Four privately-owned Burmese banks will next month open exchange services in Thailand, Malaysia and Singapore in a bid to ease problems with remittances from Burmese migrant workers abroad and increase connectivity with ASEAN economies.
The move will make life easier for the millions of Burmese living outside the country whose remittances serve as a crucial safety net for families back in Burma. To date, those who send money home have been forced to use unofficial brokers who charge a sizeable commission.
A currency crisis in June last year brought remittance services grinding to a halt after a substantial drop in circulation of the Burmese currency, the kyat, triggered by a strengthening in its value. The move sparked alarm, given the quantity of money flowing into Burma from overseas relatives: the World Bank estimated that in 2008 alone, remittances to Burma totalled $US150 million.
But the decision to make the service official will ease concerns about future fluctuations in the Burmese financial market, and comes at a time when the government is enacting a number of reforms to improve the country’s moribund banking sector.
As usual, business tycoons allied to the government have been the first to benefit. Asia Green Development Bank, which will open an exchange outlet in Malaysia, is owned by the powerful businessman Tay Za, whom Forbes has described as Burma’s first billionaire and who has benefited from close relations with top-level government officials.
Two other banks included in the scheme, Kanbawza Bank in Thailand and Ayeyarwady Bank in Malaysia, are also run by close affiliates of the government – Zaw Zaw, owner of Ayeyarwady Bank, is chairman of the Myanmar Football Federation, while Aung Ko Win runs Kanbawza Bank and is a close ally of the former junta’s second-in-command, Maung Aye.
The fourth, Cooperative Bank, will open services in Singapore.
Private banks were also the first to be granted permission to open ATMs in Burma last year, a move considered key to attracting greater numbers of tourists. Also seeing rapid transformation is the in-country foreign exchange service, with Burmese from today onwards able to exchange up to $US10,000 at forex centres without requiring paperwork.
Previously Burmese had been required to divulge the source of the money, a move consistent with the government’s long-time suspicion of Burmese citizens receiving funding from abroad.
Burmese are notoriously distrustful of the country’s banking sector, which is rife with corruption and often marred by high inflation. Historically many have either horded money in their homes, or stockpiled commodities such as gold.
Additional reporting by Shwe Aung