Myanmar's Mobile Market & FDI Potential

This assignment delves into the burgeoning mobile phone market in Myanmar. It analyzes consumer behavior, mobile phone shipments, and the required rate of labor productivity. The focus also extends to examining the role of Foreign Direct Investment (FDI) in Myanmar's economy, highlighting its significance in sectors like telecommunications and technology.

Running head: MYANMAR 0
GLOBAL AND
INTERNATIONAL
CONTEXT

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Table of Contents
Introduction:................................................................................................................................................1
Part 1:..........................................................................................................................................................1
Porter’s national diamond model:...........................................................................................................1
Part 2:..........................................................................................................................................................1
Modes of entry:.......................................................................................................................................1
Attractiveness of FDI in Myanmar:...........................................................................................................1
Limitations of FDI:....................................................................................................................................1
Recommendations:..................................................................................................................................1
Part 3:..........................................................................................................................................................2
Management issues:................................................................................................................................2
Conclusion:..................................................................................................................................................2
References:..................................................................................................................................................2
Appendix:.....................................................................................................................................................2

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Introduction:
Globalisation is the concept that helps the companies to conduct their business activities across
the globe. Foreign direct investment is the mode that is used by the companies to enter the
foreign land in order to set up their businesses. Myanmar is one of the countries which falls
under the category of under-developed economy but has the potential to develop in future. As far
as the mobile industry of the country is considered, it has been analysed that it is facing tough
competition and Chinese players are fighting for the share. This report argues about mobile
phone industry in Myanmar with the help of porter’s national diamond model. This discussion
follows with the explanation of FDI that s foreign direct investment in the country. It focuses on
analysing the attractiveness and limitation for FDI in Myanmar. The later part of the report
discuses about the management issues that the foreign company may face if enter this country.
Part 1:
Porter’s national diamond model:
Michael porter is the one who has developed a model called Porter’s National Diamond model.
The purpose of developing this model is to examine the competitive environment of any of the
particular industry. The analysis conducted by this tool helps the companies to frame their
strategies as per the market conditions. Analysing the relative strength of the market helps the
firm to develop a competitive edge by implementing the relevant strategies (Gsma.com., 2018).
There are four elements that are being discussed in order to analyse the market as per this model
APPENDIX 1. These four factors involve:
Firm strategy and rivalry: This is the element of the model that includes the discussion of the
strategies of the companies that allow them to be organised and managed. It also discusses about
the pressure that the organisations face in the industry due to competition.
Factors input conditions: This is the element that discuss about the various resources. It has been
analysed that the basic resources that are available in the country are natural resources and the
advanced resources are human resources, research capabilities.

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Related and supporting industry: this is the factor that discusses about the supporting and the
related industries that act as the suppliers and provide the materials for making innovations.
These are the industries that provide inputs and participate in making up gradation of the process.
Demand conditions: this is the element that deals with the demands of the products in the market
and the various market conditions that help the companies to develop competitive advantage
over others.
Porter’s National Diamond model application on mobile phone industry of Myanmar:
Firm strategy and rivalry: Myanmar is the county that is enjoying a massive growth in the sector
of internet, mobile communication and usage of social media. This suggests that a new market
potential is developing in the country for the companies that operates in these industries. The
country is observed to be experiencing a digital shift and this digital shift leads to change in the
demands of the customers in the market. It has been analysed that 50% of the growth has been
experienced by Myanmar mobile phone industry (Fischer, 2016). Myanmar is considered as the
fourth place to have net additions in the mobile phone subscribers. The country has trailed the
nearby countries like India and China in this. The telecommunication industry of Myanmar has
experienced and intense change. The survey has been conducted which suggests that 42.2% of
the total mobile users in Myanmar are the customers of Huawei and rest other prefers to buy
some other phones such as Oppo, Lenovo, Xiaomi, iPhone, sony etc. as per this analysis. It has
been identified that the users prefer to buy the phones that are of low prices and Chinese mobiles
are getting success in the Myanmar market. The rivalry is amongst the Chinese players in the
country.
It is very important to understand the nature of the consumers and their choices to use the mobile
phones. The figure suggests the options available in front of the consumer to use the smartphones
and the number of users that use mobile phones. APPENDIX 2
Demand conditions: Myanmar is the country with great versatility. People have different
references to buy the products as per the gender and their ages. Chinese brands of the mobile
phones are fighting for the market share because they are in demand. The communication sector

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of Myanmar is evolving gradually. Many of the international brands have competed for the
license in the country and two of the brands such as Telenor and Ooredoo have got the same.
They joined the market which was earlier facing the monopoly of the local company that is
Myanmar Post and telecommunication. In the year of 2015, the AIM cards that are sold in the
country were 30m. This suggests that the increase was of 518%.
Related and supporting industries:
When the mobile industry is considered, telecom is the first associated name that comes into
mind. This is because there is no use of the phone if there are no network connections. As far as
the telecom sector of Myanmar is considered. It has been analysed that MTP is the company that
has the monopoly in the country. Some of the new players are also entering but the MTP still
have highest subscribers. After awarding the licenses to the two foreign competitors such as
Telenor and Ooredoo, the prices of SIM cards have been observed to be reduced by time. As
more and more SIM are sold in the market thus creating the demands for the mobile phone
shipments from outside (Techinasia.com,2018). APPENDIX 3
Factor input conditions: in this section, the resource availability of the country is discussed. In
terms of resources, it has been analysed that the country is giving cheap labour which is
attracting more and more foreign investors to start their operations in the country but the lack in
infrastructural facilities restrict them to do so. Myanmar is very unusual but a market with great
potential for business to invest (Solarin & Shahbaz, 2015). It is an underdeveloped economy with
fastest growing resources. This nation of Asia provides abundant of natural resources and is
close to the market of around billions of people. it has been analysed that if Myanmar will grow
with this pace in the aspect of labour productivity then it will receive only 4% of the growth in
coming years but the country has the potential to grow by 8% and this require the country to
make their labour more effective by enhancing the productivity rate. The labour is cheap but the
rate of productivity is still very low. The rate needs to be increased to 7% from 2.7% (McKinsey
& Company., 2018). APPENDIX 4
However, with the short Telco liberalization history, massive growth in a short time and endemic
situation (hot weather and Monsoon), the influx of mobile device replacement with consuming
power of Myanmar people will happen continuously in Myanmar. This is one of positive

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overview for mobile market in the next couple of years. However, this endemic trend will change
shortly and follow other countries trend soon.
Part 2:
Modes of entry:
Modes of entry are the concept that deals with selecting the most effective and feasible way to
enter the foreign country in order to start the business operations there. This is the very crucial
decision for any business and can vary as per the foreign country conditions. It is not necessary
that the company will en each and every foreign country with similar mode thus it is dependent
on the country’s environment and feasibility. As far as these modes are considered, FDI that is
foreign direct investment is the most effective and the most common way to enter the foreign
country. It is considered as the mode that provides benefits to the host country as well as the
foreign country.it is the mode where the investment of the business in the foreign county can be
determined by the economic growth of the country and the stability of the country in other terms
such as market and politics. Myanmar is considered as the place where FDI is supported by its
government (Taguchi & Lar, 2015). This is because Myanmar is an underdeveloped economy
and requires the foreign business to invest in their country so that they can earn foreign currency.
There are various objectives of FDI in Myanmar. Some of them are:
 Embracing market oriented system in the country in order to allocate the resources.
 Encouraging private investment and entrepreneurial activities of the country.
 Exposure of foreign investment to the economy of the country in order to expands its
businesses.
 Updating the technology
 Development of employment opportunities for the local people.
Attractiveness of FDI in Myanmar:

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Foreign Direct Investment in Myanmar increased by 656.28 USD Million in April of 2017.
Foreign Direct Investment in Myanmar averaged 580.58 USD Million from 2012 until 2017,
reaching an all-time high of 3821.91 USD Million in March of 2016 and a record low of 3.14
USD Million in June of 2016 (Tradingeconomics.com., 2018). APPENDIX 5
Even though Myanmar is underdeveloped economy but still manages to attract the foreign
companies or the countries to make investment in mynamar.it has been analysed that after the
National League of Democracy government took the office, the country has made approval to
around $11.2 billion foreign investment. The figures suggest that the country has the room for
making the improvement and attracting the companies from the foreign countries to invest their
capital in Myanmar (Fumagalli, 2017). One of the major aspects that are attracting the FDI in the
country is conduction of MIC meetings twice a month. This strategy helps the company to
approve an review more and more foreign proposals. The changes that were made in the Burma
company act and the release of the new law are also the reasons for attracting more and more
companies. when any of the business decide to make investment in the foreign country, they look
for some of the aspects such as how much time it takes to get the approval and to start the
business and the number if procedures to undergo (Ho & Chua, 2016). As far as Myanmar is
confided, the new law supports the online registrations of the business which is way faster
process than earlier. Apart from all these things, the availability of the natural resources in the
county is also the major reason for attracting the companies. The location of Myanmar is so
perfect that this provides the great and high potential market for the foreign companies to serve.
The countries like Bangladesh, China, India etc. are nearby countries. Labour cost is
attractiveness for the foreign investors. This is because the country provides very low labour thus
the companies try to set their operations and manufacturing part here in Myanmar.
Limitations of FDI:
It has been analysed that Myanmar is attracting many countries and their companies to set up
their operations in Myanmar but there are many limitations and barriers for FDI in Myanmar.
Some of them are discussed below:
Policy barriers: whenever a country enters the new land, it is required by the country business to
understand the policies of the foreign country (Gelb, Calabrese & Tang, 2017). Thus, these

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policies cannot be similar across the borders so they act as the barriers for the businesses to set
up in foreign land. Same is the case with Myanmar. There are various such policies that are not
much stable in the country such as Fiscal policy, monetary policy, tax rates etc.
Administrative policies:
These are the policies that deal with the submission of the business proposal to the country and
getting the approval for the same. As far as Myanmar is considered, it has been analysed that
even if the country has changed its policies and made it online but still there are series of
procedures needs to be followed by the foreign countries before setting up their business in their
country. This makes it difficult for them to enter the country (Ftijournal.com., 2017).
Infrastructure policies:
As discussed earlier that infrastructure facilities at the country are not very much feasible and
thus it is required by the government of the country to make the relevant changes so that FDI can
be enhanced in the country (Time., 2017). This is because it is the major challenge that the
company can face. The infrastructure of the country does not support the business activities and
thus it is required by the government of the country to make investment in this sector so that FDI
can be improved.
Recommendations:
As per the analysis, there are several recommendations that have been made regarding the
improvement of the Myanmar condition attract more and more countries or invest in Myanmar.
Some of the recommendations are given below:
Coupling digital technology: Myanmar is observed to be taking the advantage of the digitalization era
that is the country is experiencing. The mobile and internet connections are becoming extremely
reasonable in the market. Coupling these tools to the fullest can help the country to attain a more
advanced stage of development, but this requires the government to implement a great technological
infrastructure where the country is lacking.

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Shift towards manufacturing industry: most of the countries are shifting their practices and
dependency on manufacturing industries but Myanmar is experiencing a very less shift and more of
the earning dependency of the country is on agriculture. Today, the country’s manufacturing sector is
small in total terms—less than half the size of Vietnam’s—but it has the potential to be Myanmar’s
largest by 2030.
Preparing for urbanization: it has been analyzed that most of the population of Myanmar lives in rural
area of the country. However, the scenario is changing gradually. The share of population in urban
areas can be increased by 25% till 2030 but this again requires the attention of government to invest in
infrastructure facilities.
Connecting to the world: Myanmar must consider the best way of reconnecting to the global economy
through investment, trade, and flows of people. The nation potentially needs more than $170 billion of
foreign capital to meet its overall investment requirement of $650 billion and should develop a
targeted strategy to attract it. As far as the trade volume of the country is considered, it has been
analyzed that it is very low and unsystematic. Myanmar can enhance its trade opportunities by
educating the labor, enhancing their skills and knowledge transfer.
To implement that schema, Myanmar’s government is likely to entail more ability and may consider
setting up a delivery unit dedicated to solving problems and driving the application of change. The
nation’s businesses could consider their opportunities in different markets, quickly reach international
quality standards, and explore foreign corporations. International companies must move fast, be
prepared to commit to Myanmar for the long term, and consider partnerships with local firms. It is
very much required to invest in the right sector so that Myanmar can improve its quality of the
business environment that serves the foreign companies with best facilities.
Part 3:
Management issues:
It has been analysed that FDI is the very important decision and thus it is required by the
countries to take the decision widely. The countries have to look for the various environment of

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the country in order to make investment there. In case of mobile phone industry, it’s required by
the business to analyse the overall market so that better decisions can be made. In Myanmar, the
mobile phone industry is fighting a tough competition and it has been identified that Chinese
brands are in top of this fight (Sjöholm, 2016). Not only the competition of the industry affect
the new business investment but the nature of the market and resources availability at the country
are also the factors that drives FDI in the country. Managing the business in Myanmar is not that
easy and the major reason that has been identified is its economy and the unstable of political
aspects. Flowing is the brief discussion of some of the management issues:
Labour and infrastructure issues: in terms of labour, it has been analysed that the labour available
in the country of Myanmar is very cheap. This attracts many of the foreign firms to enter this
country and set up their business here but what about the productivity?
The figure shows the labour productivity of the country (Quirke, 2018). APPENDIX 6
It has been analysed that the labour class of the country is unskilled in nature. If the mobile
industry is considered, it is the industry that requires the labour to have the technological and
technical knowledge of the devices and the processes of manufacturing. Only performing the
task is not enough but having the competitive edge in innovation is necessary to fight such a
tough competition (Chandran & Tang, 2013). It has been estimated that around 60 million people
lives here and out of those 46 million falls under the category of working get. But the
unemployment arte of the country is 40% which is quite high. The tie when the worlds GDP
have experienced the growth of 3%, Myanmar GDP has experienced the grot of only 1.3%. This
is really a shocking experience by the country. One of the areas that have been found for this was
low labour productivity. Reliance of the country economy on agriculture can be the reason for
this. As the labour is engaged in agricultural activities they are not feasible for earning in the
manufacturing industries.
Out of a population of 60 million however, only 4% of Myanmar's citizens are regarded as a
consumer class. Myanmar households, spend over 70% of their income on basic necessities,
leaving very little to be saved. Prior to China's economic opening in 1985, Chinese households

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spent 62% on basic necessities. Since then, this number has fallen to 27% of income, showing
the potential that awaits economic openings and foreign investment in Myanmar (Quirke, 2018).
In terms of infrastructure also, the country is facing so much of issues. It is very difficult for the
country that is entering Myanmar to manage the infrastructural issues.
The figure clearly describes that the country has to make investment in the infrastructural aspects
so that it can attract the FDI (Britcham.org.sg, 2018). APPENDIX 7
Political instability: this is another reason that restricts the foreign players to enter the country.
Political instability in the country has become the major management issues these days for the
foreign businesses in Myanmar. Some of the political issues such as employment standards, land
grabbing, child labour etc. affect the management of the business in the country (Kingsbury,
2014). Government alone is not watching these aspects of the country but the interference o
ministry of defence is creating a grit trouble. For so many years, the country was under the rule
of defence and this has made the environment worse. The conditions like poverty and corruption
has ceased country. Bribery is the very common practice that can be seen and it is required by
the foreign firm to enter and bribe the officer to make their set up in this country. These things
affect the management of the foreign companies who do have the clear idea about these practices
(Odaka, 2015).
The overall discussion suggests that there are some flaws in the country in order to invest for the
business but it also have the potential to generate lot of revenue in terms of manufacturing. The
country has the potential to develop but the government of the country has to pave their way in a
right direction by making investments in infrastructure and bringing stability to their political
environment.
Conclusion:
The inference of the report suggests that Myanmar is the country with high potential of growth in
manufacturing and other sector such as mobile phone and internet. Myanmar is the county that is
enjoying a massive growth in the sector of internet, mobile communication and usage of social
media. This suggests that a new market potential is developing in the country for the companies

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that operates in these industries. The country is observed to be experiencing a digital shift and
this digital shift leads to change in the demands of the customers in the market. It has been
analysed that 50% of the growth has been experienced by Myanmar mobile phone industry. The
foreign countries find it a potential place to set up their business the mode of entry called FDI. It
is considered as the mode that provides benefits to the host country as well as the foreign
country. It has been analysed that after the National League of Democracy government took the
office, the country has made approval to around $11.2 billion foreign investment. It has been
analysed that Myanmar is attracting many countries and their companies to set up their
operations in Myanmar but there are many limitations and barriers for FDI in Myanmar. Some of
the limitation is related to its administration and political policies. It is recommended that the
government of the county has to make investment in its infrastructure and made the political
environment stable along with educating its labour. This is because the labour productivity of the
country is very low. Managing the business in Myanmar is not that easy and the major reasons
that has been observed its economy and the unstable of political aspects.
References:
Britcham.org.sg.(2018). The Opportunities and Risks of Investing in Myanmar. Retrieved 29
January 2018, from http://www.britcham.org.sg/static-pages/o47-feature-opportunities-
risks-investing-in-myanmar
Chandran, V. G. R., & Tang, C. F. (2013). The impacts of transport energy consumption, foreign
direct investment and income on CO 2 emissions in ASEAN-5 economies. Renewable
and Sustainable Energy Reviews, 24, 445-453.
Fischer, P. (2016). Foreign direct investment in Russia: a strategy for industrial recovery.
Springer.
Ftijournal.com. (2017). Myanmar: Opportunities and Challenges for Businesses.. Retrieved 31
December 2017, from http://www.ftijournal.com/article/myanmar-opportunities-and-
challenges-for-businesses

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Fumagalli, M. (2017). The Making of a Global Economic Player? An Appraisal of South Korea's
Role in Myanmar.
Gelb, S., Calabrese, L., & Tang, X. (2017). FOREIGN DIRECT INVESTMENT AND
ECONOMIC TRANSFORMATION IN MYANMAR.
Gsma.com. (2018). Mobile phones, internet and gender in Myanmar. Retrieved 29 January 2018,
from https://www.gsma.com/mobilefordevelopment/wp-content/uploads/2016/02/
Mobile-phones-internet-and-gender-in-Myanmar.pdf
Ho, E. L. E., & Chua, L. J. (2016). Law and ‘race’in the citizenship spaces of Myanmar: spatial
strategies and the political subjectivity of the Burmese Chinese. Ethnic and Racial
Studies, 39(5), 896-916.
Kingsbury, D. (2014). Political transition in Myanmar: prospects and problems. Asian Politics &
Policy, 6(3), 351-373.
McKinsey & Company. (2018). Myanmar’s moment: Unique opportunities, major challenges
Retrieved 29 January 2018, from https://www.mckinsey.com/global-themes/asia-
pacific/myanmars-moment
Odaka, K. (Ed.). (2015). The Myanmar Economy: Its Past, Present and Prospects. Springer.
Quirke, S. (2018). Making Money On Myanmar. Seeking Alpha. Retrieved 29 January 2018,
from https://seekingalpha.com/article/1508442-making-money-on-myanmar
Sjöholm, F. (2016). Foreign direct investment and value added in Indonesia. School of
Economics and Management, 47(1), 35-63.
Solarin, S. A., & Shahbaz, M. (2015). Natural gas consumption and economic growth: The role
of foreign direct investment, capital formation and trade openness in
Malaysia. Renewable and sustainable energy reviews, 42, 835-845.
Taguchi, H., & Lar, N. (2015). FDI, industrial upgrading and economic corridor in Myanmar.

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Techinasia.com (2018). Tech in Asia - Connecting Asia's startup ecosystem. . Retrieved 29
January 2018, from https://www.techinasia.com/myanmar-mobile-market-grow-5-
million-units-5-years
Time. (2017). 5 Challenges Facing Burma's New Civilian Government Retrieved 31 December
2017, from http://time.com/4275928/burma-myanmar-civilian-government-challenges/
Tradingeconomics.com. (2018). Myanmar Foreign Direct Investment | 2012-2018 | Data |
Chart | Calendar. Retrieved 29 January 2018, from
https://tradingeconomics.com/myanmar/foreign-direct-investment#alerts
Appendix:
1. PORTER’s NATIONAL DIAMOND MODEL
Michael porter is the one who has developed a model called Porter’s National Diamond
model. The purpose of developing this model is to examine the competitive environment of
any of the particular industry. The analysis conducted by this tool helps the companies to
frame their strategies as per the market conditions. Analysing the relative strength of the
market helps the firm to develop a competitive edge by implementing the relevant strategies.
There are four elements that are being discussed in order to analyse the market as per this
model.

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2. What mobile phone users do with the phone in Myanmar:
3. It is very important to understand the nature of the consumers and their choices to use the
mobile phones. The figure suggests the options available in front of the consumer to use
the smartphones and the number of users that use mobile phones.
4. It is very important to understand the nature of the consumers and their choices to use the
mobile phones. The figure suggests the options available in front of the consumer to use
the smartphones and the number of users that use mobile phones.

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It is very important to understand the nature of the consumers and their choices to use the
mobile phones. The figure suggests the options available in front of the consumer to use the
smartphones and the number of users that use mobile phones.
3. Mobile phone shipments:

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4. Required rate of labour productivity:

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5. Myanmar FDI:

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6. Labour productivity:
7. Transport infrastructure:

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