As telecom companies invest, a new era unfolds in Burma

As telecom companies invest, a new era unfolds in Burma

Burma’s Ministry of Communications announced last week that it has short listed 12 telecommunication companies for consideration for two licenses that would allow these international corporations to do business in the country’s currently languishing telecom sector.

At present, less than 10 percent of the country utilizes mobile or telecom services, largely due to exorbitant prices on phones and SIM cards. A lottery system was implemented this week that will make SIMs available at a far more affordable rate for hundreds of thousands of Burmese, and aid the government in its goal to increase the number of people using mobile and Internet services over the next several years.

The lottery system will award 350,000 SIM cards at about $USD 2.00 a piece, and monthly lotteries will be held from this point, according to Reuters. When mobile services were first made available in Burma in 2001, the cost of setting up a phone was an incredible 4.5 million kyat, more than $5,000 USD. Such a price is out of reach of most middle-class Americans, let alone the average citizen in one of the poorest countries in Asia.

Even today, a SIM card alone costs nearly $230 USD, a shocking amount when compared with neighboring Thailand, where SIM cards are available for less than $USD 10. But the Burmese government has promised that change is coming, and the SIM card lottery is part of that. The stated goal is to have 80 percent of the population utilising mobile phones and telecom services by 2016.

Investment by whichever telecom companies win the licenses to move into the country (those on the short list include the Irish corporation Digicel and a Vodafone/China Mobile partnership) has the potential to be a net win for the companies, the government and the people of Burma. But as is the case with so much in this country, there is also a risk of things going very wrong.

A successful foray into Burma’s telecom market could yield foreign companies several billion dollars, given that this is such an untapped sector of the economy. The government certainly would benefit from whatever the companies pay in licensing, taxes and other fees, not to mention the public relations angle that it is indeed promoting reform in a freer, more democratised Burma.

More importantly, a thriving telecom industry that offered low-cost products and services could prove invaluable to the Burmese people. With widespread use of mobile phones and the internet, the citizenry would be far more connected with family members, friends, employers and activists throughout the country.

It is conceivable that, were people who live in remote areas of the country to have access to cell phones, they could call for vital aid and assistance in circumstances such as natural disasters or violent flare-ups with the military.

Google chairman Eric Schmidt recently visited Burma and touted the benefits of a modern, accessible telecom industry. Radio Free Asia quoted Schmidt as telling university students in Rangoon: “The Internet, once in place, guarantees that communication and empowerment become the law and practice of your country.”

Schmidt said he believed that the telecom industry could become one of the most profitable in the country. However, Schmidt also touched on another issue that should be a very real concern in the face of such developments – the threat of government censorship.

A free and open internet in Burma would create immense opportunities for activists working within the country and elsewhere. It would facilitate conversation among various non-profits, NGOs, volunteers and policy consultants, and would be an outlet for the average person to report what is really happening within the country.

This would mean the Burmese people would have an opportunity to truly hold the government accountable when it comes to reform and promises of ceasefires with rebel armies. Given the long-standing government practice in Burma of jailing dissidents and violently attacking citizens, it is reasonable to be skeptical that censorship will not be an issue as more people gain access to the internet.

A broader documentation of what is happening in Burma, by those who live there, would also help the international community understand why human rights groups have expressed so many reservations about the influx of foreign investments in the first place.

Foreign investment in Burma has been an ongoing and pressing issue in the past several years. From a business perspective, Burma is ripe for development in practically every conceivable sector, and the telecom industry is certainly no exception.

Indeed, iconic opposition leader Aung San Suu Kyi has called on the international community to invest in Burma, as a way of creating jobs for the people and stimulating the economy. Last week, while on a trip to Japan, she implored the Japanese government and businesses to invest in Burma, citing the need for jobs for economic development.

Plenty of countries are eager to take up the challenge with the Myanmar Investment Commission recently reporting that nearly $800 million USD had been invested in the country in the past nine months. The move of major international telecom companies into the impoverished company could assuage the employment issue, providing much-needed jobs in a sector that is sure to see heavy action once services become widely affordable.

[pullquote] The stated goal is to have 80 percent of the population utilising mobile phones and telecom services by 2016 [/pullquote]

Of course, foreign investment is driven by a desire to reap the benefits of working in an underdeveloped state, and opens the door for exploitation. This has been repeatedly demonstrated in Chinese-run resource extraction projects, in which the companies were accused of exploiting the country’s natural resources and its people.

There are definite concerns for exploitation with foreign telecom companies as well, but because they rely on people using their services, it seems there will be at least some benefit to the general public, even in a worst-case scenario.

Even in the developed world, it’s not uncommon to see telecom giants gouging prices and swindling subscribers out of extra money with hidden fees and surcharges. There is no reason to expect that the same will not happen at least to some extent in Burma – after all, these companies are clamoring for a spot in the Burmese market because they are looking to make money.

It is worth considering the warning of many in the human rights community, who have cautioned that foreign investment will indicate approval for the government, rather than forcing it to make good on promises of reform.

While development in general may be good for the country, there are still countless atrocities being committed against minority groups. These incidences may go unaddressed by the international community if the majority of Burma coverage and discussion turns to opportunities for investment and the supposed triumphs of the Thein Sein government.

In fact, the International Federation for Human Rights and Altsean-Burma released a report in February stating that the country is not right for human rights-compliant international investment.

There are also practical concerns for those foreign businesses that choose to move into the Burmese market. Bloomberg recently quoted a Singapore-based analyst as suggesting that political instability or changes in the government could upset business agreements and stifle their growth plans in the country. There is also the question of the investment being worth the risk: because Burma is such a poor country, companies will have to ensure that they can make their ventures there profitable.

As seems to be the case with so much in Burma, the great potential for growth and development is accompanied by the risk that things could go quite wrong as well. It remains to be seen how this plays out in the telecom industry, but if it means that even a small portion of the population benefits from the opportunities presented by greater information access, it will be a positive thing.

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