March 13, 2017 2:00 pm JST

Internet ventures blooming in Myanmar

Car-hailing, payment brokering draw consumers as phone penetration soars

MOTOKAZU MATSUI, Nikkei staff writer

Thanks to 2C2P's payment platform, people can now pay utility bills at a convenience store like this one in Yangon.

YANGON -- Internet startups offering such services as car-hailing and payments are attracting many consumers in this booming economy, and the sector is expected to evolve further with a smartphone boom and improving infrastructure.

Smart way to move around

In the largest Myanmar city of Yangon, where traffic volume is shooting up, taxis carrying the logo of "Oway Ride" are a growing presence. Users can request the closest car among 4,000 vehicles in the city via a smartphone app.

"Recently, there are no parking spaces in the city due to the heavy traffic, so taxis are indispensable," says a 52-year-old pharmaceutical wholesaler. "Oway can call a taxi in a few minutes, so it's very handy." With good reports about the service spreading, cumulative downloads of the app have exceeded 150,000.

Sometimes called the Uber of Myanmar, Oway was founded in 2012 by CEO Nay Aung. He has a Stanford MBA and experience working at an Internet service company in Silicon Valley.

The company started out as a travel booking service, targeting mainly foreigners. It has grown into a major industry player, dealing with some 700 hotels and about 50 airlines.

Nay Aung is now trying to shift Oway's focus to the domestic market, and the car-hailing service marks the first step.

The company aims to have more than 25,000 drivers within two years and reap synergies with travel services, Nay Aung says. Oway has gained international attention as a growth company, and was approached last year by the World Bank group with a $3 million loan offer.

Myanmar economy's is still among the least developed in Southeast Asia, and mobile phones started appearing in great numbers only recently.

When the country was under military rule, less than 1% of the population had access to the Internet. But the mobile phone market opened up to foreign companies in 2014, transforming the situation. The percentage of people with mobile phones soared from around 10% to nearly 100% in three years. About 70% of mobile users now have smartphones, and the access to a broader communication network is fueling startups.

New services catch on not only for the convenience of being available via smartphones, but also by improving routines of daily life. Oway's distance-based pricing is a typical example, eliminating the need to negotiate with drivers and giving greater transparency.

Going digital with no bank accounts

Another startup with comparable growth potential is payment service provider 2C2P. Last year, the company launched the One Stop Payment service to broker digital payments of utility bills, online-booked air tickets and other services for people who have neither bank accounts nor credit cards.

Agents can use a mobile app to send customers' payments to others via a 2C2P bank account. With no special point-of-sale equipment necessary, participating locations have grown to about 12,000, including grocery stores in villages as well as convenience stores in cities. The company aims to expand the agent network to 30,000 locations by the end of this year.

Many people in Myanmar are skeptical of banks after two cancellations of banknotes in the 1980s and prefer to keep cash at hand. The country does not have many banking service locations, and only about 30% of people have bank accounts. Therefore 2C2P's payment service is catching on quickly.

B'smart Telematics Myanmar, which provides traffic information, is another example of a company sharply expanding its business.

Untapped e-commerce potential

In a country lacking logistics companies with a nationwide delivery network, online shopping has lacked momentum. No major e-commerce companies, not even Amazon.com from the U.S., are operating here. But the lack of modern commercial facilities and the growing economy point to abundant business potential.

Myanmar's Communications Ministry is planning to open up spectrum for 4G data service starting this spring. If such data services become prevalent, the environment for internet businesses will improve further.

The arrival of a full-blown broadband age will buoy the growth potential of online businesses, says 2C2P CEO Aung Kyaw Moe. Startups that power the new era of Myanmar look to prosper.

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