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Burmese banks will for the first time start issuing credit, debit and ‘smart’ cards to their customers, but on the proviso that recipients either deposit one million kyat (US$1,000) in a state-owned bank, or hold a savings account.
The announcement follows the launch of new private banks in Burma, one of the more significant aspects of the government’s sweeping privatisation of state-owned industry. At least four of these banks are owned by powerful businessmen with close ties to the ruling junta.
But the banking sector in Burma is notoriously archaic, and control over it has gradually tightened since a mysterious banking crisis hit the country in 2003. Measures imposed at the time included the limiting of withdrawals and credit to prevent inflation.
Moreover, citizens’ trust in Burma’s banks, which are currently subject to high inflation and negative interest rates, is low, and many people instead horde cash in their homes.
The cards will be issued by some of the new private banks, as well as the Myanmar Economic Bank, and will likely be broadly welcomed by the business community inside the country. Outsiders with keen interest in Burma’s economy will also take note; many have been frustrated by sanctions placed on the country which has made it difficult to obtain US dollars.
Burma’s banking sector has, in all probability, avoided interaction with international banks in order to maintain its lucrative money laundering operations, which are thought to be integral to the country’s narcotics industry.
Banks in Rangoon reportedly offer laundering services for a 40 percent commission in an industry thought to be worth tens of billions of dollars each year, rivalling only gas as one of Burma’s key export industries.