Earlier this week Jiang Zhengxin – vice general manager of China United Telecommunications Corp. –revealed that the company has been contracted to construct China’s first international undersea cable linking China and Myanmar.
Speaking from the sidelines of the China-ASEAN Information Harbor Forum held on September 13th, this announcement comes as part of a larger push by China to enhance its connectivity with ASEAN.
Construction will be headed by China Unicom, a subsidiary of China United Telecommunications Corp., which will work in partnership with Myanmar’s Telecommunications operators. Of those currently operating in Myanmar, the most likely partner for the project is state owned Myanmar Post and Telecommunications (MPT) which has a prior working relationship with China Unicom, experience in undersea cable construction, and a monopoly on the telecommunications sector in Myanmar.
With a US $50 million land cable linking China and Myanmar currently underway, the announcement of an additional sea cable is one of several moves by China aimed at improving data flow within Myanmar and the ASEAN region at large. In his opening speech at the Harbor Forum, Lu Wei, Chinese minister of the Cyberspace Administration, stressed the importance of Internet connectivity and revealed Chinese plans for a special fund targeting Internet and telecom infrastructure between China and ASEAN. The fund is set up with 34 target projects and has a total budget of US $3.3 billion.
Connectivity in Myanmar
Current data infrastructure in Myanmar is limited to a land cable with Thailand as well as a connection to the SeaMeWe-3 cable. Completed in 1999, SeaMeWe -3 is the nation’s only undersea cable, and while it provides relatively stable access to Asia, the Mid East, and Europe, its capacity has become increasingly inadequate in the face of technological advances. While a land connection to Thailand is in operation, instability, rough terrain, and rapid fluctuations in weather have long plagued its effectiveness and moreover called into question the efficacy of future land cable projects.
As of 2012, total existing infrastructure placed a 14gbps limitation on nationwide traffic. With demand for bandwidth skyrocketing, costs of a one year subscription to a 1mbps broadband connection have ballooned to 130% of Myanmar’s GDP per capita while leaving connection speeds among the lowest in ASEAN. The combination of these factors currently inhibit the development of a viable online consumer base, such as that seen in Vietnam, and prevent access to low cost e-learning tools critical for human capital development.
SeaMeWe – 5
Among several infrastructure initiatives set to improve connectivity in Myanmar, the nearest to completion is the SeaMeWe – 5 undersea cable. Slated for completion in early 2016, SeaMeWe – 5 will increase data flows to the Middle East and Europe. While the cable will extend to several ASEAN Member states (Malaysia, Indonesia, Singapore, & Thailand), other member states as well as large regional partners such as China, Korea, & Japan will not be included.
Chinese Sea Cable
The China – Myanmar sea cable provides a unique compliment to the shortcomings of SeaMeWe – 5. With a dedicated link to China, Myanmar will benefit from increased connectivity to Asia’s largest economy. In addition to increased capacity, a new cable will decrease congestion of the SeaMeWe3, thereby compounding its benefits. While details of the project have yet to be released, available routing options would position the cable to pass many ASEAN members (Vietnam, Cambodia, The Philippines) lacking access to the SeaMeWe-5, raising the possibility that they could be added to the project as it progresses.
Taking Advantage of Increased Capacity
With many projects on the horizon, Myanmar is due for an overall infrastructure upgrade – something the country sorely needs to lower connectivity costs and boost investment. However, to ensure the benefits competitive internet pricing are gained from this new capacity, a substantial regulatory overhaul is needed as well.
While there are indications of increased competition in telecommunications and an opening of Myanmar’s access to the World Wide Web, many hurdles to doing business in the country remain. Investors with the most up to date information on prevailing regulatory trends will be the best positioned to tap into the country’s emerging, tech savvy consumer classes, and leverage the country’s largely untapped human capital to bolster their ASEAN growth.
Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email firstname.lastname@example.org or visit www.dezshira.com.
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