Myanmar is set to achieve the third-highest economic growth of Southeast Asian nations this year, with projected GDP growth of 6.6%. The global economic slowdown notwithstanding, Myanmar is defying the odds and outdoing all but two Southeast Asian countries, Vietnam and Cambodia, which are on course to record GDP growth rates this year of 6.8% and 7.0%, respectively. According to the World Bank’s report, “Myanmar Economic Monitor: Building Reform Momentum,” Myanmar’s economic growth is driven by the accelerated implementation of its reform programs, an increase in infrastructure spending, and the liberalization of its wholesale and retail sectors, as well as banking and finance industries.
Following on from the country’s first blockchain roundtable held by local community tech hub Phandeeyar in June this year, this article will explore the use of blockchain by the national stock exchange i.e. the Yangon Stock Exchange (YSX) and for the development of Myanmar’s national payment system.
Unbeknownst to most people, Myanmar’s affinity for blockchain goes back to 2016 when the YSX established cooperation with Tokyo-based Daiwa Securities Group to explore the use of blockchain to support the exchange’s operations. Under the cooperation framework, Daiwa’s blockchain-based equity trading platform will be integrated with the YSX’s exchange platform to facilitate the development of a more efficient bookkeeping system. During the pilot phase of the project, blockchain, which dispenses with the need for a centralized server, enabled the stock exchange to maintain its operations despite the country’s frequent power outages.
The Central Bank of Myanmar had in April this year officially endorsed the use of blockchain for the national payment system, approving collaboration between Shwe Bank of Myanmar and Krungthai Bank of Thailand to develop a blockchain-based cross-border remittance system between the neighboring countries. Shwe Bank and Krungthai Bank are exploring the use of Bangkok-based Everex’s blockchain platform to develop an Ethereum (ETH)-based cross-border remittance system to provide a secure channel through which the 3 million Myanmar migrant workers in Thailand can wire money to their families back home.
Other than cross-border remittance, the use of blockchain in Myanmar’s financial industry also extends to its microfinance sector. It’s notable that statistics collated by the World Bank found that in the first quarter of fiscal year 2018, the credit take-up rate of local small and medium enterprises (SMEs) in Myanmar recorded a staggering 80% growth year on year, highlighting the immense potential of the country’s microfinancing sector.
In 2016, Myanmar became the first country in the world to use blockchain for microfinancing, following a pilot project by Japanese software development firm Infoteria testing the decentralized technology on the computer system of Yangon-based microfinance institution BC Finance. However, major obstacles remain. Infoteria highlighted the problem of blackouts and the “low quality of local circuits,” damaging the reliability of the country’s internet infrastructure and, therefore, inhibiting further adoption and development of blockchain in the nation.
Given the country’s past explorations of the technology, Myanmar appears to be a believer in blockchain and its potential. Nonetheless, it continues to struggle with energy insecurity due to the instability of its power grid. The World Bank recommends that Myanmar double investment in its power sector to US$2 billion from 2020 onwards.
The country’s upcoming smart city, Yatai, presents an ideal opportunity to develop a more stable power grid, paving the way to unlocking blockchain’s potential and sustain Myanmar’s economic growth.
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