#Asia Startups betting big on quick growth of Myanmar’s Internet user base

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In 2015, 80 per cent of mobile users — 18 million people — in Myanmar already have smartphones

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A little more than a year ago, the Myanmar government gave two foreign telcos, Ooredoo and Telenor, the green light to launch operations in the country.

This triggered a price war in the market that saw the costs of pre-paid SIM cards drop significantly to US$3.8 (that also includes data charges) from US$500 in 2010 — and paved way for a huge Internet explosion.

Welcome to Myanmar, the land of new opportunities.

With a population of more than 53 million, of which 80 per cent have smartphones, the country is now on the path of a revival with the new democratically-elected Aung San Suu Kyi set to lead the government after many years under a military junta.

The return of democracy is music to the ears of companies across the world looking to do business in the country, which has one of the fastest-growing Internet user bases.

People embracing innovation

In Myanmar, only one per cent of the population had access to the Internet in 2012. Now, the penetration rate is around 10 per cent. The three leading telecom operators — Ooredoo, Telenor and MPT — are developing the 3G network really quickly. Most of the major cities are now covered, but the rural and far-flung areas have yet to get access.

According to a March 2015 report by The Economist, with wireless towers now popping up across the country, the government thinks that 80 per cent of its citizens may have a mobile phone with a data connection by 2016.

“Myanmar is in a pivotal period in its evolution. The country has opened its borders only five years ago, and revealed a unique potential for emergence. A lot of markets were literally untapped because nobody had ever invested in them and the expectations of the population were very high,” Niroshan Balasubramaniam, Co-founder and Managing Director of e-commerce startup Kaymu Asia told e27.

“In 2015, 80 per cent of mobile users (18 million people) have smartphones, it is as much as in Singapore and more than in the US (75 per cent). It is hard to believe when you know that a SIM card was worth US$500 in 2010! The country is developing very quickly because Burmese people are particularly supportive of innovation. They want to use state-of-the-art technology and catch up with the rest of the world after years of isolation,” he added.

According to Rocket Internet’s Managing Director (Asia) Gijs Verheijke, the period between April 2015 and September 2015 had been very interesting for the Internet in Myanmar.

“In mid-2014, the penetration was at around one per cent. Based on active SIM cards data from the providers, a realistic estimate is that about 10 per cent of the people have access to Internet as of September (this year). I haven’t checked, but I don’t think there has ever been a country in the world where the number of connected people (and hence the addressable market for online businesses) increased 10X in the scope of one year,” Verheijke said in a post on Quora

Entrepreneurship scene still quite small

The startup ecosystem is not developed in Myanmar. There is no incubator, and the entrepreneur scene is quite small. However, things are changing slowly and some big companies are now launching projects to support innovation and entrepreneurship. Young people are also taking business initiatives, according to Balasubramaniam.

Over the past couple of years, many startups have cropped up in the country. Among them are Zwenexsys Intl, Bindez, Technomation, Studio AMK, Total Gameplay Studio and InnoWave Myanmar. Big e-commerce ventures are also seeing massive prospects in the country.

This is why Rocket Internet expanded operations into Myanmar. The German Internet incubator is operating a slew of startups, including e-commerce firms Kaymu and Daraz.

Both these startups, originally from Pakistan, are betting big on the growing mobile penetration. Rocket also runs Work.com.mm (online career platform), Motors.com.mm (online car/motorcycle classifieds), House.com.mm (home sales and rental platform), and Ads.com.mm (general online classifieds), in addition to Shop.com.mm (another e-commerce firm following an Amazon-like business model).

Facebook is the Internet for many

“Building Internet infrastructure is one thing, and educating people to use their phones and the Internet is another. Many people still think that Facebook is the Internet and (they) never visit other websites, or know how to use search browsers and email accounts. It is a big challenge as an independent online marketplace to get customers place their orders and manage their account independently. It is also important to educate our sellers. We need sometimes to tell them that even if they clicked on the ‘dispatch’ on their accounts, they still need to do it ‘in real life’,” added Balasubramaniam

The lack of non-mobile Internet infrastructure also has a huge impact on a startup’s performance since they have to pay a huge amount of money to get a decent connection. Internet is a significant budget item for a startup and takes funds that could be dedicated to other things, marketing for instance.

Another key challenge is lack of proficiency in foreign languages. This is forcing entrepreneurs to localise their products and content. Competing standards for encoding the Burmese alphabet are making it tricky to produce text that will be readable on all devices, according to the The Economist report.

Digital payments is another key barrier for growth in Myanmar, where a majority of citizens remains unbanked. People still buy apps by paying cash for them in electronics shops. The shop would then download each app to the buyer’s smartphone from an encrypted memory stick provided by its designers.

“Despite the lack of knowledge on how to use and download mobile applications, our app launched in April is already accountable for 20 per cent of our visits. This is a result far beyond what we initially expected,” Balasubramaniam shared.

What does the future hold for Myanmar?

Kaymu says that its top selling products show clearly that people are very interested in technology. Orders for Huawei, Oppo and Samsung smartphones, as well as for electronic accessories, are high. Electronic products represent 50 per cent of its orders, according to Balasubramaniam.

Apart from Facebook, the other most commonly-used app is Viber. This presents a good opportunity for startups to engage with users and market their products through social media.

While the startup scene is quite bleak as of now, the penetration of the Internet and smartphones can boost Myanmar’s prospects.

The new government should open its doors for foreign companies and set up incubators/accelerators to encourage innovation. Mobile infrastructure should be expanded and foreign languages such as English should be taught at schools.

As the Southeast Asian region is going through a startup revolution, Myanmar should also be able to catch up with the rest of the region.

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Image Credit:Hanoi Photography/Shutterstock

The post Startups betting big on quick growth of Myanmar’s Internet user base appeared first on e27.

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