Myanmar’s startups are on their own for now, but founders have hope
Sitting across the table from four budding Burmese entrepreneurs, it felt like any other meeting that I’ve had with startup founders. These guys were young, talented, and clearly passionate about what they were building.
The differences became stark, however, when the conversation turned towards the problems they faced in building their respective businesses. All of them bemoaned the unstable yet very expensive broadband internet connections they were using. The installation alone cost them nearly US$560 two years ago, and a 2Mbps line today requires a monthly fee of US$125 — extremely steep prices for a country with a per capita GDP of around US$1,105, one of the lowest in East Asia and the Pacific.
A couple of them also revealed that they had purchased backup power generators for those times when the electricity went out — which was often, especially during summer. The other two said they simply didn’t have the cash to do the same, and were resigned to putting up with recurring power failures.
Welcome to Myanmar.
According to these founders, interest in the country has been growing over the last three years, but remains little more than that — interest. Government support continues to be scant, angel investor and VC interest remains low, and infrastructure is still struggling to catch up to the rest of the world. It’s not an easy life for the business-minded Burmese.
Min Zeya Phyo, founder of development firm Code2Lab, sums the startup life in Myanmar as such: “It is not just about validating your startup idea, but also having to deal with the small details of day-to-day operations.”
Coming back home, building a legacy
Be that as it may, it’s clear that the Burmese have an insatiable appetite for entrepreneurship. When Tech in Asia ran our flagship Meetup event at Yangon last week, the room was full, and one entrepreneur remarked that almost every startup in the city was in attendance. Barcamp Yangon, a yearly technology-based conference, attracted a massive 6,400 participants in 2013, dwarfing every other Barcamp held in the region.
Many Burmese entrepreneurs at our Yangon Meetup, all eager to learn.
You have to wonder what keeps them going. In particular, the four local founders I met had all lived in Singapore for a period of time, and only recently returned to Myanmar to found their startups. Why choose to come back when Singapore is one of the best places in the world for business?
It might seem cheesy, but Wai Yan Lin, founder of online classifieds portal builder Rebbiz, tells Tech in Asia that it’s simply because Myanmar is home — and home is where the heart is. “When I was thinking of doing my own startup, Myanmar came into my mind first. This is the place where I was born and raised — I know the people and I know the culture,” he recalls. “I want to help my fellow countrymen do business more efficiently and easily with our technology and solutions.”
Another reason — one that many other foreign businesspeople share — is that there are so many opportunities ripe for the taking in Myanmar. “The opening of Myanmar [in 2012] is a once-in-a-life chance. With a 51 million large local population that is generally quite young, there is high potential for startups to make it big here,” Code2Lab’s Min explains. He points out that there is plenty of ‘blue ocean’ — or uncontested market space — locally.
He’s right on that point. Myanmar is currently bypassing an entire generation of personal computers and DVD players, and jumping straight into the future with tablets and smartphones. Already, Qatari telco Ooredoo and Norway’s Telenor have sniffed out the opportunities in the telecommunications sector, and are now battling for market share with ever-decreasing prices — which is good news for Burmese consumers.
For Nay Min Thu, founder of online business solutions provider iMyanmar, returning to Myanmar was simply a matter of expanding his already-established business operations from Singapore. But what motivated him to make the move can be encapsulated in three words: national pride, and legacy. “Ultimately, my contribution towards my country is the utmost satisfaction I get,” he says. “I can help build the economy, create jobs, and shape the future of the nation.”
Startups must rely on themselves
It’s hard to blame the government for dropping the ball on the tech scene. For one, tech isn’t the only industry out there. Some of the government’s more ambitious plans to boost Myanmar’s economy include the building of a massive industrial park called the Thilawa Special Economic Zone. These will likely consume most of their attention and resources, and there are indications that they are doing good work out there — according to World Bank data, foreign direct investment has risen from US$901 million in 2010 to US$2.62 billion in 2013.
As Appota’s founder Do Tuan Anh put it during the Yangon Meetup, the government has many things to worry about — especially so in a country that’s only just emerging from under the shadow of military dictatorship. This means that startups are left to fend for themselves for the time being, and the circumstances are not favorable towards them.
Appota founder Do Tuan Anh holds the Burmese audience captive with his story.
The Myanmar ICT Park, which comprises of a series of office buildings earmarked for tech companies, is an excellent example of this. Local entrepreneurs say that the complex was meant to be similar to Singapore’s Block71 — a hub for entrepreneurship — but instead mostly became occupied by large local corporations, some of which aren’t even IT-related.
This is a pity, because office rental costs make up one of the biggest expenses for business owners. “After 2012, the property prices in Myanmar surged, and now it’s very expensive to get a proper office for startups,” says Myo Myint Kyaw, founder of creative digital agency Revotech.
Locally, the talent pool is also painfully small. Good designers and developers are an extremely rare resource, and most of them would rather get by doing freelance work for themselves rather than work for someone else. Myo tells Tech in Asia that founders try to mitigate this by training fresh graduates from the ground up by themselves.
This takes up a lot of their time and resources, however, and is not scalable. Furthermore, many of these newly minted developers end up jetting off to Singapore in search of more lucrative work.
Myanmar isn’t ready — yet
Adding to the headaches that startups in Myanmar face is the fact that locals don’t even know they need these products and services yet. There’s an extra step they have to take — educating people from the ground up, which is a tedious process.
“The greatest challenge that we face is customer readiness. For example, if you approach a customer about online advertising, he or she may not even know anything about how the internet works. Hence, we have to educate the customers on how cost-effective online advertising can be,” says Nay.
Besides ordinary citizens, he thinks that the government needs some education in how the IT industry can help jumpstart the entire nation’s development, too. He points to India as an example.
“The IT industry in India contributed about 1.2 percent of its GDP in 1998. But the figure grew to 7.5 percent in 2012,” he explains. “In the process, the industry created millions of jobs and raised the standard of living for many families. The same scenario can happen in Myanmar if we play it right.”
In a nutshell, here’s what Nay thinks the government needs to provide to get the IT sector going:
We need more computer labs and IT-related courses in schools. We need more support from the government in terms of providing grants, funding, tax exemption, and affordable office space to startups. And we need more dialogue and communication between the startup community and government ministers.
Like Tuan Anh, however, Min doesn’t think the government has the bandwidth to accommodate their needs at the moment. The future might be bright, but for now, Myanmar’s startup community is alone.
Originally published at www.techinasia.com on October 20, 2014.
