– Business incubation, health care technology, education technology and agriculture technology to support Myanmar’s national strategy for a digital transformation –
Scala, Inc. (Head office: Shibuya-ku, Tokyo; Representative: Norikatsu Nagino) and ACE Data Systems Ltd., a company in Republic of the Union of Myanmar (Head office: Yangon; Chairman: U Thein Oo) have established joint venture SCALA ACE Co., Ltd. (Head office: Yangon; Managing Director: Norikatsu Nagino).
SCALA ACE will use AI, IT and the Internet of things (IoT) in the fields of education, health care and agriculture to help solve social issues in Myanmar and play a role in building a foundation for creating businesses in order to achieve consistent growth and progress in Myanmar.
1. Background and purpose
Since its inception, Scala has used a distinctive steady-revenue business model for consistent growth while meeting customers’ needs with flexibility in the fields of IT, new business development and finance. To aim for more growth, Scala announced the COMMIT5000 Medium-term Management Plan on August 14, 2019. The plan has the main goal of transforming Scala into a “joint value creation company that works with clients to use businesses for solving social problems.”
Scala has three core strengths: the capability to determine the real issues, the capability to discover the hidden value of resources, and the capability to maximize value by proposing and implementing the best possible combinations of issues and resources. By using these strengths, Scala plans to expand operations in order to provide services in Japan as well as to companies and public-sector clients in other countries. To accomplish this, the goal is to build a joint value creation platform for devising solutions to issues at the regional, national and global levels.
Many companies are using AI and the IoT for a digital transformation with the primary objective of speeding up the growth of businesses. In December 2018, Scala opened a branch office in Mandalay in Myanmar for the purposes of acquiring development resources for the digital transformation in Japan and other countries and of creating businesses that play a role in solving social problems. This office is now a base for IT development activities and has a staff of more than 30, mostly people recruited locally. The Myanmar office works with development teams in Japan for the creation of IT services that are provided to the Scala Group’s clients in Japan. In addition, the Myanmar office is considering the joint establishment with an IT university in Mandalay of an incubation center. This incubation center will be used to develop engineers who are immediately proactive at a high level and to create new industries by training entrepreneurs who can launch high-tech start-up companies in the Mandalay area. These activities have the goal of contributing to rapid economic growth in Myanmar.
In June 2020, Scala made an investment in MyanCare Co., Ltd., a health care technology firm that provides remote medical services, in order to play a role in the health care digital transformation in Myanmar. This is one example of a business that can help solve a social problem in Myanmar.
– Website: https://scalagrp.jp/news/2020/06-myancare/
SCALA ACE will identify the most critical issues in the fields of education, health care and agriculture in Myanmar and provide solutions to these problems. The joint venture’s activities will also include the incubation of new businesses in sectors like health care technology and agriculture technology in order to contribute to sustained economic growth in Myanmar. Many discussions have been held with U Thien Oo, chairman and the founder of ACE Data Systems and a prominent businessperson in Myanmar, about the best ways to accomplish these goals of the new company. Mr. Oo has been at the center of the advancement of Myanmar’s IT industry since its beginning. He has made many achievements and is currently a representative of the Myanmar Computer Federation.
2. ACE Data Systems Ltd.
Founded in 1992 as a software company and IT training center, ACE Data Systems is now one of the largest IT system development companies in Myanmar. The ACE Data Systems Group is a source of a broad array of services for banks, hotels, retail stores, insurance companies and companies in many other industries. Major activities are software development, system integration, ICT consulting, outsourced services, IT infrastructure construction, cyber security, educational services and e-commerce. The group consists of 21 companies with a workforce of more than 850.
– ACE website: https://acedatasystems.com/
ACE Data Systems has established joint ventures with many foreign companies and has strong offshore development relationships with a large number of well-known IT companies based in advanced countries. For the establishment of a joint venture for helping solve issues involving the digital transformation, a national strategy of Myanmar, ACE Data Systems selected the Scala Group because of the group’s excellent core capabilities for determining the real issues, discovering the hidden value of resources, and maximizing value by proposing and implementing the best possible combinations of issues and resources.
Scala is partnering with ACE Data Systems because of the company’s many years of experience with engineer training programs and IT projects involving the government of Myanmar. Scala looks forward to contributing to the advancement of Myanmar by supporting the digital transformation as a national strategy with ACE Data Systems.
3. Issues for economic growth in Myanmar and significance of Scala support through SCALA ACE
The following table shows issues involving economic growth in Myanmar and the country’s strategic goals. Since shifting to civilian rule in 2011, Myanmar has attracted attention as the last frontier of Southeast Asia. Industrialization progressed rapidly, mainly in the agricultural sector, with funding from development aid and direct investments from other countries. However, there are still two issues the country must address in order to aim for more growth. One is a weak infrastructure for living standards, health care, education and industry because the country was isolated from the global economy for about 50 years. The other is a foreign exchange reserve shortage caused by a negative current account balance every year since 2011.
Economic Development, Current Issues and National Strategic Goals in Myanmar
By forming this jointly owned company with ACE Data Systems, a leading IT company in Myanmar with extensive knowledge of the local market, Scala plans to play a role in overcoming these two issues that stand in the way of more economic growth in Myanmar. The new company will support the national strategic goal of achieving a digital transformation through activities in the fields of business incubation, health care technology, education technology and agriculture technology.
Strategic Goals of Myanmar and Significance of the Scala Group Digital Transformation Support
4. Significance of the joint venture concerning the Medium-term Management Plan COMMIT5000
Based on the Medium-term Management Plan COMMIT5000, Scala is using its three capabilities to grow by providing services in Japan as well as to companies and public-sector clients in other countries. Activities will be focused on two business sectors. One is solutions that use AI and the IoT and the other sector is businesses that help solve social issues such as the Sustainable Development Goals. These two sectors are predicted to have annual revenues of hundreds of trillions of yen 10 years from now. The long-term goals are revenue of 100 billion yen and operating profit of 10 billion yen in the year ending in June 2025 and revenue of 500 billion yen and operating profit of 50 billion yen in the year ending in June 2030.
Scala believes these two business sectors in emerging countries with rapidly growing economies have significant upside potential regarding contributions to the achievement of the Medium-term Management Plan COMMIT5000 goals.
5. Overview of Joint Venture
|Name||SCALA ACE Co., Ltd.|
|Honorary Chairman||U Thein Oo|
|Managing Director||Norikatsu Nagino|
|Head office||MICT Park, Building-18, 7th Floor, Hlaing Township, Yangon, Myanmar|
|Business||Education technology business, health care technology business, agriculture technology business|
|Capital||500,000 USD (About 54 million yen *1USD≒107 yen)|
|Shareholders||Scala, Inc. 35%
ACE Data Systems Co., Ltd. 35%