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Corporate Communications Staff Explores the World

A Changing Myanmar

  • Myanmar
  • Media, ICT, Lifestyle Related Goods & Services Business Unit
  • Environment & Infrastructure Business Unit
  • Electric Power & Energy
  • Real Estate
  • Retail & Service Operations

January 2017

Miki Kazama, Mass Media Relations Team, Corporate Communications Department

She joined Sumitomo Corporation in 2009, and was primarily involved with risk management of business investment for eight years. In August 2016, she was transferred to the Corporate Communications Department. Her current responsibilities encompass reporting on ICT and lifestyle-related matters in the Media, ICT, Lifestyle Related Goods & Services Business Unit, on logistics business in the Environment & Infrastructure Business Unit, and on resources and energy topics in the Mineral Resources, Energy, Chemical & Electronics Business Unit. She loves travelling (especially to southern countries), doing lots of shopping and taking hundreds of photos during her trips.

In March 2016, a new government led by Aung San Suu Kyi was inaugurated in Myanmar, and in October, the US lifted all of its economic sanctions on the country. Myanmar has been garnering attention as "Asia's last economic frontier," and it is likely to see accelerating expansion of US and other foreign companies. Anticipating future development there, Sumitomo Corporation designated Myanmar a strategic industrial focus for development by the entire Group in its Medium-term Management Plan that started in fiscal 2015, and has dispatched a total of nearly 50 employees to Myanmar. I had the opportunity to visit ventures Sumitomo Corporation is involved in there in early October, and I would like to describe Sumitomo Corporation's involvement in a country that is now in the global spotlight.

The Evolving Thilawa Special Economic Zone

About one hour drive from Yangon, I noticed that the numbers of cars and buildings had gradually diminished, with a scattering of stilted houses on a broad expanse of flat land evoking old-fashioned images of Southeast Asia. Far ahead of this scene could be seen a line of flags: the national flags of Japan and Myanmar as well as the flag of MJTD(*1), the local business company in charge of developing and operating the Zone A of the Thilawa Special Economic Zone(SEZ). The industrial park being developed within the SEZ's Zone A is a major project under joint development since by the governments of Japan and Myanmar as well as private companies including Sumitomo Corporation. What kinds of changes has this once-vacant land undergone in the two years since sales began? With high expectations I headed toward the main gate towering before me.

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An advantageous location adjacent to the Port of Thilawa

Adjacent to the main gate was a brand-new two-story administration building housing the One-Stop Service Center, the Thilawa SEZ's most notable feature. This Center is a general liaison set up by the Myanmar government for investment applications, company registrations, and other operational procedures required for foreign companies to move into the SEZ. Myanmar requires foreign companies to comply with the Foreign Investment Law when making investments, necessitating that applications be filed with all relevant ministries/agencies. This process takes time, imposing no small burden on companies. The Special Economic Zone Act applies to companies expanding into the Thilawa SEZ, however, and all of the complicated procedures can be handled in the Center, as its name implies, via one-stop service. Stepping inside, visitors receive waiting numbers, and staff members were at windows attentively dealing with inquiries. JICA specialists are also posted on a full-time basis to the Center, where they offer advice on setting up in the Thilawa SEZ. The systems and know-how that foreign companies need to receive assistance with assurance are all available here.

Next door to the administration building is Thilawa Global Logistics (hereinafter, "TGL" (*2)), a logistics company in which our company holds a stake. One of TGL's remarkable features is that it has a warehouse inside the Thilawa SEZ to which customs officers are posted full-time. The company also enjoys an outstanding location a mere five minutes by car from Thilawa Port, with its facility situated just inside the main gate. Tenant companies using TGL have access to comprehensive import/export customs clearance and logistics services.

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The One-Stop Service Center in Thilawa for handling inquiries

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A customs office that is part of the One-Stop Service Center has been set up on TGL's premises. On the front of the building are displayed the customs logo on the left and the TGL logo on the right

Further inside the zone was an expanse housing a tidy row of plants. A year or so after the zone had opened for business, about 80 companies had decided to move in, and agreements had already been concluded for about 90% of the plots for sale. As of October 2016, plants were being operated by nearly 20 companies from a wide range of industry sectors, from construction materials to foods and beverages, farm machinery, fertilizer, sewing, and assembly. Rental plants have been set up in the Thilawa SEZ. These rental plants offer production spaces that help companies hold down their initial investments and allow them to start up their operations without excessive time or difficulty, thus providing backup support for expansion by small and medium-sized companies. These have been well-received, with the existing plants for the most part full, and new rental plants are being constructed on a neighboring site.

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Rental plants are a quite popular approach to holding down initial investments and minimizing the risks of setting up locally

Helping encourage many companies to set up in the Thilawa SEZ are the improvements made in basic infrastructure. Optical fiber has been laid in the Thilawa SEZ, providing communication speeds even faster than those in Yangon. Housing for employees has also been constructed nearby to make commuting convenient. The area's previously rough roadways are being improved bit by bit. On a site adjacent to the Thilawa SEZ that lay vacant until a year and a half ago towers an impressive gas-fired power generation plant constructed with yen loan from Japan. This plant reportedly supplies electric power to Yangon as well as to the Thilawa SEZ.

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Thilawa gas-fired power generation plant in operation from 2016

A look at how completely the scenery has changed over the past two years offers an immediate picture of how smoothly business is progressing. This rapid development is underpinned by the fact that this project has received strong support from the governments of both Myanmar and Japan.
The rainy season is just now coming to an end. With the start of the dry season, construction work will begin in greater earnest. Many more plants will be standing a few years from now, creating more employment, and the infrastructure will be even better. We have high expectations of uninterrupted development at the Thilawa SEZ.

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View from the roof of a water treatment plant, offering a panoramic look at the Thilawa SEZ

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Construction site when the lot was vacant land two years ago

*1 MJTD is the abbreviation for Myanmar Japan Thilawa Development Ltd., a business company funded by the governments of Japan and Myanmar as well as private companies
*2 A comprehensive logistics company funded by Sumitomo Corporation, Kamigumi Co., Ltd., and a Myanmar corporation

Telecommunications Business: Moving up to the Next Stage

The spread of mobile telephones in Myanmar has accelerated since foreign companies entered into the mobile communications business in 2014. In September 2014, when the mobile phone penetration rate in Myanmar still at only 10%, Sumitomo Corporation, KDDI Corporation and MPT(*3)launched a joint operation(MPT JO) to enter the telecommunications business while other foreign telecommunications companies Telenor and Ooredoo also entered the market. Two years or so later, Myanmar's mobile phone penetration is now 90% and expected to reach 100% soon. Most of the people in Myanmar walk around with smartphones, not only in town but even in Buddhist pagodas and temples. When I passed through the city, I was surprised to see the huge number of advertisements of mobile phone operators. Almost all of the parasols of open-air stalls are colored yellow (MPT JO), light blue (Telenor), or red (Ooredoo), and buses and taxies are even wrapped in operator's advertisements. A fourth mobile telephone company is expected to enter the market very soon, and the fierce competition among operators is inevitable .Currently MPT JO's market share is around 40%, and its population coverage rate is 97%, which is the largest coverage in Myanmar. While competition in the mobile telephone market is getting more and more intense, how can MPT JO as No.1 operator in the market differentiate from other competitors ?

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Communications company advertisements are conspicuous across Yangon, and certain streets feature a host of mobile telephone sales shops

On October 7, 2016, MPT JO opened a new shop in Myanmar Plaza, one of the largest commercial facilities in Yangon. Myanmar Plaza is a modern commercial facility opened in 2015, and it was filled with young people and families despite it being a weekday. MPT JO now has nearly 130 stores, but this Myanmar Plaza shop stands out because it emphasizes MPT-brand promoting functions and customer care. In a first for the company, MPT JO launched its own brand of smartphones in September 2016. Other MPT JO shops and competitors' shops primarily offer smartphones from multiple foreign manufacturers, but only MPT-brand smartphones are on display at this shop, which focuses on promoting the MPT brand to customers. Special attention has been given to the shop's interior design. The shop has partitioned counters for dealing with customers one-on-one, allowing visitors to consult about services without worrying about other customers. This setup is considered standard business practice in Japan, but shops in Myanmar do not have partitioned counters; indeed, most competing shops have nothing but a counter for ringing up sales. The Myanmar Plaza shop has installed sofas where people can relax while waiting, and provides free mobile phone charging and free WiFi. MPT JO COO Yoshiaki Benino (from Sumitomo Corporation's Mobile Solution Business Department No. 2) says, "We want to make it a place where customers tired from shopping can feel free to stop in." Such generous customer care, not available at other companies, will boost the value of the MPT brand.

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The new shop aims to improve customer satisfaction with MPT-brand promoting functions and a layout emphasizing customer care

High-speed, large-capacity fourth-generation (4G) technology is making inroads into Myanmar, and it is anticipated that the 1,800 MHz frequency band will be opened up this year. The future will likely see a move from posting/viewing photos via SNS, etc., to listening to music and watching videos, and communications companies have been making the changeover from SIM card sales to the provision of appealing services. To address the full-scale expansion of 4G, MPT JO, is also making day-to-day improvements to its infrastructure and developing new services.
Taking a look inside MPT JO's office, I saw an extremely large number of Japanese engaged in discussions with their Myanmar colleagues. Every Japanese staff member holding an important post in MPT JO has a counterpart from the local partner company. One of MPT JO's major strengths is its ability to skillfully combine Japanese technology and service know-how with the partner company's local perspective.
On the day before the Myanmar Plaza shop opened, the shop staff were busy preparing from very early that morning until just before the store opened. Local staff showed up for the opening ceremony, and after opening, I saw COO Benino greeting customers with a smile together with shop employees. Although the market is in a turbulent phase, the three companies remain unanimously committed to this business and to the course already set. This will likely be the driving force that allows MPT JO to make further strides ahead.

*3 Abbreviation for Myanma Posts & Telecommunications

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Japanese and Myanmar executives engaged in a meeting at MPT JO

Myanmar’s Future Prospects

Looking back over the six days I spent in Myanmar, I feel that the country was more "open" than I had imagined. The women walking along were wearing makeup similar to women in Japan instead of the traditional thanaka (a cream-colored paste applied to cheeks), locals were clad in dresses and jeans rather than the longyi (traditional ethnic attire), and there were numerous bars playing Western music that drew in foreign tourists and local youth. Clothing, food, housing and culture are seeing a steady transformation. On the other hand, commercial facilities had power outages, the traffic congestion was terrible, and logistics networks were inadequate, leaving me to conclude that there are still many infrastructure issues that need to be addressed. Such social issues necessarily offer new business opportunities, though, and this new business will develop and change Myanmar. My visit led me to a clear understanding of what every single representative posted there had told me: the Myanmar you see now can only be seen this instant. I wonder how much change the Myanmar I saw will undergo in the near future. In a year or two the country may transform in ways I had not even imagined, so I made it a point to firmly commit to memory everything that I had seen in these six days.

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The Buddhist faith has not been forgotten in Myanmar even amidst modernization, and Buddhist pagodas tower over the city streets

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