she said.

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