What Matters

The Impact of Internet Shutdowns on Myanmar’s Economy

The longer the duration of the internet shutdowns, the greater the damage to the country’s current economic situation. The shutdowns would essentially fragment the internet and information technology market. The market is only a decade old and built only through overcoming many obstacles, making it an economic frontier for the country. From an economic perspective as well, the internet shutdown policy is the greatest loss for the country’s current weakening economy and long-term development as well as for the general public. 
By ISP Admin | May 21, 2021

What Matters No. 24

(This article is a translation of the Burmese language version posted on the ISP-Myanmar Facebook page on May 7, 2021.) 

In the aftermath of the February 1 coup, the military council has imposed various forms of nationwide and regional internet shutdown in Myanmar. Myanmar’s authorities rolled out extensive internet outages prior to the coup, starting from June 2019 in seven townships in northern Rakhine State and one township in southern Chin State. Following the coup, the new military government imposed wider internet shutdowns and the entire nation was badly affected. According to February 2021 data from the Datareportal website, almost half of Myanmar’s population – or about 23.65 million people – are internet users (Kemp, 2021). In terms of e-commerce usage, about 26 percent of the country’s population over the age of 15 has a bank account, and only about 3.6 percent use online shopping. In this context, it is important to divulge the extent to which the internet shutdown is jeopardizing Myanmar’s economy. 

Key Findings in Brief 

Some governments across the world have used the reasoning of preventing political instability to justify cutting off public access to the internet at various times. When the internet is cut off, not only are human rights violated unseen, but there are also many disadvantages to social, educational and economic developments as well. Among these impacts, the calculations of the effect on the economy are some of the most obvious as the impact is easiest to estimate.  

One of the methods used by Deloitte, a global consulting firm, is to determine the impact of the internet in 96 countries based on population and technological advances data. This method divides the countries into three groups: highly dependent, medium-dependent and least-dependent. The countries are further divided by the number of internet users, the internet speed and the ratio of e-commerce to the country’s GDP The final estimation of the economic cost is based upon the impact on 10 million people. Economic losses can further be estimated depending on the number of days the internet is cut off and the population living in the affected area. For the countries that rely heavily on the internet connections, a day of internet outage could cost an estimated US$ 23.6 million loss per 10 million people. For the countries that are averagely dependent, there could be a loss of US$ 6.6 million for every 10 million people, and for countries which are less dependent on the internet, an estimated US$ 600,000 could be lost. (Deloitte, 2016). The bottom line is that the more the economy depends on the internet, the greater the loss for the country’s economy.  

Another simple way to estimate the average daily rate is to calculate the probability of one day loss by dividing the annual sales volume of the entire digital market with 365 days. In any case, the more the economy relies on the internet, the greater the loss. 

Why does it matter? 

At the current time, the internet shutdown policies by the authorities have more cons than pros and have become a source of concern for researchers due to significant economic losses. The most vulnerable sectors which suffered from economic losses due to the internet outages include the online shopping sector and technological businesses. (Kathuria et al., 2018) Table shows the economic losses caused by internet outages internationally. After the February 1 coup, the military regime cracked down on the general public using various forms of internet shutdowns with the hope that it would slow down the anti-coup movement. Instead, the opposition has managed to utilize the internet to mobilize the people’s movement across the country. The overall conclusion is that the impact of the internet shutdown on the country’s economy and a comparative study on how much losses the economy is facing is a noteworthy matter.  

Table 1: Internet shutdowns and estimates of economic impacts 

Study  Country  Duration in Days  Number of Instances  Economic Impact Estimate  
OECD (2011)  Egypt  5  1  Direct costs of a minimum USD 90 million (On a yearly scale 3-4% of GDP)  
Brookings (2016)  India, Iraq, Syria (non-ISIS areas) Pakistan, Turkey, Bangladesh, Brazil, North Korea, Republic of Congo, Uganda, Vietnam, Algeria, Bahrain Chad, Ethiopia, Libya, Morocco, Saudi Arabia, Syria (ISIS areas)  753  81  Total: USD 2.43 billion  India: USD 968 million for 70.54 days of shutdown  
Deloitte (2016)  Based on data for 96 countries  Not Applicable  Not Applicable  Highly Internet connected country: Per day impact of USD 23.6 million per 10 million population 
 Medium connectivity country: Per day impact of USD 6.6 million per 10 million population 
 Low connectivity country: Per day impact of USD $0.6 million per 10 million population 
 
CIPESA (2017)  Cameroon, DR Congo, Ethiopia, Gabon. Gambia, Niger, Republic of Congo, Togo  176  Not Available  USD 218 million (estimate only for total Internet shutdowns)  
CRIER (2018) India (2012-2017) ~680 (16,315 hours) 130 170 times shutdown and a total of 16,315 hours caused a loss of USD 3.04 billion  

Source: Kathuria, R., Kedia, M., Varma, G., Bagchi, K., & Sekhani, R. (2018). The Anatomy of an 

Internet Blackout: Measuring the Economic Impact of Internet Shutdowns in India. http://icrier.org/pdf/Anatomy_of_an_Internet_Blackout.pdf  

Is it relevant to Myanmar? 

The military council continues to roll out various forms of internet shutdown make them highly relevant to study to determine how much damage is being inflicted upon Myanmar’s economy. The Internet-based economy in Myanmar is just beginning to grow. According to officials from the Ministry of Trade, in 2018, there were about 220,000 active online shoppers in Myanmar and e-commerce accounted for 0.07pc of the country’s GDP (approximately US$ 53 million) (Aye Nyein Win, 2019).  The figure is likely to be many times larger, as it does not include the selling of things through social media which essentially grew more in Myanmar during the COVID-19 pandemic period. Statista estimated that by 2021, the digital commerce market, including Myanmar’s e-commerce market, will reach US$1.152 billion.  

Deloitte’s method will be used to estimate the size of the losses Myanmar’s economy is suffering from internet outages. Data from Table-2 shows that Myanmar is closer to inclusion in the group of countries least-dependent on the internet. In a country with low internet usage, the potential loss per 10 million people in Myanmar is estimated at US$600,000 a day. The Myanmar economy is estimated to be facing a loss of US$3.24 million (Myanmar has a population of approximately 54 million) per day. Using the data from Statista of US$1.152 divided by 365 days, Myanmar’s economy is expected to lose approximately US$3.156 million per day. These numbers do not cover education services and internet advertising (which are not directly counted as e-commerce) as well as the losses that telecommunication companies suffer. To give an example, Telenor, a large telecom company operating in Myanmar, saw a loss of US$783 million within the first three months of 2021 after the February coup. According to analysis from Netblocks (2021), a day-long internet outage in Myanmar would cost nearly US$ 22 million. Of these, if the most popular social media platform in Myanmar, Facebook, is shut down, Myanmar is looking at a loss of more than US$1.2 million a day, and if YouTube is also included, the losses would be more than US$2.4 million per day. 

Table 2: Internet ecosystem metrics across groups of countries by Internet connectivity  

Characteristics Myanmar  (2021 forecast) Low connectivity country Medium connectivity country High connectivity country 
Internet penetration 43.3 %* <49 % 49-79 % >79 % 
Average connection speed (mbps) 20.95* 3 6.5 10.5 
Businesses with internet access – 20% 69 – 95 % 78 – 95 % 
E-commerce as a % of GDP ~ 0.54 %** 0.3 – 2.3 % 0.4 – 5.2 % 0.8 – 5.7 % 
Average e-commerce size per capita USD 21* USD 40 USD 220 USD 1,250 

Source: Deloitte. (2016, October). The economic impact of disruptions to Internet connectivity: A report for Facebook. 

* Myanmar data from Datareportal website, ** Myanmar data from Statista website  

Note: Internet speed appeared to be faster in Myanmar in the table as Myanmar data is from 2021 while the rest was from 2016 research.  

In conclusion, the longer the duration of the internet shutdowns, the greater the damage to the country’s current economic situation. The shutdowns would essentially fragment the internet and information technology market. The market is only a decade old and built only through overcoming many obstacles, making it an economic frontier for the country. From an economic perspective as well, the internet shutdown policy is the greatest loss for the country’s current weakening economy and long-term development as well as for the general public. 

∎ Further reading: 

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