Myanmar Banking Coup Disrupted, Informal Financial Services Providers Sell Well

Queues of customers at banks belonging to Myanmar's military regime. (Twitter/@IrrawaddyNews)

JAKARTA - A coup by Myanmar's military on February 1 hit the country's banking sector. With banks halting operations, banking services practically rely on mobile and ATM services. If any bank is open, its services are limited by a token system.

As a result, people have difficulty accessing their own savings. Service queues at banks quickly run out, while cash at ATMs also runs out quickly.

"I have waited almost half a day. There were only ten people in front of me when the ATM ran out of money. It's quite frustrating," said a Yangon resident who tried to withdraw his salary for March at The Irrawaddy on Tuesday, April 13.

Taking advantage of this, informal financial service providers are popping up all over Myanmar. Offering services to access their savings, the service charges withdrawals ranging from 3 per cent to 10 per cent of the money taken.

"It is very difficult to get tokens from banks and I can only take 200,000 kyat at a time from atms. So I went to one of the new financial service providers. As soon as I transferred 10 million from mobile banking, they immediately paid me in cash. But I had to pay them 300,000 kyat as a service fee," said a local businessman.

Customer queue. (Twitter/@IrrawaddyNews)

"Businesses have long been constrained by cash shortages. Now many use financial service providers. It's an informal service, but we have no choice," the entrepreneur said.

"We don't have to risk finding an ATM with cash or queuing up to get tokens. As soon as we called, the service provider came straight to our house," he added.

Last week, nearly a dozen people queuing at a KBZ bank ATM in Yangon were arrested by Myanmar's military regime security forces, without being told why.

"For business people, service fee is not a problem. But for ordinary people trying to access their paychecks, service fees are a burden," said a staffer from an advertising company.

"I only get a salary of 500,000 kyat a month. The service provider asked me to pay a service fee of 30,000 kyat. I don't know what's going to happen tomorrow, so I don't dare keep my money in the bank. So I had no choice but to pay them to access my salary," he said.

Myanmar's banking system has been crippled as pro-democracy supporters have successfully encouraged staff from the country's private banks to participate in a civil disobedience movement in protest of the February 1 military coup. Since mid-February, businesses have been short of cash as bank branches close, except for mobile banking and limited ATM services.

Soon after the coup, many people rushed to the bank to withdraw their cash as rumors spread that the bank system would collapse.

Myanmar's military antiquities protests. (Twitter/@HsuChiKo1)

The central bank appointed by the regime introduced new rules allowing daily withdrawals of 500,000 kyat from ATMs and directly from banks. However, since mid-March, customers at private banks have only been allowed to withdraw 200,000 to 300,000 kyat daily from ATMs, while banks only distribute 20 to 30 tokens per day for direct withdrawals.

Supermarkets or shopping centres are also unable to accept payments by card anymore, following the closure of mobile internet by the junta in March.

"We use mobile internet for electronic payment systems. So as long as the mobile internet is disconnected, we can't offer an electronic payment system," said a branch manager from one of the largest retail and wholesale malls.

Not only once, but the imposition of this service fee can be twice, this service is used to transfer money. When sending money, there is a fee charged, when receiving money there is also a fee charged. Otherwise, the money cannot be disbursed.

An agent from Wave Money said the double levy had become standard because a lack of money had impacted the community.

"We had to queue in front of the bank once the curfew was lifted. We took a risk because the security forces might arrest us. People attract about 10 million kyat every day. Sometimes, we have to stop the service because we don't have enough money," he said.

Illustration of a bank in Myanmar. (Wikimedia Commons/Marcin Konsek)

Not only for local people, foreign entrepreneurs also have difficulty reaching their money, including the difficulty of reviewing transactions from abroad. Currently, businesses are not allowed to know the review process, said a Japanese investor from the Thilawa Yangon Special Economic Zone.

'It's been four weeks already and I don't even know what's going on with deals coming from overseas. I'm not sure where my money is. It's very hard to do business here right now. We don't know how long this crisis will last," he complained.

Myanmar's banking system remains one of the most outdated in Southeast Asia, although reforms have begun in 2011.

"The coup has destroyed all reforms carried out over the past decade. Now, the informal financial system is booming again in this country. No doubt we will step down," said an economist who did not want to be named.

Myanmar coup. Voi's editor continues to monitor the political situation in one of asean's member countries. Civilian casualties continue to fall. Readers can follow the news about Myanmar's military coup by tapping this link.