With ASEAN turning 50 years old and China’s Belt and Road Initiative taking centre stage, connectivity is a buzz word embraced by politicians and pundits alike. Since the Fourth Industrial Revolution has started, Myanmar should look at developing connectivity in terms of both hardware and software, according to Ken Tun, chief executive officer of Parami Energy.

Ken Tun

Parami Energy chief executive officer Ken Tun spoke to The Myanmar Times about what key messages from this year’s World Economic Forum on ASEAN that Myanmar should focus on. Photo – Myanmar Times

 

With ASEAN turning 50 years old and China’s Belt and Road Initiative taking centre stage, connectivity is a buzz word embraced by politicians and pundits alike. With the Fourth Industrial Revolution, Myanmar should look at developing connectivity in terms of both hardware and software, according to Ken Tun, chief executive officer of Parami Energy.

After his trip to Phnom Penh for the World Economic Forum (WEF) on ASEAN 2017, Mr Tun spoke to The Myanmar Times on the ASEAN topics tackled at the Forum and how Myanmar’s digital and physical infrastructure should move forward.

Approaching its semi-centenary, the “ASEAN Vision” comprises of economic growth, connectivity, and a single market.

“Now we [ASEAN] are the sixth-largest economy in the world. The ASEAN, after 50 years, are talking about the ‘ASEAN Vision’ – to make ASEAN the fourth biggest economy in the world. But how does ASEAN become the fourth biggest economy in the world, promote connectivity and create a single competitive market?

“These are brainstorm ideas, but at the same time there are real problems: ASEAN is not moving as expected. But compared to Europe, ASEAN only seems to be gaining power. These are some of the dynamics that we have at the Forum,” he said.

ASEAN is a diverse region with individual countries boasting varying levels of economic development, religions, history and a plethora of ethnicities. To connect these places together, roads and railways are needed.

According to the Asian Development Bank (ADB), ASEAN will require US$26 trillion in investment by 2030 to meet the region’s infrastructure needs. Crucial to this is the need to bring together the 10 Southeast Asian countries and deepen their economic integration.

At the Forum, Tevin Vongvanich, chief executive officer of PTT Public Company Limited in Thailand, explained: “Connectivity is very crucial for economic development.”

He added that cross-border infrastructure projects are increasing and the government needs to work with the private sector to allow a more fluid process to facilitate cross-border transactions.

“That would do a lot to facilitate the investment decision,” he said.

Emerging market premium and blended finance

Myanmar’s solution in tackling the infrastructure gap and connecting the country with the rest of the region, according to Mr Tun, lies in dealing with the “emerging market premium”.

“For example, let’s look at any emerging country. If you [the country] want to build the road, it costs you, let’s say, US$100, for emerging countries like Myanmar.

“But if you build the same road in Malaysia, do you think it will be cheaper or more expensive? It’s definitely cheaper because the cost of capital is cheaper. The people think that this country, in this case, Malaysia, is less risky. I call it an ‘emerging market premium’,” he explained.

Myanmar needs to pay for the premium in infrastructure projects because it is perceived as a risky country, and Mr Tun didn’t think it fair.

“Infrastructure should be a democracy, and, under democratic terms, things should be equal. So, now we need to fight for that. That’s the reason I am pushing our government to sign what’s called ‘blended finance’. If you look at any infrastructure project, you have private sector finance and you have development finance. And if you get more private sectors involved they will demand more equity and premiums on that.

“But a country like Myanmar cannot afford those kinds of high premiums. How, from a global-community perspective, can they help Myanmar to have access to a cheaper source of capital? I strongly believe that it is possible,” he said, pointing to a new initiative Sustainable Development Investment Partnership (SDIP).

The SDIP is a joint-venture initiative led by the World Economic Forum and the Organisation for Economic Co-operation and Development (OCED), and comprised of several stakeholders, including development and financial institutions and private banks.

According to the Partnership’s website, it is committed to mobilising blended finance for $100 billion of projects supporting sustainable and climate-resilient infrastructure.

“The goal is to provide some sort of risk premium, such as government-guarantee risk and political risk, so the cost of the project will be lower. Myanmar has the opportunity to actually tap on those initiatives in order to lower the cost of building the infrastructure.

“If you look at connectivity, let’s look at India, China, Japan – these countries say ‘Can we allocate $100 for Myanmar?’

“However, when our government and institutions meet them, they say: ‘what we ask for is only $1’. We should be more daring and courageous to ask for more; it’s all about benefit. Building cross-border connections is about mutual benefit.

“Where is the benefit for Myanmar? And where are the challenges?” he asked, adding that different stakeholders should join forces to work on those two questions.

“First we need to identify the opportunities and challenges. For that we need a model where we build an institution, i.e. a centre of excellence, with the government, think tanks, private sector and community – all four groups coming together. Now we can start to identify opportunities and challenges. What about minimising difficulties and maximising benefits? This centre for excellence will brainstorm those issues. Then they [the issues] can be forwarded to the government, and the government will negotiate on behalf of Myanmar. That should be the key in moving forward.

“We cannot be ignorant; no one will punish you for asking for more. I hope that there will be more opportunity to be proactive, and to be proactive you need this centre of excellence taking care of cross-border connections.

“Our people have a mindset of looking at a problem and feeling very sad and painful, and then end up paying a lot to solve the problem. But we should see the problem as an opportunity. That should be the mindset,” Mr Tun said.

Digital integration and DQ

Diversity can be integrated with “hardware” by building physical infrastructure such as highways, railways and ports. But, with the arrival of the Fourth Industrial Revolution, connectivity can also be done with “software” such as digital platforms and smart phones applications.

The WEF also focused on fast-tracking and prioritising digital integration. Businesses said that digital integration will enable business development to move ahead faster and help connect ASEAN countries with regional supply chains in production and distribution.

Manu Bhardwaj and Yuwa Hedrick-wong from Mastercard Center for Inclusive Growth argued that this in turn would stimulate development of physical infrastructure, setting in motion a virtuous circle of “software-hardware” integration and facilitating inclusive growth.

Mr Tun appeared upbeat about the digital revolution taking place in this country, but he was also cautious on the need to prepare Myanmar’s young people to use the digital technology and digital space wisely and safely.

“We already have IQ [intelligence quotient] and also EQ [emotional quotient]. Now we are talking about DQ [digital quotient] – how you manage your Facebook, train your kids to know their digital rights and protect their digital identity, and how to safeguard themselves.

“If you look at Myanmar in 2012-13, only six percent of people carried mobile phones,. Within 18 months after the opening up of the telecom sector, 65pc of people carried internet mobile devices… Then Facebook became a phenomenon: you wake up and you use Facebook – you set up meetings through Facebook and date through Facebook,” he said, adding that how people use the digital part of their lives is an important aspect.

“I am working with 1600 rural monastery schools which educate 300,000 kids. It’s quite important for me to work on the DQ part and help Myanmar kids to embrace the digital revolution by knowing their digital rights, identity and how to safeguard their privacy,” Mr Tun said.

In the interview, he also highlighted the importance of developing the transport and energy sector.

“Aung San Suu Kyi said that there are two areas she wants to focus on in Myanmar: energy and transportation.

“Transport specifically refers to the feeder roads so farmers can have access to the market. At the same time, 70pc of people in the rural areas do not have access to electricity in Myanmar right now.

“The existing net grid covers 30pc of the population so 70pc don’t have access to electricity,” he concluded, stressing that access electricity is a human right.

 

Source: MYANMAR TIMES (By Thompson Chau   |   Wednesday, 31 May 2017)