Banks push safety of money transfers
Volume 31, No. 610
January 16 - 22, 2012
PRIVATE banks are promoting the safety of their money transfer services in a bid to lure customers from the faster and often cheaper informal hundi network, several industry sources said last week.
The hundi network is a web of businesspeople that allows people to transfer money around the world without paying any tax. The network is regularly used by Myanmar workers abroad to remit money back to their families.
But it is a system built on trust, and this has recently been called into question following a number of reported thefts.
According to a December 19 report in Weekly Eleven journal, the owners of Shweyadana shop in Singapore’s Peninsula Plaza took between US$40,000 and $60,000 from workers and other shopowners at the centre. They were supposed to remit the money to Myanmar but apparently failed to do so. The same report said another recent hundi fraud had involved up to S$2 million.
Rumours have been circulating that a group of hundi agents in Singapore stole the money from Myanmar workers.
“Hundi payments are very fast and are completed within one day. But it’s based entirely on trust and there are no guarantees,” said Ko Win Maw Oo, 28, who is working in Malaysia’s manufact-uring sector.
Ko Win Maw Oo added that he had sent money to his family in Myanmar for three years through the hundi and had never encountered a problem.
Ma Shweyi Myint, who is studying journalism in the United States on a scholarship, said the informal network was cheaper than going through banks.
“Hundi payments are more economical for me, as well as being fast. I think it’s actually cheaper to transfer money this way than using the banks,” she said.
Ma Shweyi Myint said US banks charge a minimum transfer fee of about $45 and her parents would probably also have to pay a fee in Myanmar too. She said another attraction of the hundi network was that it could transfer money on weekends when most banks were closed.
Hundi agents do not charge fees as such but offer a slightly worse exchange rate than banks.
“Obviously we’d prefer to not pay any charges at all but if the service is easy to use and completely safe we would be willing to pay the fees,” she said.
Myanmar’s Central Bank allowed four private banks – Ayeyawaddy, Asia Green Development (AGD), Co-operative (CB) and Kanbawza – to offer international money transfers from January 1.
However, the banks are yet to begin offering the service because they are still seeking partners abroad, an AGD official said.
U Thet Lwin Shwe, AGD’s director, said the company had not had time to open bank branches outside of Myanmar but would look to open offices instead. He added that AGD would target Singapore, Thailand and Malaysia, all of which have large numbers of Myanmar workers.
CB’s managing director U Phey Myint said his company was preparing to open a remittance office in Singapore’s Peninsula Plaza, a hub for the Myanmar expatriate community in the city-state.
Bank officials are negotiating to offer transfers in Malaysia ringgit, Singapore dollars and Thai baht, he added.
U Than Lwin, Kanbawza Bank’s vice chairman, said a network allowing “swift” transfers would be completed in April and clients could then perform international money transfers quickly and safely.
“We can’t stop the hundi network but we have to try to reduce the number of these illegal payments,” he said.
He added there will likely be some foreigners, especially Chinese, who will link up with Myanmar nationals to transmit money into the country and then invest it in the property market. He warned that could fuel a real estate bubble.
An Ayeyarwaddy Bank spokesperson said the company would not set either minimum or maximum transfer limits but expected most workers abroad would remit up to $1500 a month and would set their fees accordingly.
“Our service will surely be more expensive than hundi payments and will take longer. But it will be safe,” he said.