Burma's first legal currency exchange centers opened for business on Saturday, but are likely to face stiff competition from black market moneychangers who don't ask questions about the sources of money or set limits on how much can be exchanged.
Recently licensed by Burma's Central Bank as part of an effort to reform the country's archaic financial system, the new bureaus de change operate under a raft of restrictions that could discourage customers, said operators of the new businesses.
According to a source at one currency exchange center, foreign customers are required to show their passports and provide personal information, while Burmese using their services must produce ID cards and other documentation. All customers are required to sign for every transaction.
To change large amounts of money, customers are also expected to explain how the money was acquired and provide additional documentation. Amounts exceeding the limit of US $10,000 or 100 million kyat ($123,000) must be reported to the Ministry of Home Affairs.
Foreign Exchange Certificates (FEC) are not subject to the same limits, however, and can be exchanged with any amount of US dollars, euros or Singapore dollars.
Some Rangoon-based businessmen said that the restrictions will ensure that unlicensed moneychangers continue to dominate the domestic foreign exchange market.
A source from the Union of Myanmar Federation of Chambers of Commerce and Industry, speaking on condition of anonymity, said that few people would be willing to provide their personal data or signatures to do business with licensed moneychangers unless they offered substantially better exchange rates than those available in the black market.
The licenses for exchanging foreign currencies were granted to banks closely linked to the military and government ministries, including Myawaddy Bank, which is owned by the Union of Myanmar Economic Holdings Ltd, known as the “economic backbone” of Burma's generals; Innwa Bank, owned by the Myanmar Economic Corporation; and the Myanmar Livestock and Fisheries Development Bank, which is connected to the Ministry of Livestock and Fisheries.
The opening of the new currency exchange centers has also provided a business opportunity for brokers, who offer to handle transactions for customers who don't want to do it themselves. One Rangoon-based reporter said that at every currency exchange center she entered, she was immediately approached by people offering to assist her.
“The brokers are good for people who are confused by the way the exchange centers operate,” she said, adding that while there seemed to be little demand for their services at this stage, the brokers could be useful for those put off by red tape.
Meanwhile, some state-owned banks will open branches in Thailand, Malaysia and Singapore—countries where large numbers of Burmese nationals live and work.
The move is expected to help Burmese people living in these countries to transfer money to their families in Burma, but some say the introduction of overseas branches of Burmese banks will not replace the informal cash transfer businesses known as hundis.
Nang Aye, who runs a hundi service in Tachilek, a town in Shan State on the Thai-Burmese border, said that he didn't expect to be affected by the new banks.
“Almost all of our clients are Shan people whose families are still living in Shan State. Some don’t have ID cards, which they would need to transfer money through a bank,” said Nang Aye, speaking to The Irrawaddy on Monday.
Recently licensed by Burma's Central Bank as part of an effort to reform the country's archaic financial system, the new bureaus de change operate under a raft of restrictions that could discourage customers, said operators of the new businesses.
According to a source at one currency exchange center, foreign customers are required to show their passports and provide personal information, while Burmese using their services must produce ID cards and other documentation. All customers are required to sign for every transaction.
To change large amounts of money, customers are also expected to explain how the money was acquired and provide additional documentation. Amounts exceeding the limit of US $10,000 or 100 million kyat ($123,000) must be reported to the Ministry of Home Affairs.
Foreign Exchange Certificates (FEC) are not subject to the same limits, however, and can be exchanged with any amount of US dollars, euros or Singapore dollars.
Some Rangoon-based businessmen said that the restrictions will ensure that unlicensed moneychangers continue to dominate the domestic foreign exchange market.
A source from the Union of Myanmar Federation of Chambers of Commerce and Industry, speaking on condition of anonymity, said that few people would be willing to provide their personal data or signatures to do business with licensed moneychangers unless they offered substantially better exchange rates than those available in the black market.
The licenses for exchanging foreign currencies were granted to banks closely linked to the military and government ministries, including Myawaddy Bank, which is owned by the Union of Myanmar Economic Holdings Ltd, known as the “economic backbone” of Burma's generals; Innwa Bank, owned by the Myanmar Economic Corporation; and the Myanmar Livestock and Fisheries Development Bank, which is connected to the Ministry of Livestock and Fisheries.
The opening of the new currency exchange centers has also provided a business opportunity for brokers, who offer to handle transactions for customers who don't want to do it themselves. One Rangoon-based reporter said that at every currency exchange center she entered, she was immediately approached by people offering to assist her.
“The brokers are good for people who are confused by the way the exchange centers operate,” she said, adding that while there seemed to be little demand for their services at this stage, the brokers could be useful for those put off by red tape.
Meanwhile, some state-owned banks will open branches in Thailand, Malaysia and Singapore—countries where large numbers of Burmese nationals live and work.
The move is expected to help Burmese people living in these countries to transfer money to their families in Burma, but some say the introduction of overseas branches of Burmese banks will not replace the informal cash transfer businesses known as hundis.
Nang Aye, who runs a hundi service in Tachilek, a town in Shan State on the Thai-Burmese border, said that he didn't expect to be affected by the new banks.
“Almost all of our clients are Shan people whose families are still living in Shan State. Some don’t have ID cards, which they would need to transfer money through a bank,” said Nang Aye, speaking to The Irrawaddy on Monday.
sisters as much as possible in the difficult time.