RGO47 SET TO RIDE ON MYANMAR’S ECOMMERCE BOOM

Source: The Nation, November 26, 2018
NEWS
As digitalisation becomes popular in Myanmar, more and more people could change their shopping behaviour – from visiting traditional stores to buying things online – within a few years. This would create massive opportunities for local e-commerce platforms including rgo47, according to Aye Chan, chief strategic officer of Royal Golden Owls Co. which runs the platform. “This is a very competitive industry. If we look at the market growth forecast, we believe Myanmar is going to move in that direction and we want to be an integral part of this growth,” he said. Aye Chan said, citing the figures released by international organisations, that Myanmar’s e-commerce market is currently less than 0.01% of the nation’s gross domestic product (GDP). He believes the market will grow tenfold to 0.1% of GDP in the next two or three years.

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RESEARCH VIEW
After liberalizing its telecommunications market in 2014, the country jumped straight to smartphones and data. According to Asian Development Bank, the mobile penetration rate is closed to 100%, with smartphone penetration above 80%. There is an unprecedented opportunity for Myanmar to do digital, as well as financial, leapfrogging: to use technology to accelerate change and development, and to use e-commerce to move from cash-only to a cashless society. Yet, there are still substantial obstacles preventing tech start-ups and merchants from scaling up their businesses via e-commerce and more generally for an uptake of e-commerce in the country. While Myanmar’s e-commerce future may look bright on the basis of these impressive figures, a considerable amount of work for the government is still needed to increase the country’s readiness for e-commerce. One of which is improving and updating the legislative and regulatory framework for e-commerce is of paramount importance. E-commerce needs a suitable environment to grow; it also needs the government’s support in establishing and optimizing such environment, especially in areas where the market mechanism fails to allocate resources.

UNDERDEVELOPMENT OF LOGISTICS INDUSTRY CAUSES DELAY IN COUNTRY’S PROGRESS

Source: Mizzima, November 26, 2018
NEWS
Union Minister of Transport and Communications Ministry Thant Sin Maung said that the underdevelopment of the logistics industry was one of the reasons why Myanmar’s progress has been delayed. The Union Minister said these words at the opening ceremony of the Yangon Dry Port project at Ywathargyi in Yangon in November which was built to help with the decongestion of traffic in hauling cargo and cutting the costs of cargo transport in Yangon. “Underdevelopment of the logistics industry is one of the reasons for the delay in the progress of our country. Transport infrastructure must be good if we want our country to progress and develop. Transport infrastructure itself is a part of the logistics industry,” Union Minister Thant Sin Maung said.

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RESEARCH VIEW
As expressed by the United Nations Conference on Trade and Development, with the advantages accruing from the preferential trade agreement and low labor costs, Myanmar can utilize the time window before the trade agreements expire to address the key constraints it faces in improving both the environment for domestic manufacturing as well as the efficiency of trade logistics. The lack of stable electricity supply and skilled labor hinder the expansion of the domestic manufacturing sector severely. Separately, the difficulty in access to bank credit is viewed by SMEs as the key constraint to expanding production activities, especially for those firms in the garment sector and those that look for export financing. In this regard, neighboring firms in Laos and Cambodia find it much easier to secure financing. Transportation infrastructure and logistics costs are also critical factors to exporters’ costs and their potential capacity to climb up the value chain. Myanmar still ranks as one of the lowest in the region in terms of its logistics performance, dragged down by all key aspects including infrastructure, customs, and shipments.

MYANMAR’S ECONOMIC DOWNTURN HITS AVIATION SECTOR

Source: Investvine, November 26, 2018
NEWS
Three airlines in Myanmar suspended operations in the recent past, citing economic losses and a shortage of aircraft. Two of them, Yangon-based Air Bagan and Naypyidaw-based Apex Airlines, have already returned their air operator certificates, while another one, FMI Air, also with its hub in Yangon, on July 20 announced temporary suspension of both its scheduled and chartered flight services to pave way for reorganisation after only one year in business.

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RESEARCH VIEW
According to Centre for Aviation, the country’s domestic airports are “very basic”, with several airports unable to support e-ticketing due to lack of electricity. Several of the airports lack lights, limiting operations to daytime flights, and cannot accommodate jets. Fuel is also not generally available at the smaller domestic airports. The private sector may eventually become involved in managing and expanding Myanmar’s secondary airports, some of which have big long-term potential, but for now the government is instead enlisting help from agencies such as the Japan International Cooperation Agency (JICA). While the growth opportunities in Myanmar are exciting, it will take time for the potential of the country’s aviation sector to be fully realised. Infrastructure, including new airport terminals and hotels, cannot be built overnight. Myanmar has the potential to become one of Asia’s next top tourist destinations but this cannot be achieved without infrastructure. Overseas investment will also come, spurring demand for air travel, but it will take time for business ventures to be forged and implemented.