Tag Archives: business

Incubating the future in Myanmar

Project Hub Yangon co-founder Pete Silvester mentors a team of MBA students on planning a business start-up. Photo: Richard Edwards
Project Hub Yangon co-founder Pete Silvester mentors a team of MBA students on planning a business start-up. Photo: Richard Edwards

Starting your own business in Myanmar poses challenges that are insurmountable for most – which in no way reflects the skills of those wishing to try. According to a World Bank report published at the end of last year, Myanmar improved more than any other country in terms of ease of doing business. However it jumped from the very bottom spot of 189th to being 167th – which means that there is still a very long way to go before the country’s next generation of entrepreneurs can turn their professional ambitions into reality.

The local social enterprise Project Hub Yangon (PHY) is Myanmar’s first start-up business incubator and has been collaborating with Indiana University since 2014 to provide MBA students with new opportunities and skills through the USAID-funded Advancement and Development through Entrepreneurship Programs and Training (ADEPT) program. ADEPT is a three-year program that improves the success of the Yangon University of Economics students through entrepreneurship skills education. The partnership is funded by USAID with support from HP, the Vina Capital Foundation and Business for Social Responsibility. It’s one of three higher education partnerships in Myanmar that were launched by USAID in 2013 and aim to build on what President Obama called “extending a hand” to Myanmar during his first visit here in 2012. The partnership also represented the first bilateral agreement reached between the two countries since 1957.

PHY works with MBA students at Yangon Institute of Economics to provide entrepreneur skills training that aims “to encourage students to develop problem solving skills and start new businesses,” said PHY co-founder Allison Morris.

“What we have been doing since 2014 has primarily been going into the school and running business idea competitions. We also run one-off seminars and invite guest speakers, which gets students excited about solving problems through business.”

This year, MBA students who performed well at the business idea competition were then offered the opportunity to take part in a three-month entrepreneurship incubation program as an alternative to doing an internship.

PHY is currently providing oversight and mentoring to a team of three promising students who are setting up an events management company.

With bank loans being virtually non-existent and other channels of credit all but closed in Myanmar, participants must have a realistic vision to succeed, said Ms Morris.

“We encourage participants to think of a business idea that is practical and that could get off the ground within three months. When we first started out, for example, a number of people wanted to build online apps – but lacked any app building skills. We said, ‘Okay, you could spend three months learning those skills, but you wouldn’t be actually starting a business.’”

Project Hub team (L-R) - Kyaw Ye Min, Myat Kay Khine Hsint, Kaung Myat Kyaw. Photo: Richard Edwards
Project Hub team (L-R) – Kyaw Ye Min, Myat Kay Khine Hsint, Kaung Myat Kyaw. Photo: Richard Edwards

The three months is geared towards providing practical experience by speaking face-to-face with prospective customers, carrying out market research and applying the lean start-up methodology.

Ms Morris summarized the methodology as a practice that involves starting a business with a viable product as cheaply and quickly as possible.

“For example, the participants initially thought that the first necessary step in setting up their event management company was to buy a printer and a truck. However we explained that the first step is to go out and talk to a potential customer, and then eventually, when you have money from customers, you can buy things. It’s all about starting small – that’s what we’ve always taught at Project Hub – not to spend money first, but to make it.”

Ms Morris said that students often feel quite uncomfortable about the idea of approaching strangers with the goal of pitching a business idea; but that’s simply par for the course.

“Their goal this week was to go and do a survey of 50 mothers about hosting children’s birthday parties. We emphasized that those 50 people are potential customers, so when the survey is finished at the end, the students should try to see if they can get them to agree to run an actual event. It makes people very uncomfortable doing that, but at the same time, the goal is to win the customer,” she explained.

As well as building up sales skills – which are typically fairly weak in Myanmar, in large part due to a lack of opportunities – participants are also taught marketing skills that include research, web design and social media, as well project management tools, tracking tools and advanced online communicative tools. In addition to daily coaching sessions, they also meet with an expert mentor every other week to hone their new skills and to justify their rationale for various decisions along the way.

ADEPT participant Myat Kay Khine Hsint told Myanmar: All That Matters that “Kaung Myat Kyaw and Kyaw Ye Min and I joined this program to learn as much as we could. We don’t have much experience when it comes to starting up a real business and have difficulties in becoming entrepreneurs because we lack skills, experience and knowledge. This program has been really amazing – we’ve been mentored 24/7.”

“Our program manager provides guidelines about how to brainstorm like crazy to come up with a profitable business idea, approach real customers, build up a real business and financial model, deal with competition and supplier analysis and conduct market research as well,” she added.

Myat Kay Khine Hsint plans on continuing her business project after she completes her MBA, and also has an interest in social enterprises and becoming an “ambassador at some respectable entrepreneurship organization to encourage other newcomers like us [to start their own businesses].”

Whilst internships nowadays are plentiful in the commercial capital – to the point where Ms Morris said that MBA interns “have their pick of so many different companies,” she believes that the incubation program offers unique advantages over a more traditional path.

“Participants get to test out a business idea in a risk-free atmosphere and to discover what it’s like to be an entrepreneur. The second thing they acquire is real-world business skills and they test the knowledge they’ve accumulated from their textbooks. Whilst it does of course depend on the type of internship a person does, ADEPT participants develop professional skills that can be used in the workplace – such as how to develop a work plan, use online tools and utilize good presentation skills. If they have done this, they know how to take initiative, solve problems and are comfortable with performing challenging tasks. And that’s something an employer will look for that will make them a really valuable employee, if that turns out to be the route they want to take,” she said.

“This is a wonderful opportunity for young Myanmar entrepreneurs to reach their business ambitions, boost their entrepreneurial skills, and contribute to the growing Myanmar small-and-medium enterprise ecosystem,” said Richard Edwards, Incubation Program Manager at Project Hub.

The business of media in Myanmar

Published in the April edition of Myanmar: All That Matters

Myanmar language print media is a grossly overs-serviced market, according to Tony Child, Chief Executive Officer of The Myanmar Times.
Myanmar language print media is a grossly overs-serviced market, according to Tony Child, Chief Executive Officer of The Myanmar Times.

Myanmar’s media scene has benefited from the relaxation of strict laws in recent years, including pre-publication censorship of print news in mid-2012, as well as restrictions on advertising content that included prohibitions on specific advertising categories and the use of certain types of imagery deemed culturally offensive. Other gains include the opportunity to publish privately-owned daily newspapers, the freedom for private companies to enter broadcast radio and television markets and a commitment by the former government to expand the country’s nascent digital and satellite infrastructure.

However according to a 2013 report by international NGO Internews ‘The Business of Media in Myanmar,’ there is no guarantee that an independent media will flourish in Myanmar despite the positive changes that have taken place.

“A ‘perfect storm’ is emerging in which the media market expands unnaturally without a concurrent growth in advertising revenues, reporting capacity, distribution channels, legal protections, or experienced business management,” states the report.

Tough financial circumstances are inhibiting the growth of the sector, with print media particularly vulnerable. Although dozens of new publications were launched after the USDP government loosened its grip on the sector, low advertising revenues and strong competition has forced many to close or to suspend print versions, such as the English and Myanmar editions of The Irrawaddy, the latter of which suspended publication in January.

The Myanmar language editor told The Myanmar Times that the decision had been made purely for financial reasons.

“We cannot compete with state-owned newspapers. Policies that allow state-owned media to monopolise advertising and the readership need to be amended. If that happens, we will definitely resume publication of our paper,” editor U Thar Lon Zaung Htet said.

Although the leader of the National League for Democracy, Daw Aung San Suu Kyi, has categorically stated that state-run newspapers will be privatised, the new government’s list of priorities is so long that policy changes may not take place in the near future, leaving many to struggle to stay afloat.

The Editor of The Irrawaddy’s English Edition Kyaw Zwa Moe, told Myanmar: All That Matters that, “We have no plans to resume our printed versions soon.”

When asked why it’s so difficult for newspapers to make money in Myanmar, Tony Child, Chief Executive Officer of The Myanmar Times, said: “I think in a word it’s the decrease in advertising spend. Newspapers seem to be a limited vehicle for getting news out to the public promptly because nowadays people in Myanmar increasingly use smartphones to access information online.”

The prohibitive cost of sim cards kept mobile penetration rates among the lowest in the world until the state monopolization came to an end in mid-2013.

Furthermore, Myanmar’s cash-based economy and lack of access to capital prevents an even playing field from emerging.

“In a cash economy, those players with deep pockets are uniquely advantaged to have access to expensive presses, broadcast towers, and satellite time. For emerging independent news media organizations, having access to capital can put them into the game. Yet often times, the decision not to invest in media or supply capital is apolitical, it is a purely commercial decision. Media businesses typically do not own a lot of assets, cash flow is both cyclical and seasonal, and technological innovation can disrupt the underlying business model…” states Internew’s report.

Mr Child said that in the new era of high levels of smartphone use, print media is considered a “dated” vehicle through which to convey news.

“This shows through when people are deciding how to spend their advertising money and it’s particularly because agencies have arrived on the scene that advertising is going down. Before they came, newspapers in Myanmar blew up their circulation figures without fear of being discovered. Agencies are also able to record who newspapers reach and how they reach them. More analysis is being done on the value obtained from advertising in certain types of media,” said Mr Child.

He said that the popularity of Facebook in Myanmar leads many agencies to recommend to clients to utilize the social media network to get their message across in a much more cost effective way than the traditional method of placing an ad in print media.

In 2013, Ogilvy & Mather became the first Western advertising agency to operate in Myanmar in more than 20 years – prior to that all ad agencies were locally-owned. Internews welcomed Ogilvy & Mather’s entrance, saying their presence would “increase competition in the field and raise overall standards and accountability.”

“[International advertisers] need more than just local recommendations to justify their expenditures. Without ratings or circulation or audience measurement, other factors are used to determine how to buy advertising. Common methods include money laundering, currying favor, rewarding cronies, and punishing media for their reporting,” states the report.

International advertisers will undoubtedly be arriving in greater numbers now that the uncertainty surrounding last year’s historic general elections have passed – and will provide a much-needed boost to Myanmar’s media industry. But will it be enough?

“Eighty percent of our revenue is generated through advertising, while 20% is through circulation and distribution: that tells you the reliance we have on advertising,” said Mr Child.

He added that the newspaper’s local language edition is faring even worse due to the market being swollen with rivals.

“Advertising figures for our Myanmar language edition is diabolical because the sector is grossly over-serviced. It is just ridiculous. A lot of journals are losing money. I think I’ve counted 15 that have gone out of business in just the last 18 months,” he said.

Broadcasting business could boom

By contrast, broadcasting is a “very lucrative business,” said U Toe Zaw Latt, DVB Multimedia Bureau Chief.

DVB is a satellite channel and considers itself the nation’s only independent broadcaster. Only eight channels are available, and he said that the previous government restricted licenses to entertainment and sports only – the amount of news that’s permissible to be broadcast by private companies is heavily constrained. He cited the lack of transparency in the awarding of licenses as a key concern and said DVB will continue to object to a proposed broadcasting law, as it fails to open up the market to new players.

Despite having a large audience, DVB’s ability to attract advertising has been hindered to some extent by its reputation as an outspoken critic of the previous, military-backed governments of Myanmar. It operated in exile until the government invited DVB back in 2012.

“We are just starting to get advertising now, as we’re moving from being an exile-based NGO funded organization to a commercial venture. When we moved back to our country, we needed to generate income so that we could reduce funding from donors and start standing on our own feet. We are in transition and we have a new marketing department to help that along,” U Toe Zaw Latt explained.

“In the old days people were a little scared of advertising on DVB – the businessmen weren’t sure if they would have problems if they did. DVB was regarded as being very critical of the previous government – now that NLD is on power things will change, though of course we will always be independent. So I think we have a very bright future if a level playing field is created. That said, I don’t want to be overly optimistic – there are some technical issues that need to be worked out, such as how the government will relax spectrum allocations to allow us and newcomers to have a share.”

Shift in reporting focus on the horizon

DVB began TV broadcasting back in 2005 and U Toe Zaw Latt said that audience appetites are now rapidly changing. In the past there was a strong focus on politics, but this may change due to the advent of democracy following November’s historic general elections.

“There will be more demand for business and less politics. We’re thinking of new business shows to air,” said U Toe Zaw Latt.

“People don’t understand business, and things like having a more privatized market, an influx of FDI, a stock exchange and ASEAN integration will lead to a higher demand for quality business news,” he added.

While DVB translates a small amount of its content from Burmese into English and also has ethnic minority language broadcasts, U Toe Zaw Latt expects that more English content will be generated in future.

“It won’t be 24/7 or anything – but there will be some news in English,” he said.

“Last year five million tourists came to Burma – and this year there will be more businesspeople, diplomats, UN agencies and so forth wanting to engage.”

DVB is also keen to have a greater variety of platforms. It sends out two 90 SMS news messages to paying subscribers every day and hopes to increase more English language content.

“We also have more than two million Facebook fans, but it doesn’t translate into money,” he said.

“This is the future,” he said, holding up a smartphone. “The entire world is switching to digital these days. Income generation will come from increasing our platforms.”

DVB is currently in talks with Norway-based telecoms operator Telenor. DVB said the fact that DVB started out broadcasting programming into Myanmar from studios in Oslo and that it was part-funded by Norwegian NGOs is purely coincidental.

“We have historical links, yes, but when we approached Telenor they weren’t interested. But later when staff members travelled across Myanmar and told locals they were from Norway, people said ‘Norway – DVB!’”

DVB and Telenor are currently in talks about a joint project using Telenor sim cards to view television content, however it will require a 3G network being rolled out which may take another year for Telenor to complete.

“Whenever a new radio station opens, we train locals in the area how to create and send us content using their smartphones. We call it mobile journalism and it’s more participatory,” he said.

However the fact remains that Myanmar has a weak consumer economy, which serves to hinder growth in advertising across the board and necessitates the need for innovative business models to be developed. In 2011, Advertising Age found that Myanmar’s entire annual market for advertising was worth approximately $525 million – or less than $10 per capita. By comparison, in the US ad spending is nearly $500 per person.

International expertise may also be required to help media houses acquire solid sales and marketing skills. According to Internews, “[Local staff] lack essential business skills, especially the core competencies of financial management, competitive selling, and self-marketing. There is a critical lack of middle managers in every business segment in Burma, but media is hardest hit because of the junta’s long-term economic and political persecution.”

Distribution difficulties

Another headache for magazines and newspapers is distribution.

“Even getting our newspapers to Mandalay and Bagan is an effort. We have to do a barter deal with airlines to get our papers there that day – and even that day we get a 6am flight which reaches Mandalay at 8am so the newspapers don’t get into shops until 10 or 11am. So we are missing the key time,” said Mr Child.

He said that the state-run Global New Light of Myanmar has 14 printing presses nationwide, whereas The Myanmar Times only has one in Yangon.

“The costs of outsourcing the printer would destroy the value so flights are the only option,” he said.

The Global New Light of Myanmar has a circulation of around 15,000, which dwarfs The Myanmar Times, the latter of which prints 2-3,000 on weekdays and 5,000 copies of its weekend edition.

The Director of The Global New Light of Myanmar, U Maung Maung Than, told Myanmar All That Matters that, “GNLM is printing its daily in another two places; Nay Pyi Taw and Mandalay, which are owned by the Ministry of Information. According to my knowledge, Sittwe and Monywa are newly opened by MOI. I don’t know the total number since I am not from MOI.”

Regardless of how uneven the playing field is, most players in Myanmar’s media industry agree that deep-seated reforms are needed to complement the gains made in free speech during Myanmar’s transition to democracy.

“If the state wants to support the media as the fourth estate, then the government should take active measures to do so – not to become politically involved but to recognize that a healthy press is the lifeblood of what they are trying to be now – a democracy. It could be temporarily supported phase through subsidies, tax benefits and tax breaks,” Mr Child suggested.