Survey of IT Implementation 1 ICT Development in Myanmar

The Ministry of Communications, Posts and Telegraphs has been responsible for the development of IT in Myanmar. The Myanma Posts and Telecommunications (MPT) is the sole operator for all telecoms and ICT facilities in Myanmar.

To enhance the long distance telecommunication and long distance telephone services in the border areas, domestic satellite earth stations were implemented in 1991 and VSAT system was introduced later. Currently 10 VSAT stations and one DOMSAT station are in operation in the rural areas. All the domestic earth stations and VSAT are linked with THAICOM 3. Broadband Satellite System has been implemented since 2004 and encouraging already the use of about 550 satellite terminals for voice and broadband data through IPSTAR. IPSTAR, designed for two-way broadband communication over the IP Platform, fully supports Internet connection and other applications for them to be used over the IP Platform. The ADSL system is also available starting from early 2006 in Myanmar. ADSL provides a complete portfolio of digital subscriber line technologies to end-users over existing copper telephone wire infrastructure.

The connection of ADSL is extended to every township for improving Internet access. 400 public Internet services centres have been projected to be introduced in 324 townships within three years to facilitate communication link.

Data communication with Packet Switching system as well as Internet services as the main infrastructure have been introduced. For international communication, Standard A Satellite Earth Station has been implemented and it is connected with SEA-ME-WE optical fibre transmission system.

Myanmar is now operating 1644 circuits to 11 countries by satellite communication as well as international optical fibre communication system. Myanmar is now participating in linking with the member countries of the Greater Mekong Sub-region and also cross-border connection with China and Thailand are being developed. Under the GMS Information Super Highway Implementation Project, the transborder fiber link between Myanmar and the PRC was opened in March 2008, and bandwidth capacity 10 Gb (STM-64) can now be used on the link and 2.5 Gb(STM-16) on its micro link. The transborder fiber optic link between Myanmar and Thailand can also be used in the Northern Part of the Myanmar border and the Southern Part of the border link will soon be opened.

Cellular Mobile Telephone System was started in 1993 and CDMA Wireless Local Loop (WLL) and GSM have been introduced in 2000 and 2002, respectively. Mobile Phone availability is very limited in Myanmar and the level of the usage of mobile phone is quite low compared to other SEACEN member countries.

At present in Myanmar, MPT and Myanmar Teleport, which are under control by the Ministry of Communications, Posts and Telegraphs, are service providers on voice, as well as e-mail, web-hosting, web-browsing, server-co- location, FTP and Internet services. MPT has an on-going project to lay down a fiber optic backbone which can provide optimum connection for high-speed networks for ICT. It is also providing mobile Internet service and e-mail service on its GMS system using GPRS Technology. MPT provides Internet services to some government agencies and private companies since 1998. Also Myanmar Teleport which offers Internet and e-mail facilities to the public since 2002 using digital telephone lines, initially deployed Broadband IP satellite from a Central HUB site in Yangon and via dial-up access. It has also deployed Fixed Broadband WLL in the two major cities (Yangon and Mandalay) since late 2002. Myanmar Teleport is also providing virtual private network services for domestic banks, government departments, private companies and a VOIP gate way.

The Myanmar Information and Communication Technology (MICT) Park, now known as Myanmar Info-Tech, a consortium consisting of over 50 local ICT companies, was inaugurated in January 2002 with the aim of leveraging the development of ICT. There are currently 30 software companies operating there.

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Since 2003, Cyber Cafes are available for public use in the major cities but this facility has not reached the rural areas. The Government offices and big companies can use the Internet access very easily. All government offices and some large corporations by using domain names for e-mail address and website have become very popular today. To improve Internet access, connections of ADSL Line are being extended to every township. Recently the number of Internet users in Myanmar has reached nearly 400,000, up from 9,255 in 2004/05, according to the MPT and Myanmar Teleport Statistics. Moreover, the three -year project which started in 2006/07 has been carried out to establish 400 public access centers in 324 townships of ten major cities, namely Yangon, Mandalay, Pyinmana, Pyay, Magway, Muse, Myitkyina, Monywa, Pathein and Taunggyi, within three years to facilitate communication links. However, the ratio of total Internet users against total population is 0.70% and the ratio is quite low amongst the member countries.

Cyber Laws (Electronic Transaction Law) was enacted in April 2004 to provide a suitable legal framework for ICT development. Communication Law which will cover all aspect of Telecommunication and ICT, is in the drafting stage under the guidance of the Myanmar ICT Development Council, the highest body for ICT in Myanmar. The government organisations and the ICT companies are working towards the development of ICT through various projects consisting of e-passport, smart card, smart school, certification authority, e-procurement, e-government, e-education and e-learning. E-National Task Force and four working groups were formed in 2000 and they are responsible for leading the ICT development activities. The government has planned for the of installation of new telecommunication networks as well as the upgrading and modernisation of the existing services to meet the public demand.

There are 22 universities offering computer studies and computer science. throughout the country providing ICT education courses.

In the banking sector, the Myanmar Economic Bank (MEB), the largest State-owned commercial bank, has 318 branches throughout the country and it conducts its banking operation by using personal computers with accounting application software as well as manually. It communicates with its branches and transmits data and information and transfer of fund by using telephone line or telex or fax.

Only the three largest domestic private banks, namely, the Yoma Bank Ltd, Kanbawza Bank Ltd. and the Cooperative Bank Ltd., are conducting data transmission and funds transfer among their branches through on-line network by using VSAT and IPSTAR. The other banks are linked with their branches through telephone line or telex or fax for transmission of data and information as well as for the transfer of funds.

The following survey table shows the status of IT infrastructure installed in Myanmar.

Figure 1

Status of the IT Infrastructure Installed in Myanmar

Source: Survey conducted for this research paper.

As mentioned earlier in Chapter 2, IT- supported financial products and services have not been implemented yet.

The presence of technology-supported financial products and services are mentioned below:

Figure 2

Technology-supported Financial Products and Service

Most of the domestic private banks are using different types of software application which are outsourced to domestic private service providers for conducting their core banking services. The status of IT – related Applications in addition to IT – related products is mentioned below.

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Figure 2

Technology-supported Financial Products and Service

Most of the domestic private banks are using different types of software application which are outsourced to domestic private service providers for conducting their core banking services. The status of IT – related Applications in addition to IT – related products is mentioned below.

Figure 3

Status of IT-related Applications in Addition to IT-related Products.

No. Item Yes/No

1. Core Banking General Ledger, Third Party

fund, loan and consumer -

2. Treasury Yes

3. Remittance -

4. Trade Finance -

5. Corporate Online Service -

Source: Survey conducted for this research paper. 3.2 National Payment System

All state-owned banks are providing international payment and settlement system services through the Society for Worldwide Inter-bank Financial Telecommunication (SWIFT). It is an ADSL system and the Central Bank of Myanmar has been implementing SWIFT system since 2004 with the correspondent network of over 40 banks. The services consist of international payment and settlement, funds transfers and exchange of financial information.

The only way for foreign banks to have a presence in the country is to open a representative office for information and marketing purpose. The domestic private banks have not opened branches outside Myanmar and they are not allowed to operate foreign banking services and international fund transfer. Both representative offices of foreign banks and domestic private banks cannot operate the international payment services.

Another payment system is the Clearing House Mechanism. The Clearing House for cheque clearing among banks is conducted at the Central Bank of Myanmar. The Clearing and payment settlement are based mainly on manual procedures.

For inter-bank funds transfers and payment, private banks conduct them among their branches through on-line system or telex or telephone or fax depending on their availability of telecommunication network.

The banking network is now going to be implemented and it is in the initial stage for the purpose of inter-bank funds transfer and reporting system services between CBM and all banks. Moreover, the Auto Clearing System is projected to be introduced in the near future.

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4. Impact of IT Implementation on Financial Institutions

To date, IT-supported financial products and services have not been introduced in Myanmar. Three of the 15 domestic private banks have provided on-line banking services including data compilation, fund transfer, account information, producing statements, internal remittance and historical transactions. So far, operational risk arises in their operations but it has not seriously affected banking operation because of the implementation of internal checks and management system, segregation of duties, proper control and password management, and on-going monitoring system.

A cyber law legislation ( Electronic Transaction Law ) was enacted on 30th April 2004 and the Law covers the areas of electronic signature, computer crime, electronic fund transfer and data protection. However, it does not cover all the issues arising from the implementation of IT- supported financial products and services, hence there will still be a need to widen the scope of the cyber law.

The following risks shown in Figure 4 are bound to occur. Figure 4

IT Risks

No. Item Yes/No

1. Operation Risk Yes

2. Liquidity Risk Yes

3. Credit Risk Yes

4. Strategic Risk

5. Reputational Risk Yes

6. Legal Risk Yes

7. Compliance Risk Yes

Source: Survey conducted for this research paper.

If and when all the banks implement IT in their banking operations and introduce IT-supported financial products and services, the Central Bank of Myanmar should follow the principles of risk management for electronic banking issued by the BIS in an appropriate manner. Banks also should develop risk management procedures to control and mitigate risks associated with the implementation of IT products and services.

5. Prevailing IT Supervisory Framework and Regulations