The unusual place for tech startups
Writer - Nuno Pinto Gonçalves
A few months ago, I traveled to Myanmar, and I noticed an increase in the usage of ride-hailing services, such as Uber or Grab. Unlike in Western countries, the adoption of ride-hailing services goes almost unprotested by taxi drivers. According to Reuters, the Myanmar government supports ride-hailing services because they only hire accredited taxi drivers, and both Uber and Grab established partnerships with the taxi drivers unions.
One of the reasons for the success of ride-hailing services in Myanmar is the increase in transparency. Taxis are not metered, which means customers must negotiate their prices beforehand. This affects the ride cost, which is sometimes arbitrarily defined by drivers based on whether the customer is foreign as well as the number of passengers willing to use taxis versus private cars.
Both Yangon and Mandalay (Myanmar’s second largest city with a population of 1.25 million people) are good locations for the analysis of the changes in public transportation as a result of the widespread adoption of ride-hailing services. Reuters reports the Yangon region has more than 70,000 taxis, not including other forms of transportation, such as shared taxis; the city has approximately 4.5 million people.
Traffic in Yangon
Two fundamental drivers are necessary for the quick adoption of ride-hailing services to occur:
i) New mobile operators have driven internet adoption on mobile devices. According to the Singapore-based agency We are Social, 26% of the population had internet access at the end of 2016, and the growth rate in 2016 was 97%. Therefore, internet penetration rose significantly in 2017. Recent data shows 51 million active SIM cards, the same number as the entire population of the country. I spent much time in the countryside and noticed almost everyone had a smartphone.
ii) Public transportation services in Yangon and Mandalay are almost non-existent. The population from both cities relies mainly on private cars and taxis for commuting.
Since Uber and Grab introduced their services in Myanmar, ride costs have lowered. For instance, the cost of a ride between the Yangon airport and downtown (about 15 km) has reduced from 12,000–15,000 MMS (9 to 11 USD) to 6,000–8,000 MMS (4 to 6 USD ) on average. It is unclear if this reduction is temporary (i.e., based on strategies to attract more users) or if these prices will be the new norm. Based on the network effect of these services, I believe that the cost for ride-hailing services will continue to plummet as additional users and providers join the system. Time will tell whether ride-hailing will become as competitive as bus services.
According to Grab, the company aims to invest heavily in Myanmar and plans to spend $100m USD in the next few years. The company also plans to use its mobile payment services as a growth medium.
The country offers a fascinating market for digital transformation. Social networks, messaging, VOIP, and mobile banking are some of the other services that may experience exponential growth. It is clear that the country’s emergence from military rule has provided many opportunities that tech companies should exploit.
Writer - Nuno Pinto Gonçalves
A few months ago, I traveled to Myanmar, and I noticed an increase in the usage of ride-hailing services, such as Uber or Grab. Unlike in Western countries, the adoption of ride-hailing services goes almost unprotested by taxi drivers. According to Reuters, the Myanmar government supports ride-hailing services because they only hire accredited taxi drivers, and both Uber and Grab established partnerships with the taxi drivers unions.
One of the reasons for the success of ride-hailing services in Myanmar is the increase in transparency. Taxis are not metered, which means customers must negotiate their prices beforehand. This affects the ride cost, which is sometimes arbitrarily defined by drivers based on whether the customer is foreign as well as the number of passengers willing to use taxis versus private cars.
Both Yangon and Mandalay (Myanmar’s second largest city with a population of 1.25 million people) are good locations for the analysis of the changes in public transportation as a result of the widespread adoption of ride-hailing services. Reuters reports the Yangon region has more than 70,000 taxis, not including other forms of transportation, such as shared taxis; the city has approximately 4.5 million people.
Traffic in Yangon
Two fundamental drivers are necessary for the quick adoption of ride-hailing services to occur:
i) New mobile operators have driven internet adoption on mobile devices. According to the Singapore-based agency We are Social, 26% of the population had internet access at the end of 2016, and the growth rate in 2016 was 97%. Therefore, internet penetration rose significantly in 2017. Recent data shows 51 million active SIM cards, the same number as the entire population of the country. I spent much time in the countryside and noticed almost everyone had a smartphone.
ii) Public transportation services in Yangon and Mandalay are almost non-existent. The population from both cities relies mainly on private cars and taxis for commuting.
Since Uber and Grab introduced their services in Myanmar, ride costs have lowered. For instance, the cost of a ride between the Yangon airport and downtown (about 15 km) has reduced from 12,000–15,000 MMS (9 to 11 USD) to 6,000–8,000 MMS (4 to 6 USD ) on average. It is unclear if this reduction is temporary (i.e., based on strategies to attract more users) or if these prices will be the new norm. Based on the network effect of these services, I believe that the cost for ride-hailing services will continue to plummet as additional users and providers join the system. Time will tell whether ride-hailing will become as competitive as bus services.
According to Grab, the company aims to invest heavily in Myanmar and plans to spend $100m USD in the next few years. The company also plans to use its mobile payment services as a growth medium.
The country offers a fascinating market for digital transformation. Social networks, messaging, VOIP, and mobile banking are some of the other services that may experience exponential growth. It is clear that the country’s emergence from military rule has provided many opportunities that tech companies should exploit.
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