Mr Schmidt Goes To Myanmar: Why A Repressive State Suddenly Needs To Get Googled

The world’s most popular search engine scored a victory this week, and it came in the form of two little “m”s.

Mountain View, Calif.-based technology giant Google Inc. (NASDAQ:GOOG) launched a new domain for its iconic home page on Thursday at www.google.com.mm, which serves the country of Myanmar. The day before that, the Southeast Asian country gained access to the online Google Apps store.

Myanmar, also called Burma, has undergone major reforms since a new civilian government was elected in 2010. Google Executive Chairman Eric E. Schmidt is apparently keen to take advantage of the opportunity: He visited the formerly ostracized country to help kick off his company’s access to a whole new market.

In a speech to university students on Friday in the economic hub of Yangon, Schmidt waxed poetic about the potential of online communication. He argued that more connectivity would empower citizens and keep Myanmar from regressing toward autocracy.

“The Internet will make it impossible to go back,” he said, according to the Associated Press. “The Internet, once in place, guarantees communication and empowerment becomes the law and practice of your country."

For years, the Myanmar government had plenty of reasons to restrict Internet accessibility. Even today, despite ongoing reforms, the country is one of most repressive places on earth in terms of political freedoms and government transparency.

But Myanmar is in desperate need of foreign funds and economic growth. The connectivity that Schmidt promotes could very well stir up trouble for the still-restrictive administration -- but it’s also the ticket to new levels of progress and prosperity.

In the end, that may trump the more authoritarian inclinations of repressive officials in the capital city of Naypyidaw.

Fertile Ground

Having been ruled by a military junta for decades, Myanmar was suffering under heavy sanctions imposed by the international community. But most of them were lifted in 2011 and 2012, and now that economic growth is on the fast track, officials are doing all they can to accelerate it even more.

In a bid to ramp up foreign investment, the Burmese central bank floated the national currency in April of last year, setting an official rate of 818 kyat against the American dollar. That’s up from a measly 6.4 kyat per USD, which had enabled privileged companies to score incredible profits by selling abroad at realistic prices but using official rates for accounting to hide revenues.

Myanmar also passed new foreign-investment laws in November, setting up tax breaks and looser land-lease restrictions.

Today, Naypyidaw cronies may find it more difficult to line their pockets the old-fashioned way -- but overseas funds are rolling in like never before. According to a report on global investment trends by the United Nations Conference on Trade and Development, foreign direct investment in Myanmar grew by 90 percent from 2011 to 2012, to hit $1.9 billion.

International firms are attracted by Myanmar’s proved reserves of natural gas, which amount to 10 trillion cubic feet, according to the U.S. Energy Information Administration. Hydrocarbon companies including South Korea’s Daewoo International (KRX:047050), Australia’s Woodside Petroleum (ASX:WPL) and France’s Total (EPA:FP) are eyeing offshore blocks for exploration, which should be up for auction come April.

All told, this is an era of great potential for Myanmar. Its gross domestic product grew by 6.2 percent last year and is expected to increase by another 6.5 percent this year, according to World Bank estimates. But it will be a while before this progress makes a difference for the average Burmese citizen. In this county of 61 million people, about one in four live below the poverty line.

To move past decades of stagnancy on this front, Myanmar will have to liberalize its political system. That process began in earnest in March of last year, when a new civilian government was inaugurated after 50 years of military junta rule.

The election that took place in November 2010 was widely criticized as a sham since the main opposition bloc, called the National League for Democracy, or NLD, boycotted and was therefore unrepresented in the final results. A party allied to the old junta -- the Union Solidarity and Development Party, or USDP -- swept the election, and one-quarter of the seats in both houses were reserved for junta appointees. USDP member and former military commander Thein Sein was selected as president.

Reforms under Myanmar’s first civilian government in half a century began to take shape in 2011 -- but the real watershed moment came in 2012, when by-elections were held to fill 46 seats. This time, the NLD contested, led by iconic human-rights activist Aung San Suu Kyi. Of the 44 posts the NLD sought, it won 43.

Suu Kyi, who had been under house arrest for a combined total of 15 years until her final release in 2010, has since become the face of progress in this long-repressed nation. And although the NLD still holds only a small fraction of the seats in both houses of parliament, domestic and international enthusiasm over the party’s ascension has given it more power than its numbers would indicate.

International diplomatic visits, investments and praise have been on the upswing for the past several months. Parliament agreed just this week to review the constitution, which could eventually result in a new draft that further curtails military power. Hundreds of political prisoners have been freed over the past two years, economic policies have been liberalized, and -- most important for people such as Google's Schmidt -- bans on a variety of news and activism websites have been lifted.

A Slow Connection

According to a 2012 Freedom of the Net report by Freedom House, a New York-based research and advocacy group focused on political and human rights, Myanmar’s level of Internet censorship has decreased significantly. In a ranking system of 0 to 100, where 0 is the most free, the country ranked 75 -- down from 88 in 2011. Of the 174 countries measured, it was the second most improved overall.

“Burma had some of the harshest laws on the books in terms of imprisonment for Internet crimes; you could get imprisoned for years on the basis of a few emails,” said Sarah Cook, a senior research analyst at the Freedom House. “That has changed dramatically, slowly but surely. But Burma is still pretty deeply in the ‘Not Free’ category because of the continued harshness of some laws.”

The research found that Myanmar still employs some particularly blatant methods of censorship, such as blocking websites and detaining online dissidents, many of whom were subjected to physical abuse. And while such draconian measures appear to be on the decline, it is important to note that there are other, more subtle ways for governments to exert control. These include hiring agents to steer online discussions, or enforcing rules that make it hard for users to publish information anonymously.

But even those more sophisticated controls will be harder to enforce if Google takes on more of a role. Of course, change won’t happen overnight. What restricts most Burmese people from communicating freely on the Internet isn’t censorship: It’s poverty and lack of infrastructure.

Myanmar is currently one of the least connected countries on Earth. According to estimates cited in the Freedom House report, only 500,000 people were Internet users in early 2012. That’s less than 1 percent of the population.

Many citizens obtain access to the Web in public Internet cafes rather than via privately owned devices, but the connections can be atrocious -- users sometimes wait for 45 minutes to load a single page. Setting up a home connection or purchasing a mobile phone is prohibitively expensive for most. And in rural areas Internet access is essentially nil. In many communities, there is no awareness of Google’s existence, let alone demand for its products.

That didn’t stop Schmidt from making his pitch and looking optimistically at long-term goals.

"The government has to make it possible for the private sector to build the telecommunications infrastructure," he said. "If we do that right, within a few years the most profitable businesses within Myanmar will be the telecommunications companies."

Communication may very well be the key to development -- in Myanmar, it’ll just have to start small. But Schmidt is no stranger to pushing connectivity in unlikely places, from the hermit state of North Korea to the most crime-ridden areas of Mexico. In Myanmar at least, the situation is headed in the right direction. And now Google has its foot in a door that was already opening.