With the new investment, ONGO aims to ramp up the country’s cashless transaction adoptopm. Its goal is to “provide one million consumers in Myanmar with access to finance over the next three years”, said an official press release.

The rise of smartphone usage — fuelled by the slashing of sim card prices — has allowed large swathes of Myanmarese to link up to the internet. That, in turn, has enabled mobile payment services such as Thai e-wallet startup T2P to enter the market.

ONGO is the consumer facing brand of Ronoc Asia, a subsidiary of the emerging markets investment business Ronoc. It offers a range of fintech services including payroll systems, e-wallets, locating of cash agents, airtime top-up, p2p transfers and bill payments.

“The addition of NBC as a strategic investor will strengthen our capabilities and accelerate our timelines in Myanmar as well as our expansion to other markets in the region,” said Michael Madden, the Founder and Chairman of Ronoc Asia/ONGO.

“National Bank of Canada is proud to become a partner of Ronoc Asia/ONGO. This investment in fintech complements the activities we already have in the ASEAN zone through our subsidiary ABA Bank, in Cambodia,” stated Louis Vachon, President and Chief Executive Officer of National Bank of Canada.

ONGO currently employs over three hundred people in Yangon and is expected to grow to five hundred by year end.

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Financial inclusion is a topic of growing importance in countries such as Myanmar, where advances in tech are rapidly changing the dynamics in how people access financial products. As I wrote in 2016, fintech companies are capitalizing on Myanmar’s rapid development and increasing smartphone and internet penetration by offering digital financial products.

Although many people in Myanmar are skeptical of traditional banking institutions, fintech startups hope to win their confidence through low-cost, user-friendly products. One such organization is Wave Money, a joint venture between Telenor, Yoma Bank and Myanmar First Investments. (Disclosure: I performed contract editorial work for Telenor Group in 2014 and 2015.)

In a new partnership with the United Nations Capital Development Fund (UNCDF) and the Australian Department of Foreign Affairs and Trade (DFAT), Wave Money is targeting women consumers specifically in an attempt to increase financial literacy and inclusion in Myanmar. The company is developing a financial gaming application that will be accessible via users’ mobile phones.

Boosting confidence 

The app’s content will be delivered through a gamified system that teaches consumers about savings, interest and insurance. Ultimately, the goal is to help women become confident enough to engage with formal banking systems and navigate financial products they may have shied away from in the past. Wave Money, UNCDF and Australia’s DFAT aim to reach 260,000 women, 30,000 of whom already use mobile money accounts.

“The partnership between Wave Money and UNCDF will be instrumental in identifying how we can most effectively serve those currently underserved and excluded,” said Brad Jones, Wave Money’s CEO, via email. “We believe that through this application, people in Myanmar will be able to improve their understanding of financial concepts, which will further enhance financial inclusion in Myanmar.”

Wave Money CEO Brad Jones poses in front of the company logo in Yangon in August 2016. (Photo credit: ROMEO GACAD/AFP/Getty Images)

Less than 10% of women in Myanmar between the ages of 18 and 34 currently have bank accounts, and only 29% have access to formal financial services. In a press release announcing the partnership, the partnering parties attributed the low numbers to “the lack of information that reaches women, and poor guidance available to them on where and how to use financial services that meets their respective needs.”

A digital gateway

But with smartphone penetration growing rapidly in Myanmar, digital platforms offer a gateway for reaching greater numbers of women and provide them with the means to participate more fully in the economy. In 2016, the GSMA reported that 33% of women own mobile phones in Myanmar, and about 1.4 million use smartphones. According to Jones, Wave Money will use UNCDF resources and data in developing the gamified app to ensure that it meets the needs of the women it aims to reach.

The Wave Money-UNCDF-DFAT partnership stems from UNCDF’s SHIFT Challenge program. The Shaping Inclusive Finance Transformations (SHIFT) department emphasizes empowerment through access to financial services and specifically focuses on women in underserved markets. Wave Money submitted a proposal for its gamification platform to the Challenge, and will receive funding from SHIFT, DFAT and the UNCDF’s Expanding Financial Access (EFA) program, the latter being the primary sponsor.

The EFA’s goals for Myanmar include increasing the number of adults who use more than one financial product from 6 to 15% and boosting overall inclusion from 30 to 40% by 2020. The program also aims to reach 830,000 “low income beneficiaries,” such as small-scale farmers, young consumers, and women entrepreneurs.

Winning over skeptics

As the first company to receive a mobile financial services license from Myanmar’s Central Bank, Wave Money sees an opportunity to “enable and empower people with the freedom to manage their money the way they most prefer in an easy and reliable way,” according to Jones. The hope is that consistent, transparent products will win over consumers who are skeptical of financial systems.

“The main objective of our digital gamification on financial literacy is to increase the understanding and perceptions of formal financial services and increase their interest and trust,” Jones said. “In this way, we believe that this will help improve these relationships.”

First appeared at Forbes

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As recently as 2013, CNN described Myanmar’s banking system as “outdated and debased, open for decades to abuse by the previous regime, and shunned by about 90 percent of the population.”

The article described the story of a man who kept only a small portion of his money in the bank, and he only did that for fear of a house fire. The majority of his wealth he held in cash, in his home.

That story exemplified the skepticism with which people viewed the banking system, and the situation is not entirely different today. Mistrust of the financial system pervades the majority of Myanmar’s 53 million people.

“The banking system doesn’t cater to the mass market,” said Brad Jones, CEO of mobile financial services provider Wave Money.

But the circumstances are changing, thanks to Wave Money and other financial tech platforms that are democratizing financial services in the country. Access to online services has skyrocketed in Myanmar in recent years, with mobile phone penetration reaching at least 50% and 80% of first-time phone buyers choosing smartphones. Mobile phone penetration was roughly 10% in 2014.

Wave Money, a joint venture between Telenor, Yoma Bank, and First Myanmar Investments, developed its mobile money transfer platform in response to a growing need for simplified banking services.

“There’s a lot of urbanization,” Jones said, noting that people from more rural parts of the country are seeking job opportunities in Myanmar’s cities. “As people move from those regions, they need to send money home.”

Unfortunately, transferring money at traditional banks can take hours at a time and can only be done during regular operational hours. This leaves workers in the difficult position of choosing between lost productivity and getting money to their families. Wave Money presents a more accessible alternative.

“We saw an underlying need for money transfers that are available seven days a week, around the clock,” Jones said.

Since its launch in August, 100,000 users have signed up for the service. They’re able to transfer money via their smartphones or in person at Wave Money locations. Sign-up and user to user transfers are free, though people pay a small percentage for cash-outs. For example, a 50,000 kyat ($39) cash-out would carry a 1,000 kyat ($ 0.78) service charge.

Jones said users gravitate toward app-based transfers and that 75% of Wave Money’s activity occurs outside normal banking hours. This speaks to the demand for tech-based financial products in Myanmar’s growing economy, and apps aren’t the only necessary commodities.

Financial inclusion linked to economic growth 

Financial inclusion is essential to economic development in emerging markets such as Myanmar. Widespread implementation of digital finance systems “could increase the GDPs of all emerging economies by 6 percent, or a total of $3.7 trillion, by 2025,” according to the McKinsey Global Institute.

“Financial inclusion leads to increased household welfare and macroeconomic welfare,” said Ameya Upadhyay, investments principal with the Omidyar Network.

Digitization in Myanmar would bring millions of people into the financial system formally, providing them access to secure, regulated, reliable services. Right now, the unbanked in Myanmar are extremely financially active, according to Upadhyay. However, they rely on unregulated lenders who charge monthly interest rates of 10 percent or more and can abscond with people’s savings with little to no consequence.

“Usually the pattern taken by these markets is that mobile financial services start with payments,” Upadhyay said. “Payments form the first backbone of financial inclusion.”

People don’t need to have too much faith in the banking system to send money back and forth with one another. But once they see that a company makes good on its promises and doesn’t exploit them, they’ll be willing to save or invest with them down the road. Mobile transactions also create records that people can use to eventually obtain credit and build up savings for investments. Regular, on-time payments to utilities companies or e-commerce subscriptions signal consumers’ abilities to repay loans or build savings.

A Myanmar bank staff from Asia Green Development bank counting Myanmar bank notes in downtown Yangon. As it strives to become Asia’s next economic star Myanmar, has set its sights on overhauling its battered and distrusted banking system. (Photo credit: Soe Than Win/AFP/Getty Images)

For this to happen on a broad scale in Myanmar, fintech organizations will need to establish trusted distribution networks, Upadhyay said. Agents will be on the frontlines of earning consumers’ trust and educating them about financial platforms.

Perhaps most importantly, people must become accustomed to using digital financial services beyond making money transfers or airtime top-ups for their phones.

“Where Myanmar can leapfrog other markets is by providing other use cases,” Upadhyay said. Paying bills, making tax payments, and purchasing products will spur adoption of fintech products and therefore financial inclusion. Of course, the platforms to do so must exist in order for that to happen.

The digitization of Myanmar

The fintech company ConnectNPay is helping both banks and utilities providers to digitize and streamline their payment systems. ConnectNPay is a joint venture between LeoTech and MCC Group, a local Myanmar conglomerate, which launched MyWalletPlus before pivoting into data digitization on a mass scale.

“We thought we would try to get into the wallet space, but it’s an incredibly crowded space, and the telcos are going to win that game,” said Patrick Kershaw, managing director of investments at Leo Tech and an advisor to ConnectNPay.

Recognizing that “core parts of the [financial] infrastructure were missing,” Kershaw said the company decided to provide a digitization and aggregation platform that would enable service providers to offer more efficient services. The Yangon City Development Council hired CNP to help streamline its services, and the company assisted in developing a billing system that generates 10 million bills each year and reduced billing cycles from 62 to six days.

The upshot for consumers is that rather than spend entire workdays waiting in line to pay utilities bills, the process takes a fraction of the time it once did. CNP’s services have also helped the city digitize tax payments, which Upadhyay says is a critical but often overlooked component of economic development.

“Because of the work CNP is doing, allowing people to make payments of their council tax – if a fintech startup can allow people to pay their taxes more easily, that can increase the tax revenue of the government, reducing fiscal deficit and improving the balance sheets of the exchequer,” Upadhyay said.

Building trust and economies through fintech  

As Wave Money has encountered, a lack of trust makes people hesitant to embrace new platforms. Kershaw said ConnectNPay has been fastidious in its commitment to transparency for that reason, distributing performance numbers and offering flat rates for clients rather than engaging in negotiations.

The company currently maintains data backups and some operations in Singapore, but Kershaw said the goal is to move all functionalities into Myanmar during the first quarter of 2017.

“We’re trying to be an enabler, we’re trying to build the core building blocks so the economy can emerge,” he said.

Another important component of economic development is microfinance. The ability to secure loans to build businesses enables people to create financial foundations for themselves and their families, not to mention contribute to local economies.

“Microfinance is significant in ensuring that economic growth provides benefits for the general population and not just for those at the top,” said Jeremy Kloiser-Jones, founder and CEO of Bagan Capital. “As the fastest growing economy in the world … there is a huge need for credit to help ordinary Myanmar citizens grasp the opportunities to grow their businesses, or start new ones.”

Bagan Capital provides microfinance loans to small businesses and micro-enterprises. Kloiser-Jones said most of the organization’s clients are women who need capital for buying inventory or business supplies. He noted that job opportunities within traditional sectors or with the government often go to men, so microfinance enables women to develop their own economic security. The more stable their financial lives, the more they are able to invest in their families’ education and well-being, both of which influence social outcomes.

Kloiser-Jones said Bagan Capital conducts most of its client transactions in cash because the country is still largely a cash economy. But that’s likely to change in the next several years.

“Digital money in Myanmar is still in its infancy, but we are assessing product offerings and will integrate cashless transfers into our operations in the near future,” he said. “The incredible growth in telecommunications infrastructure and smartphone penetration has now made this a realistic tool.”

Fast-track to the future

One thing most people in Myanmar’s tech community will tell you is that change is happening fast and not always in predictable ways. Regulations and business opportunities can take months to come together but once they do, businesses must be ready to move immediately.

“It’s glacial and it’s lightning,” Kershaw said.

“All parts of the Myanmar financial system are trying to develop simultaneously, as everything is starting from a low base,” Kloiser-Jones said.

For a country that only reopened to foreign investment within the past decade, the rate of change is unprecedented.

“I’ve never witnessed anything like what I’ve experienced in that market,” Kershaw said. “It’s like four-dimensional chess and the rules change every day.”

First appeared at Forbes

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Singapore-based early-stage venture capital firm Golden Gate Ventures foresees the pace of mergers and acquisitions (M&As) in Southeast Asia catapulting, as more institutional funds, protectionists economic policies and global funds look to expand their footprint in the region.

The venture capital firm, in a report, predicted that this region will see a minimum of 250 M&A’s occurring each year beginning 2020, reflecting a 500 per cent increase in M&A exits from the number expected in the 2015 to 2020 period.

The VC firm, which has investments across this region and Silicon Valley, in its second report on the growth of M&As in Southeast Asia, released Tuesday, noted that while the option to go public in regional exchanges remains a distinct possibility, acquisitions will drive primarily exits in Southeast Asia. 

Golden Gate Ventures managing partner Vincent Lauria explained:

“In the United States, a successful exit involves going public. The financial returns generated from listing on NASDAQ or the London Stock Exchange usually mean that both investors and entrepreneurs alike have generated a pretty healthy return on their investment. In Southeast Asia, it’s the opposite: a trade sale will often result in larger financial returns than going public, especially if the acquirer has a strong strategic interest in the region.”

Of the top ten M&As in the region by value, eight occurred within the last three years. Golden Gate Ventures expects this trend to accelerate, especially with the surge in capitalisation from global funds.

The VC firm, which is currently raising its second vehicle, targeted at $50 million, pointed out that there has only been 11 tech IPOs in Southeast Asia since 2005, while there have been 127 acquisitions during the same time period.

The most notable regional exits have all been acquisitions: Rakuten’s record breaking purchase of Viki for $200 million in 2012, Zendesk’s $30 million acquisition of Zopim in 2014, and even McAfee’s landmark acquisition of Darius Cheung’s tenCube back in 2009.

“As the region becomes a target for more global funds, much of that funding will only accelerate the rise of profitable, viable businesses, which in turn will foster more M&A activity, especially in light of emerging Asia’s increasing strategic and economic value,” Golden Gate Ventures’ report added.

The increase of non-VC investments also bodes well for M&A activity in the region, as Chinese tech firms like Alibaba, Tencent, and JD have already made several large investments in the region.

Major Japanese banks such as Credit Saison have also recently begun investing in fintech startups in Southeast Asia, looking to increase their customer base.

“Often, such investments are a prelude to acquisition, as they are an opportunity for the investor to follow the startup closely and learn more about its market for several years or months. Australian Securities Exchange (ASX)-listed large-cap tech companies have also been major players,” the VC firm observed.

Indian companies have also been strengthening ties to Southeast Asia, particularly Singapore. It has been reported that round three-fourths of Indian startups that raised early-stage funding in 2015 will redomicile to Singapore, seeking a more amenable regulatory climate.

Indian foreign direct investment (FDI) in Singapore also reached $25 billion in 2014. This could point to an increasing trend towards M&A by Indian companies in the next three to five years.

IPO still an option

Tech companies going public on regional exchanges is a rare event with most turning to ASX to list. In the past ten years there have been 145 per cent more M&As than IPOs in Southeast Asia.

Among the markets, the Singapore Exchange has become the international platform of choice for fundraising – positioning itself as a friendly market to take a business public through numerous initiatives, including the junior tech board Catalist, to help tech companies list more easily. These initiatives appear to be making inroads with technology companies, Golden Gate Ventures highlighted,

Among the IPO candidates are Trendlines, an Israeli technology incubator that listed on Catalist November 2015, and security firm Secura in January 2016. Upcoming is cloud­based software provider Deskera planning to go public sometime this year.

Better funding leads to better potential sales

Capital investment in Southeast Asia has increased by 47 per cent since 2013, Golden Gate Ventures pointed out, with 2015 seeing the formation of Southeast Asia-focused firms with a total capitalisation of as much as $2 billion.

The growth in funding has enabled startups to rapidly build development capabilities, hire talent, and improve operations across the region. These mature startups are attractive to prospective buyers who want to expand their footprint in the region’s fastest growing markets.

Through acquisitions, global players can circumvent many of the difficulties associated with growing a business in a foreign market, Golden Gate Ventures noted.

Cosmetics company, Luxola, founder Alexis Horowitz­-Burdick noted that acquisitions are extremely useful for international companies looking to expand into Southeast Asia.

“This is a really difficult region to do business, especially for outsiders that aren’t too familiar with the different markets.”

In July 2015, Luxola was acquired by LVMH Moët Hennessy Louis Vuitton SE, better known as LVMH.

“By acquiring a company with a strong team, existing customers, and a strong operational foundation, global companies can often expand into Southeast Asia much more efficiently than attempting it themselves,” Horowitz­-Burdick said.

In an earlier report, in August 2015, Golden Gate had said that Series A investments in Southeast Asian (ASEAN) internet startups had almost tripled in the 2010-2014 period, from $29 million in 2010 to $87 million in 2014, while adding that most capital in Southeast Asia flowed into Singapore, during this period, where 10 startups ventures had raised $60 million in 2014 in total. , with a Series A investment as between $1 million and $10 million by GGV.

The article first appeared in DealStreetAsia.com

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Read more on the topic: TechInAsia

The Economist: Some mountainous parts of Mexico are so remote that the electricity grid fails to reach them, let alone the banking system. A five-year-old social enterprise, Iluméxico, hopes to change that. It provides more than 20,000 people with loans to buy low-cost solar panels and batteries, enabling them to switch lights on, watch television and charge mobile phones, sometimes for the first time. It also introduces them to the financial system via those same mobile phones. It has launched a pilot project enabling them to pay off the loans in installments via an SMS-based payment system, Transfer, owned by Banamex, one of Mexico’s biggest banks. Read the full article

Forbes: Providing small-ticket loans backed by assets such as cars, motorcycles, houses and land to folk like Nirut, who tend to be shunned by banks, has become a big business for Srisawad. The firm’s loan portfolio is a modest $260 million, but it has 200,000 customers, and with its network of more than 1,000 branches across the country it is the biggest among what are known as “car for cash” companies. Read the full article 

The WSJ: Mobile Banking Provides Lifeline for Bangladeshis. Phone-based services revolutionize the way people save and send money. In cash-focused Bangladesh, mobile-money services are still a novelty, and some traditional bankers worry about potential security risks that users of private services like bKash face. But experts at Bangladesh Bank, the country’s central bank, describe mobile money as a key strategy to expand financial access in this nation of 160 million people, where fewer than 30% have a bank account. Four years after Bangladesh Bank started handing out mobile-money licenses, about $42 million is flowing through mobile banking systems daily. The number of registered mobile-money users has topped 23 million, around 15% of the total population, according to the central bank. Read the full article

CGAP: In Myanmar, the poorest country in Southeast Asia, where 70% of the population live in rural areas and 19 million adults earn their living through farming (FinScope 2013), mobile phones are a very new phenomenon. With a population of more than 50 million, Myanmar has the most underdeveloped financial sector in region, offering only 6% of adults any type of regulated financial service. The rapid growth in telecommunications coverage is laying important groundwork that can support growth of digital financial services for the unbanked. Read the full article

DealStreeAsia: Investment in telecoms has surged in Myanmar in the past year as operators begin to tap a rapidly expanding market, driving growth in the economy. Since the opening up of the mobile segment last year, there has been a boom in phone ownership and subscriptions in Myanmar. Currently there are more than 18 million SIM cards in circulation − corresponding to about one-third of the population − up from just 1 million in 2012, according to data compiled by Reuters. Read the full article

DealStreeAsia: MySQUAR, Myanmar’s only social media platform in the local language, has raised $2.6 million, at a valuation of $27.8 million, through an initial public offering on London’s Aim. Read the full article

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Since the opening up of the mobile segment last year, there has been a boom in phone ownership and subscriptions in Myanmar. Currently there are more than 18 million SIM cards in circulation − corresponding to about one-third of the population − up from just 1 million in 2012, according to data compiled by Reuters.

Norway’s Telenor started services in September last year, one month after the launch of Ooredoo of Qatar, with both granted licences over a year ago. The newcomers have quickly gained ground on existing operator Myanmar Posts and Telecommunications (MPT), though the former monopoly and its partner KDDI Corp of Japan still lead in market share in what is a rapidly expanding sector. MPT has 8.4 million subscribers, followed by Telenor with 6.4 million and Ooredoo with 3.3 million.

The increased competition has seen SIM costs plunge from around $200 in mid-2013 to just $2 more recently, while service costs are also expected to fall further as the three networks expand their reach into rural areas.

While MPT has the widest coverage at present, reflected in its higher subscription figures, it is being challenged by both Ooredoo and Telenor, which have extended their reach to 41 per cent and more than 50 per cent of the population, respectively.

The increased coverage and broader access to voice and internet services will be a driving force for economic growth, according to Petter Furberg, CEO of Telenor Myanmar. In an established economy, a 10 per cent increase in mobile penetration can lead to a 1.2 per cent jump in GDP, Furberg told OBG. This may be even higher in certain countries. “In emerging economies such as Myanmar, the effects are even more pronounced: 10 percent more internet availability could lead to a 3-5 percent boost in GDP,” he said.

Ross Cormack, CEO of Ooredoo Myanmar, said banking was another area expected to benefit from an expanded telecoms sector. The change is likely to come from increased penetration of banking services, which currently remains limited with just 5 percent of the local population having a bank account, Cormack said.

“The banking system will become a great example of the technological leapfrog we hear about so frequently when discussing Myanmar,” he told OBG. “Mobile money is critical to ensuring that financial inclusion is a safe, convenient and affordable option for the nation.”

Read the full article

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Singapore-based startup Leo Tech is one of those trying to navigate Myanmar’s spurting, but still opaque, business environment. Leo Tech launched its umbrella brand for financial tech, ConnectNPay, in 2014, along with the bid of several companies like German group Rocket Internet to jumpstart ecommerce in Myanmar. Read more

DEALSTREETASIA: The Polish solution to Myanmar’s banking sector. Most emerging post-socialist economies face the same particular dilemma; How to reform and develop the banking sector. The centrally-planned, state-command economies were usually characterised by a mono-bank system with a quasi-central bank being also a quasi-commercial entity. Thus, in the process of market institutionalisation one would have to create a commercial banking sector from scratch. The role of the banking sector is beyond that of being a business actor in the capitalist environment. It is an integral part of the financial system, the bloodstream of a market-based regime. It has the power to effectively support the process of growth acceleration, but the insufficiencies in the system can also impede this growth. Read more 

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That’s one of the key takeaways from Nielsen’s latest report out today on Myanmar’s young population and increasing consumer purchasing power that are “fuelling opportunities for brands”.

The opening quote comes from U Thurein Nyein, General Manager at Nielsen MMRD; while it seems to address “international brands”, startups eyeing the super-emerging market would do well to sit up and take note.

The report also found that Myanmar consumers had among the highest mobile engagement of any market in Southeast Asia, despite mobile phone penetration still being down at below half (44 per cent). But year-on-year, penetration was up 19 per cent between 2013 and 2014.

Word-of-mouth Myanmar
“The key drivers of choice of handset for Myanmar consumers include word-of-mouth recommendations from family, friends and colleagues, as well as value for money and the desire to own the latest model handset,” the report said.

SMS still makes up the bulk of mobile communication in the country (81 per cent), followed by chat apps and social networks (24 per cent). Popular websites among those browsing on mobile in Myanmar (20 per cent) include Facebook, Thithtoolwin, Google, Myanmarnews and G-talk.

Nyien added that considering Myanmar is a market that has been “closed off to the world for decades… the speed with which consumers are adopting new technology is astounding”. This, he concluded, presents a “tremendous opportunity” for brands willing to leverage this trend.

Back in February, we interviewed Mynamar entrepreneur and EventNook Founder Kyaw Lin Oo, who discussed some of the cultural differences among startup founders from the country, including his belief that “in Myanmar, when you build a business, it is forever. It is for generations. There is a tradition of these businesses”. Earlier this year, Kyaw also launched Myanmar-based online ticketing platform ScapeTour.

In line with the report’s claim that international corporates are increasingly taking note of the country of 53 million and consumer purchasing power is growing, Channel NewsAsia reported yesterday that the “United Overseas Bank (UOB) has become the first foreign bank to announce an onshore loan in Myanmar, after nine foreign banks were granted provisional operating licences in October last year”.

Read the full article: E27.CO

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Lai was previously the divisional director for IE Singapore’s China division.

Singapore’s bilateral trade with Myanmar is valued at S$3.23 billion $2.37 billion) in 2014.

Lai attributed this surge in investment to Myanmar’s abundant natural and human resources. Its strategic location, where China, India and Southeast Asia converge, also meant that this offered significant advantages, especially when making investments into the logistics and transport industries in Myanmar.

In a report by IE Singapore, it was noted that: “Myanmar has the advantage of a favourable geographical position, low wages and a large potential consumer market. Its recent political and economic reforms have inspired optimism among foreign investors. However, despite the positive outlook, investors need to be cognisant of the risks and challenges of transacting with a market that has only recently emerged from decades of isolation.”

With this in mind, Singapore has been capitalising on its excellent diplomatic relations with Myanmar ever since its economy liberalised.

Since Myanmar’s economic liberalisation in 2012, economic growth has rocketed. One in four Asian enterprises surveyed is intending to expand into Myanmar this year, according to a survey by the United Overseas Bank (UOB) in 2014.

Market Situation

Singaporean restaurant group Les Amis has opened two restaurants, House of Singapura and Peperoni Pizzeria, in Yangon. This came about as a result of establishing a joint venture with a family-owned business in Myanmar, with an initial investment of S$250,000.

According to Raymond Lim of Les Amis, businesses in consumer sectors faced minimal competition, as well as a first mover advantage.

However the benefit came with certain costs, as Les Amis had to import extensively, in order to overcome problems associated with a deficit of reliable supply chains and decor options in Myanmar.

Lim stated: “Investment-wise, cost isn’t prohibitive. We must have a foothold early. Myanmar’s consumer base will increase when a middle class and middle-income economy take shape, but how long that will take is uncertain.”

Other Singaporean firms with a presence in Myanmar are Interra Resources, the largest onshore oil producer in Myanmar with two producing oil fields. FNN, another Singaporean firm, has a 55 percent stake in Myanmar Brewery Limited (MBL), which was established in 1995. Since then, MBL has grown into the market leader, dominating the market with a share estimated at 60-70 percent.

Despite this surge in investment, investors may want to look at making longer-term investments in the infrastructure space, particularly in logistics, supply chain management, telecommunications and transport. While consumer sectors may make for an attractive investment destination, much of the industrial and commercial sectors that underly it, are also ripe for investment.

With Myanmar in a state of transition, as the economy develops, market issues like land ownership, training & development of local manpower and working within and around the limitations of physical infrastructure will emerge. Lai noted that “Singapore companies should take a long-term view when investing in Myanmar and focus on sustainable partnerships that are mutually beneficial.”

Dr Maitrii Aung-Thwin, associate professor of Southeast Asian history at the National University of Singapore (NUS) said: “Myanmar has changed visibly in the cities, but less so in the countryside. Housing and living costs have gone up, making it difficult for the everyday urban citizen to meet day-to-day expenses. My sense is that Singapore companies need to be prepared to expect returns only in the medium to long term.”

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