In only three years Myanmar’s telco sector has become the largest driver of FDI in the country, with international companies scrambling to enter the market.
Myanmar’s opening represents the dismantling of one of the world’s last pariah states. Over the past several years, the government has made concerted efforts to reintegrate the nation of some 54 million into the global community. The most poignant symbol of this was the rise to power of long-time dissident and human rights campaigner Aung San Suu Kyi in April 2016. The hurdles facing Suu Kyi are immense, and the recent upsurge in violence against the Rohingya Muslim minority, as well as increased rebel activity have tarred the country’s efforts at reform.
While sectarian tensions remain a key risk factor to watch out for in 2017, one sector at least – namely the telco sector – has seen impressive growth in recent years, with 2017 shaping up to see even more expansion. Indeed, the telco sector accounted for the largest share of all foreign investment in the country for the 2016-2017 fiscal year, accounting for 47% of the country’s $3.46 billion FDI, according to the Myanmar Investment Commission. It is important to note that this is $1 billion less than in 2015-2016; however, this is attributed to a cautious ‘wait-and-see’ approach by investors regarding new laws and regulations. Of particular importance is the new Investment Law which was ratified on October 18th, and which comes into force on April 1st, 2017.
This new law is part of the government’s efforts to streamline and consolidate its outdated and confusing legal code, which has hampered greater investment. The government expects more entrants into the market in 2017 once investors familiarize themselves with the new system.
Partnerships with local telco firms reaping rewards
Given Myanmar’s (until recent) isolation, the telco expansion in that country has been a rare example of successful reform. There has also been a rapid adoption of communication technology among Burmese citizens, with cell phone penetration rising from less than 10% in 2013 to almost 90% in 2016. This rapid adoption rate…
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