Myanmar is undergoing an upheaval after half a century of military rule. Amidst economic, social and political reforms, the Southeast Asian country of 53 million is now making a speedy transition into the 21st century.
Take its telecommunications space for example. Foreign mobile operators such as Norway’s Telenor was given clearance to roll out telecom networks in January 2014 and the Burmese government has called for mobile penetration growth from 12 to 80 per cent by 2016. Dubbed “the final frontier for the mobile internet,” Myanmar is like a technological blank slate — which spells opportunity for foreign investors and forward-thinking entrepreneurs.
In the financial services space, Myanmar is also undergoing tremendous change – such as attaining an autonomous central bank back in July 2013. A country with an independent central bank (such as the Philippines and Thailand) often has more stable economic policies, and it’s also a stamp of approval for investors. Although Myanmar is primarily a cash-based economy, developments in the online payments space is already underway.
“The financial services industry in Myanmar has begun a significant transformation in recent times [and] the explosive growth of mobile and internet penetration have majorly impacted our financial industry,” said Zaw Lin Htut, CEO of Myanmar Payment Union (MPU), which is launched by the central bank. “Developing the payment sector is crucial to improving our financial industry.”
With the MPU’s recently announced partnership with Singapore-based payment services company 2C2P,the two have launched the country’s first e-commerce payments platform. This is incredibly significant because the growing number of Burmese citizens who hold MPU cards, 900,000 to date, are now able to buy goods and services from other countries online. In the past, MPU card holders could only withdraw cash from ATMs or make purchases at establishments with POS systems – but today they’ll be able to do things such as book a flight with a foreign airline.
According to 2C2P’s CEO Aung Kyaw Moe, his company plans to onboard all the merchants they’re currently serving to the MPU card within the next three to six months, such as Thai Airways International. With offices in Hong Kong, Singapore, Indonesia, Thailand, Cambodia, the Philippines, Malaysia and Myanmar, 2C2P has a broad network across Asia and appears to be well-equipped to bring upon change in the Burmese payments space.
Although Aung left Myanmar 16 years ago and is currently based in Thailand, he still proudly holds a Burmese passport and regularly makes trips back to his home country. As he’s been building financial services infrastructure in Myanmar for almost 3 years now, Aung attests to positive change – despite growing pains. “Myanmar has dramatically improved their financial framework. For example, they floated their currency and the central bank has become independent. And there’s also been legal framework improvement – Lawmakers are trying very hard with whatever legal resources they have to bring Myanmar on par with neighboring countries,” he said.
Despite all these positive changes, Aung said that Myanmar is still very early stage. Beyond legal infrastructure and financial freedoms, the banking infrastructure is still young – with the largest bank in Myanmar only serving customers via 200 branches. To put this into perspective, the largest bank in Thailand has over 2,500 branches to date.
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Still, the road ahead is positive and the country is a target for foreign direct investment (FDI) as investors wait with bated breath for the results from this year’s Burmese general elections. Aung said that FDI will flow into Myanmar, if it appears that the government will allow those elected officials to run the country.
Despite barriers such as nascent infrastructure and outdated legislation, Aung remains hopeful and foresees unprecedented growth for his home country. “Myanmar has a chance to leapfrog and go somewhere very far, because they don’t have to worry about legacy infrastructure like in other countries,” he said. “But this has to be understood by the lawmakers and this has to be well-planned and well-executed. FinTech is heavily reliant on Internet and legal infrastructure and both of these are still currently being developed.”
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