Charlie Artingstoll looks at the challenges facing migrant workers hoping to send remittances to Myanmar.
Migration in Myanmar is an enormous issue, and so is the amount of money migrants send back to the country.
The International Office of Migration (IOM) estimates that 1 in 10 people from Myanmar resides abroad as an immigrant—a figure that does not include people who have forsaken Myanmar citizenship for a new passport. In 2018, Myanmar was ranked 4th globally as the origin of refugees. Inside the country, the number of migrants is equally striking. A recent report states that 1 in 50 people in Myanmar is internally displaced due to conflict, and 1 in 5 people in Myanmar is an internal migrant—meaning they currently live outside their hometown – usually for economic reasons. In 2019, the Myanmar-Thailand migration channel was the 11th biggest in the world with just under 2 million migrant workers. Considering the relatively modest population of Myanmar (around 54.5 million), if there were a ranking by proportion of the total population, this would be much higher. Additionally, given that many migrant workers are undocumented, and the negative impact of the COVID-19 pandemic and the military coup domestically, the real figures are likely to be even higher.
The flow of remittances into Myanmar is equally as substantial as the flows of migration. Recent estimates put the total between $8 billion dollars annually—equal to as much as 13% of Myanmar’s economy. Despite remittances being a significant amount of money flowing into Myanmar, the topic was a ‘very under-researched area’ even before the instability caused to migration and flows of money by COVID-19 and the coup over the past two years, as we will explore below.
Most of the flow of money and migrants is regional. The International Labour Organization (ILO) estimates that 70% of Myanmar migrant workers are in Thailand, and UNCDF has 86% of remittances coming from Thailand, Malaysia and Singapore. This article will therefore focus mainly on Myanmar migrant workers in Thailand.
This money comes into Myanmar in one of three ways. Firstly, there is the informal peer-to-peer (P2P) system with individuals sourced from social media – normally Facebook groups, where I will send you x amount of one currency and in exchange, you send y amount of another currency to me. Secondly, there are semiformal ‘hundi’ agents who serve as an intermediary between the payer and the recipient; one person pays a person or an organisation in a given currency, and the hundi agents pay the recipient in another currency. Thirdly, there are formal channels through established international companies such as Western Union and banks.
The first two methods rely on trust: customers transfer money to someone hoping that agents or individuals keep their promise and transfer the amount agreed upon. With established, and therefore, more formal money changers or transfer agents, this risk is reduced because these organisationss have a vested interest in being seen as trustworthy. However, transferring money through an individual is much riskier as they have little to no incentive to keep their side of the bargain. For example, anecdotal evidence suggests that scams on Facebook groups are commonplace.
Studies suggest that between 88-92% of total remittances flow through informal systems. Such is the preference for informal remittance services that even migrant workers who live outside of Asia use informal services to send money into Myanmar. Based on an informal conversation with one person in Switzerland, they mentioned that they would change Swiss francs into Myanmar kyat via a Thai hundi agent. The Thai hundi agent would pay out in Myanmar kyat because it was cheaper than sending funds through official channels.
For a comparison of remittance rates, please see the table below:
Method (1,670 THB Sent)
Amount Received in MMR Bank account *, **
Peer to Peer Hundi
Semi-formal Hundi Agent
Myanmar Central Bank Rate ***
Money Transfer Service
* Source: SaverAsia Application on 4th July 2022, figures based on author’s research.
** Cash will cost an additional 3-5% (see below)
*** Ultimately a meaningless rate, as no cash can be exchanged at the central bank
The reason that informal systems are so much more popular than formal channels is that they offer ‘speed, easy access, low costs and anonymity’. While lower costs are a big advantage, anonymity is another huge perk. In many cases, informal services also do not require identification, which is a determining factor for those without the required paperwork, including illegal immigrants. Many Myanmar migrants residing in Thailand are not there legally; and while figures are understandably hard to come by, the IOM estimates that as many as 50% of the migrant workforce are undocumented. For millions of undocumented workers, using informal services is not a choice as they are excluded from using formal services.
The flipside of this is the challenge which informal systems create for international development agencies and governments working in the area. The very anonymity afforded to individuals when money transfers do not require identification means that they could also serve as possible conduits for criminal activity. Further, informal systems like hundi pose ‘money laundering and ﬁnancing of terrorism risks.’
That unregulated, informal, and anonymous channels are used for criminal activities is not a risk; it’s a certainty. Myanmar right now is a seriously opaque place. The military barely has control of the country following their coup, which is in the grips of the world’s longest civil war. In 2020, Myanmar was the top methamphetamine producer in the world and second only to Afghanistan for heroin production. There are over 250 armed rebel groups. On the fringes of the country, the government doesn’t even hold the façade of power, and organised crime networks don’t even have to hide – Chinese mafia bosses operate illegal casinos in border towns with impunity. This is a country where tigers are sold on Facebook for $29,000.
The transfer of money via informal channels has been hugely disrupted by the coup in two key ways. First, these informal channels are vital sources of income for groups fighting the military. The Junta has been quick to close any bank accounts that it thinks might be used to buy weapons or even food for those it repeatedly deems “terrorist organisations” (pot kettle black), it has even declared hundi illegal. The junta threatening legal action is one thing–– enforcing it is another. And like many of the ludicrous laws that have been enacted in the past year, it seems to have had little effect. For example, shortly after the coup, accessing Facebook and later, the use of VPNs was banned––but the use of the social media site is largely unaffected, and key Myanmar ministries continue to post updates on their pages, including the very ministry that banned Facebook in the first place. Therefore, informal money changers have had to be more careful with how they operate––being more selective with who they work with and where they advertise their services.
Second, Myanmar’s banking system and the kyat has been on quite a rollercoaster since February 1st, 2021. The Myanmar kyat has lost close to 50% of its value, with a rate of 1,350 kyat to the dollar in January 202, rising to 2,150 kyat as of July 2022 (though the government has tried to fix the rate at 1,850ks). Although somewhat more stable now, this rate has fluctuated wildly in the past year, reaching 800 kyat in September 2021. Counterfeiting is rife, and you can openly buy 1 million kyats (US$560) worth of counterfeit bills for as little as 100,000 kyats (US$56) on Facebook.
Following the coup, fearful of runs on bank in a country that already had serious trust issues with banks and the government, the Central Bank of Myanmar restricted withdrawals at ATMs to US$150 a week, leading to massive cash shortages, long queues to withdraw money, and the rise of ‘cash agents’ who will exchange cash in your bank account or mobile wallet for cash-in-hand at a premium of between 3-5%.
The Central Bank of Myanmar recently issued a directive stating that all foreign currency must be converted into Myanmar kyat at a rate of 1,850 kyat per US dollar within one working day, making it unclear how money changers and informal agents can work within the law. Additionally, for six months after the coup, formal remittance services stopped operations, and even now, Western Union, as one example, is only available in a ‘limited capacity.’
The people that suffer from this most are migrant workers. Notwithstanding the list of grievances resulting from violations from dodgy agents, employers who violate employment laws, and corrupt government officials, the migrants and their families rely on these remittances for day-to-day living expenses. Surveys suggest that nearly 94% of remittances are used for basic necessities. Given the state of the economy in Myanmar since the coup, these families are now even more reliant on overseas remittances. As per the UNDP’s projections for early 2022, “nearly half of Myanmar’s 55 million population—some 25 million people—will be living below the national poverty line.”
Despite the wealth of research on this topic, there is little evidence of INGOs engaging with informal actors. Instead, the informal hundi system is seen as a challenge to overcome rather than a potential solution. At the very least, further efforts to improve information, support, and regularised access to informal channels are necessary. For example, the SaverAsia app’s transfer comparison tool includes only formal services and is of very little use for undocumented migrant workers. Since undocumented migrants cannot use formal services, which are more expensive than informal services, they rely upon systems like the hundi system to send remittances home.
Whether the issue of remittances should be under the purview of the ILO, the IOM, or both, is unclear. But more could be done in this area to help migrants with the issues they face when dealing with informal money transfer systems. To be fair, both organisations are doing great work in the area. For instance, IOM has a Facebook page with a chatbot and a list of useful contacts regarding workers’ rights, including multilingual tips on safe migration in ethnic languages. However, IOM offers no support on reliable ways to send remittances, which is a huge part of migrant workers’ lives. Similarly, the ILO runs SaverAsia, a regional ‘digital service designed to help migrant workers compare the costs of sending remittances home, manage their money, and improve their financial literacy,’ The main issue with SaverAsia alludes to an earlier problem, which is the target audience for these services––it only includes formal money transfer services. For more developed and stable remittance channels, this makes sense. However, given that most Myanmar migrants (documented and undocumented) rely upon informal channels to send remittances, more interventions are needed to alleviate the issues facing migrant workers.
For big multinational INGOs that work in this area, there is a big push to promote formal services. Organisations like the UNCDF (Capital Development Fund) aim to ‘make public and private finance work for the poor in the world’s 46 least developed countries.’ ‘Financial inclusion’ and ‘financial literacy’ are big buzzwords here, but this falsely assumes that people who use informal systems are ignorant of formal systems.
The reality is that these informal systems are essential because they are cheaper, quicker, and do not exclude undocumented migrants. A system that has been used for over 800 years and processes up to $7.36 billions of remittances (92% of $8 billion – see above) a year would not exist if it were ‘backwards’; any program that purports to help migrant workers but doesn’t include any reference to the informal system is missing the point entirely. Projects that are based on how the world ought to work in an ideal world yet neglect the realities of the situation need to be pragmatic and responsive to the people they intend to help.
Admittedly, there are drawbacks. As we have seen, the hundi system, as an anonymous money transfer mechanism, has the potential to support illegal activities. But it is very unlikely that small to medium-sized hundi agents used by migrant workers are the same money transfer channels used by drug lords or organised crime. the migrant worker, who on average sends around $1,000-2,000 a year is not going to use the same transfer agent as a person who needs to send vastly more funds than that. Indeed, given that the military government plays a huge role in the banking sector in the country, there is an argument to be made that government-backed banks are just as likely to engage in illicit activities. Who is to say that formal channels are any better insulated against criminal activities?
Although sending money informally is inherently risky (especially given the current instability), this is an area that INGOs can address to make it safer and easier for millions of migrant workers. It would not be hard for international organisations to engage these small to medium-sized money transfer agents that are already extensively used by migrant workers. For example, they could provide information to their beneficiaries as to what services are available and work with the agents directly to service their customers better. Right now, despite migrants using these agents for most transactions, they are simply not being engaged by key organisations working in the area. Arguably, for any INGO with the goal of increasing financial inclusion for the people of Myanmar, these organisations must be engaged with, or at the very least acknowledge, the importance of informal money transfer services.
Given the hardships that many Myanmar people are currently facing and the bleakness of the immediate economic future, it would be a massive help.
Charlie Artingstoll moved to Yangon in 2014 to work at UNODC. After winning the war on drugs, he worked at BRAC. Then he realised he didn’t like working for INGOs and started running music events. Fast-forward 2 years, he started a record label with local artists. Now, he works with celebrities and influencers in social media campaigns that communicate socially beneficial messages. He speaks pretty good Burmese. He also runs a watch company. Charlie has written on Microfinance and the Ultra-poor, the War on Drugs , Suu Kyi and Islamophobia, and the hip hop scene in Myanmar. More recently he has researched mental health in Myanmar, an area where he is now running projects.