RANGOON – For foreigners edging sweatily along Rangoon’s humid streets, “change money?” is a common refrain around tourist attractions and hotels, where local black-market money changers compete to offer bank-beating rates of exchange to dollar-carrying visitors.
But with ATMs being installed across the city, including some that accept Visa and MasterCard, foreigners are no longer completely reliant on the often troublesome need to procure enough pristine new US dollar bills before their trip, for exchange to Burma’s kyat after landing in Rangoon.
Harun, who would not divulge his full name, is a money changer working the streets near Rangoon’s Sule Pagoda, one of the estimated 100 to 200 black-market dealers who make a living changing dollars to kyat.
“Yes, business has gone down, but we’re not sure yet if that’s because of the ATMs,” he says. Right now, in the middle of the wet season, tourist numbers are down from their usual dry season peak, so it is still difficult for money changers to assess the impact of credit card-friendly ATMs—still just half a year old in Burma—on the tourist dollar-for-kyat exchange trade.
“These days, I have maybe only one business [transaction] each day,” says Harun. “Before the wet season, and last year, maybe seven or eight.”
Visa says cards can be used at “over 150” ATMs in Burma, with more than 200 point-of-sale (POS) locations across the country in shops, restaurants and hotels. MasterCard users can avail themselves of 140 ATMs in Burma and 72 POS acceptance terminals in Rangoon and Naypyidaw.
“Visa has most recently announced the continued momentum of its payment network expansion in Myanmar with Co-operative Bank (CB), Kanbawza Bank (KBZ) and Myanma Apex Bank (MAB) to further enable point-of-sale (POS) acceptance for Visa payment cards,” a company spokesperson told The Irrawaddy by email.
Esther March and Jaume Pedros, two newly arrived visitors from Barcelona, say they knew before their trip that it would be possible to use their credit cards in Burma.
But, given that these facilities are new, they nonetheless brought dollars for exchange—money they plan to swap inside one of Rangoon’s banks, rather than on the street.
“It was not clear to us how many ATMs there are and how reliable they can be,” says March.
Scanning a map of Burma they draped over a table in a café, March and Pedros point out that they will spend no more than a couple days of their one-month holiday in Rangoon. “We will be in the countryside and traveling most of the time—to Golden Rock, to Inle Lake, to Mandalay, to Bagan,” says Pedros, listing some of Burma’s tourist draws. “We don’t know if there will be ATMs outside Yangon, even if the system here in the city is good.”
In Rangoon, ATMs are still scattered, as are POS locations in shops and restaurants where credit cards can be used, so tourists might face a couple miles’ walk or a taxi ride to the nearest one—assuming they know where it is. Seeking assistance from a hotel concierge—a usual compass-beating orientation routine for befuddled tourists—might not help, either. Asked if they knew where to find the nearest credit card-friendly ATM, staff members at the nearby Traders and Central hotels advised The Irrawaddy to try some of Rangoon’s big shopping malls, such as Junction Mawtin or Yuzana Plaza, although there is an ATM less than a five-minute walk from both hotels.
There, Albert Aung is manager of the CB Bank branch, close to Sule Pagoda and Rangoon’s City Hall. He says his usual money-changing business has not yet been affected by the ATM on the wall outside, one of the few locations across the city where a Visa card can be used to withdraw cash.
“Many foreigners don’t know that we have a machine [ATM] here in Myanmar,” he says. “They still think they need to bring dollars to change.”
Another reason the branch’s exchange business is holding, for now, is the ongoing fall in value of the kyat, which seems yet to find its optimum market value amid Burma’s ongoing economic reforms and uptick in foreign investment.
“The rate has become more or less the black-market rate, or, as we call it nowadays, the ‘informal’ rate,” says Than Lwin, deputy director of KBZ Bank, which has 55 ATMs across Burma.
For Albert Aung, the kyat’s slide—it has lost 18 percent of its value against the dollar since being floated in April 2012—means he is mostly just changing small amounts of dollars these days, as the greenback strengthens against the Burmese currency.
“People are keeping dollars, waiting for the best time to change,” he says, with the black-market traders watching the bank’s rates to see if they can offer a better deal.
Outside the branch, the street-walking money changers linger, whispering the “change money” mantra to the occasional foreigner stopping to withdraw kyat at the CB ATM.
Woo Young-Seok, a Korean businessman now based in Rangoon, says that although the bank system in Burma is “getting better,” it is still not up to scratch for foreigners trying to live and work in the country’s newly opening economy.
“It’s good that there are ATMs now,” he says, slipping his Korean-issued Visa card back into his wallet. “But I cannot rely on them completely. Maybe when I come and go, I still bring dollars.”
And while Burmese citizens still cannot get a credit card from a local bank, the nascent modernization of Burma’s banking and payments regime is proving a boon to Burmese businesses that depend on foreign customers.
Lynn Zaw Wai Mang is executive director of Unique Asia Travel and Tours, and a repository of horror stories about tourists visiting Burma in the pre-ATM era. “I met so many in my office here who came with dollars but ran out of money before their holiday was over,” he says.
“I even paid a couple of times for a room for a night for some, just six or seven thousand kyat, after they came in here saying their money was gone and asking if they could use their card somewhere to get cash.”
Now that foreigners can use credit cards at ATMs, Lynn Zaw Wai Mang says his business is slowly growing as a consequence. “If they know they can withdraw money here, then they will spend more for a bus ticket, flight ticket or hotel,” he says.
“Before they could only spend whatever amount of dollars they brought into the country, and could not change plans or spend more because of that. Now they can change plans after they arrive, maybe rent a car, have more financial security for their vacation.”
The next step for his business and for others in the sector, he says, is installing an in-house point of sale for foreign credit card users, so he can sell flights and hotel rooms that way in his shop. “We are talking to CB Bank about this,” he says. “Hopefully we will have [POS] by October or November.”
But another money changer, San Win—who estimates that there about 150 others doing the same work these days in Rangoon—believes that in two to three years the illicit money exchange market will fade away as Burma’s wider economy modernizes.
“I think once they [the Burmese government] bring in the new central bank law, the situation for the black market will change,” he says.
A new central bank law is one of several economic and financial reforms expected to be introduced in Burma over the coming months.
But that will take time to implement, says Than Lwin, cautioning that even if Parliament passes the law, “it will then be a slow process to draw up the central bank rules and regulations, and then to build capacity for staff.”
Than Lwin believes the black market—or informal market, as he prefers to call it now—will continue to play a role as Burma slowly develops more modern banking and financial systems.
“We have had a black market in money for 50 years, we will still have some of it, particularly the hundi system, for a long time,” he says, referring to an informal cross-border money transfer system often used by overseas Burmese to remit to families. “It will be still difficult for some time for banks to compete.”
Nonetheless, some of Burma’s money changers are hedging against a shift away from the informal money market, and looking ahead to what the country’s other economic reforms might bring.
“I’m making plans for other business,” says San Win, tapping a coin on the table in a Rangoon bakehouse, as if to emphasize his sense of anticipation. “There will be a stock exchange here by 2015. I am researching that now and how maybe I can get some business that way.”