Monday, August 10

Co-working spaces are a Covid-19 oasis for Myanmar’s start-ups

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With 299 confirmed cases and six deaths as of June 20, Myanmar’s confirmed Covid-19 statistics are a small part of the global figures of around 10.3 million and 504,000 deaths.

Covid-19 in the country is characterised by ‘clusters’ of transmission – a step up from ‘sporadic’, but not yet having reached ‘community’ transmission status – according to an April 14 report from The World Health Organisation (WHO).

Covid-19 has led to adapted business strategies, the increasing integration of working from home, and empty offices across the globe.

Some offices in Yangon began to trial ‘work from home’ policies in mid-March, led by international companies with remote working experience in other countries.

By the end of that month, the list of players implementing work from home for at least part of their workforce included banks, media outlets and telecoms operators such as Ooredon and Telenor.

Meanwhile, the government ordered half of its employees to stay at home as of March 26.

Working remotely in Myanmar has been made more accessible in recent years by expanding internet access.

The total of internet users rose from 18 million, or 33.1 per cent of the population in July 2019, to 22.2 million, or 40.8 per cent of the estimated 54.4 million population, in January 2020, although this still lags behind the Asean average of 66.1 per cent.

Office recovery

Before the pandemic, office rental rates in Yangon were at historic lows, although both supply and demand had been expected to rise: a number of large-scale developments are in the pipeline, and the ongoing relaxation of investment regulations is opening up a range of sectors to foreign players.

Looking forward to the recovery phase, owners expect that the demand for new leases for traditional offices will return to pre-Covid 19 levels after three to five months, according to Yangon-based real estate consultancy Slade Property Services, as business operations return to normal.

Going into 2021, there may be some uptick from businesses who are in a strong position to upgrade to higher-quality properties ahead of the curve, and for a less sizeable increase in cost, before a larger number of businesses look to expand into the following year and make up for ground they lost to the pandemic.

Meanwhile, other companies may look to alternatives to traditional office spaces, in the form of co-working facilities, serviced offices, virtual spaces and meeting room rental.

Alternative working spaces

“Traditionally, shared working spaces in Yangon tend to be serviced office formats rather than the modern co-working formats that we see elsewhere,” Hugo Slade, managing director of Slade Property Services, told OBG.

As an immediate result of Covid-19, many of the latter type of co-working spaces have fallen into disuse as workers adhere to social distancing advisories.

Some providers of more traditional office space – which is less ‘community-focused’ and may include serviced office suites, or partitions between work stations – have remained open with enhanced hygiene procedures.

Adapted business operations during the pandemic may change the landscape for alternative working spaces, including both modern co-working spaces and other flexible solutions, such as services offices.

Some companies in the region have reportedly already begun to explore flexible spaces for the first time – not only to accommodate ‘work from home’ arrangements, but also to house non-core departments and enhance business continuity planning, according to Mario Berta, founder and CEO of FlySpaces, a regional office space marketplace.

It is as yet unclear what impact Covid-19 will have on the flexible office market in Myanmar. “There are those who believe that Covid-19 could seriously damage the industry in the long-term, as tenants adopt and normalise ‘work from home’ practices, which render other flexible spaces unnecessary,” Slade told OBG.

“On the other hand, there are those in Yangon’s co-working industry who believe the pandemic could act as a catalyst to encourage more Myanmar tenants to adopt flexible working practices,” he added.

Such a move towards flexible options, allowing businesses to downsize their traditional office space and reduce rental costs, could present an opportunity for those players in Myanmar who offer co-working spaces, virtual offices and meeting room rentals.

The current health crisis may, however, have implications for the operation and design of alternative working space arrangements. Alongside increased assurance over hygiene standards, customers may prefer facilities with greater separation between work stations, and changing priorities may well lead to a redesign of communal areas.

Start-up resilience

While co-working spaces may have closed their doors temporarily in light of social distancing guidelines, this has not stopped them from offering a virtual environment for entrepreneurs and start-ups to connect and work together.

For instance, Draper Startup House – which operates a start-up hostel complete with a co-working space in Yangon, as well as in Manila and Bali – formed its online Draper Entrepreneurship Network during the crisis.

Designed to keep the start-up community connected and engaged, the network has hosted and featured in a number of online talks, events and meetups, including an accelerator, a hackathon and educational courses.

This is part of an effort to enable start-ups to diversify their offering and, accordingly, their income streams. “We want to empower all start-ups not to rely on a sole source of revenue; they should strive to create multiple channels,” CK Goyal, co-founder of Draper Startup House, told OBG.

Perhaps the most salient example of diversification and modified business strategies during Covid-19 has been the online expansion of businesses across the economy.

It is also key that start-ups come together – virtually, for now – to collaborate and help each other, Goyal added. The improved resilience and adaptability of start-ups after Covid-19 subsides should contribute to a stronger start-up ecosystem, and one that is even more attractive for investors.

“Those start-ups, co-working spaces and other small businesses who can ride out the storm will emerge even stronger,” Goyal told OBG. “We might have lost some time, but we have only gained strength and unity.”

This Myanmar economic piece was produced by the Oxford Business Group.