Myanmar's mobile tech start-ups

The rapid development of Myanmar’s telecommunications sector is arguably one of the most significant modernising influences to penetrate the nation’s economy since liberalisation began in 2010. Telenor, the Norwegian telecommunications giant, has raced ahead of competitors to take the largest chunk of the market. Less than a year after setting up shop in August 2014, the company had lured more than 10 million subscribers out of a total national population of around 55 million. By the most recent estimates, only around 30 percent of Myanmar’s population have access to a mobile phone. It is easy to see that this ‘blue ocean’ of untapped market space, coupled with a track record of exponential growth, heralds a potentially rich future for the mobile tech industry in Myanmar. 

After decades of severely restricted internet access, locals have bypassed agonisingly slow dial-up connections and been catapulted into an age of mobile browsing at the touch of a button. As mobile usage grows, so will a demand for innovative software and localised mobile app content. However, due to the risks involved, only a slow trickle of international tech start-ups are attempting to fill this market void. MySQUAR, which is developing Myanmar’s first local language social media and entertainment apps, recently raised £1.67 million after listing on the London AIM stock exchange. Rocket Internet, a large German-headquartered internet company, has helped to launch several e-commerce platforms in the country, including automobile trading and property listing platforms. It is hard to name many more heavyweight international contenders in the industry. Furthermore, the sector can be difficult to penetrate. The chief executive of MYSQUAR has made it clear that the company doesn’t expect to break even until 2018, and its flagship MyChat app will inevitably face stiff competition from WhatsApp, which is owned by Facebook. Many of Rocket Internet’s online platforms are also competing with locally-developed equivalents. 

There are signs that a future is emerging for local entrepreneurs in the mobile tech arena. Myanmar is home to a host of nascent software development companies, such as Rebbiz, which operates several online classifieds portals such as Myanmar Cars DB, NEX, which has developed various localised mobile apps including a Burmese language keyboard, and Code2Lab, which has developed SmartSales, a tablet-based system designed to streamline the restaurant billing and ordering process. Many of these start-ups have sourced funding regionally. In November 2014, NEX won a $150,000 investment from a Singapore-based angel investor. Rebbiz relies on funding from Frontier Digital Ventures, a Malaysia-based investor in online classifieds businesses. 

It may be that many bigger multinational investors do not have the risk appetite for a market which is still young and fraught with challenges. Running a business from Myanmar can be extremely frustrating. Mobile usage may be growing, but technical infrastructure is still very underdeveloped. Locally-operated start-ups face daily setbacks, such as frequent blackouts and intermittent broadband connections. The price of rent is also often prohibitively high for early stage start-ups, and there is a distinct lack of skilled IT specialists and software developers. Once trained, practitioners often flock overseas in search of higher pay. Another reason for reticence may be the problems associated with adapting technologies to suit local conditions in Myanmar. For example, the most widely used method for coding the Burmese script is not compatible with Unicode, the international text encoding standard. This means that many local language websites are not easily searchable via Google, and locally developed mobile apps aren’t compatible with mainstream app stores. Access to finance can also be a barrier to the growth of mobile e-commerce. The majority of the Burmese population is underbanked, which is an obvious hindrance to the development of online payment facilities.

Nevertheless, many hardy start-ups are tackling these obstacles head on. MYSQUAR has been encouraging local mobile phone technicians to upload its MyChat app onto new phones when they install the Burmese text code, which isn’t a default preinstalled language on most phones. MyChat predicts that it will have 1 million active users by the end of 2015. Companies such as NEX bolster their income by seeking clients outside of Myanmar, in places such as Singapore, where they can offer competitive prices for their website and app building services due to relatively lower labour costs.

The uncertainty generated by November’s elections and a challenging business environment have cast a shadow over investment prospects in Myanmar as a whole in 2015. The success of mobile tech start-ups, most of which are in the early stages, also remains to be seen. But the growth of the mobile tech industry is inevitable. If the somewhat ambitious government figures are to be believed, then mobile penetration is expected to reach 85-90 percent of the population by 2016, from the current 30 percent. It may be worth playing the long game.