Business

'Hundis' Cheaper than Bank Transfers: Migrants

By May Lay 17 July 2012

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.

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