‘Hundis’ Cheaper than Bank Transfers: Migrants

Burmese migrant workers, such as these fishermen in southern Thailand, are constantly looking for the safest and cheapest method of transferring money home to their families. (PHOTO: THE IRRAWADDY)

Burmese migrant workers in foreign countries welcomed the news on Jan. 1 that the country’s banks would officially allow them to remit funds to their families in Burma. However, some eight months into the scheme and migrants in Southeast Asia are finding that the charges for official transfers are higher than they previously paid using informal money agents, or hundi.

“Remittances of money through the official Burmese banks in Malaysia are more costly than hundi if we send back less than 1,500 ringgit [US $475],” said Soe Tun, a migrant who works at a Malaysian factory.

He explained that Burmese migrants must pay 12 ringgit ($3.80) for transfers of up to 1,500 ringgit, 15 ringgit for amounts up to 3,000 ringgit, and 20 ringgit for sums up to 6,000 ringgit.

“If we can send home amounts above 1,500 ringgit, the charges are relatively not too high,” he said.

One of Burma’s leading private banks, Kanbawza, initiated the money remittance scheme for migrant workers in Thailand in coordination with the Siam Commercial Bank beginning July 10.

“About 30 migrant workers have already transferred their money through our bank from respective Siam banks in Thailand in the first four days [until July 14],” said Aung Kyaw Myo, the managing director of Kanbawza Bank.

“Later we will try working on an ATM to ATM basis,” he said. “Most migrant workers in Thailand are used to withdrawing their wages through ATMs. Under this new scheme, they will be able to transfer money home even at weekends.”

Similarly, Burma’s Ayeyarwady Bank began running remittances through Malaysia’s May Bank on Feb. 10. Likewise, the Cooperative Bank also has an agreement with May Bank to transfer monies to Burma, which it launched on June 1.

For many years, migrant workers in Thailand, Malaysia and other Southeast Asian and regional countries used independent agents known as hundi who would transfer cash to their counterparts in Burma for collection by the sender’s family or friends. The hundi tended to base themselves in areas where large Burmese migrant populations live, such as in Kuala Lumpur or at the fishing port of Samut Sakorn near Bangkok.

The hundi generally did not charge for their service but instead offered clients lower exchange rates than they could find at moneychangers. It was widely assumed that transferring monies through official banking systems would lessen the possibility of migrants being cheated or shortchanged.

Burma Central Bank allows only four private banks to run the scheme: Ayeyarwady, Asia Green Development, the Cooperative Bank and Kanbawza. The system currently only works one-way, however, and persons in Burma cannot send money to Burmese workers in foreign countries.


One Response to ‘Hundis’ Cheaper than Bank Transfers: Migrants

  1. For many years there was no official ‘unofficial’ exchange rate. The closest that anything came to that was the rate at Sule Pagoda or Bogyoke Aung San Market in Yangon. Those who had fled to Thailand needed to send money back to families, largely in Shan, and thus there emerged hundi (or hawala) banking. Border towns from Mae Sai through Mae Hong Son to Mae Sot (on the Thai side) are where the rates are established.

    Informal banking matches willing sellers with willing buyers and depends greatly on trust. Banks are rather thin on the ground in Shan and it’s unlikely that Bank Transfers will take off any time in the near future. Where hundi is functioning properly, it works well and money transferred can be picked up in a village after 30 minutes or less.

    The rates offered are clear, even though there are no explicit charges, or perhaps because of that, and generally larger sums result in better rates. Hundi is a competitive business and I should be very surprised if ‘official’ transfers were able to match hundi rates. Throughout the world banks make large profits on foreign exchange transactions; Burmese banks are unlikely to miss the opportunity.

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