As Myanmar opens up after five decades of military rule, a country run on cash is finding a new alternative: plastic.
Private banks in Myanmar have begun rolling out automated teller machines (ATM) in recent weeks, revolutionary in a country where people often haul sacks and suitcases of cash to banks.
Even more ambitious plans are in the works.
“It’s fantastic, so convenient,” Naing Lin Oo, a 26-year-old computer engineer, said after withdrawing about 120,000 kyat (US$143) one recent afternoon.
“It would be good to see more of these,” he added, pointing to a two-month-old blue-and-yellow ATM run by Co-Operative Bank, one of Myanmar’s 13 private banks.
That is about to happen: the Central Bank of Myanmar is preparing to launch a new nationwide ATM network within two months and is in talks with Visa International’s Plus and MasterCard International’s Cirrus to introduce international banking within six months to a year, part of sweeping reforms in the former British colony.
Myanmar’s banking system is among the world’s most antiquated, crippled by years of sanctions and disastrous socialist policies. Moving funds abroad often requires help from ancient hawala underground money--transfer agents.
However, over the past two months private banks have introduced basic electronic banking — with limits. ATMs, for instance, cannot be shared between rival banks and many are offline. Although US and European sanctions have been suspended, local banks still cannot connect internationally.
“Our payment system is still quite simple. It is mostly based on cash,” Maung Maung Win, one of two Central Bank of Myanmar deputy governors, said in an interview in the commercial capital Yangon. “Even some of the big companies or our government departments like to use cash.”
Within two months, he said, a new department within the central bank, the Myanmar Payment Union, would introduce a new debit-card network allowing banks to share ATMs and offer a wider array of services, among the biggest changes in the financial sector since the managed float of the kyat on April 2.
That will be followed by a second phase of international services by the middle of next year, or possibly as soon as six months from now, he added. The timing depends on the execution of Washington’s decision this month to suspend sanctions.
Since 1988, when the former military junta violently cracked down on student protesters, the US has imposed what it calls “a web of overlapping sanctions.” This was done through five laws and four presidential documents.
On May 17, the administration of US President Barack Obama announced it would ease those restrictions, allowing US investments and financial services in Myanmar for the first time in decades. This was in recognition of dramatic political changes.
However, Washington only -“suspended” sanctions, instead of lifting them, to ensure no backtracking on human rights. The laws remain on the books.
US businesses wanting to do business in Myanmar, including banks, must apply to Washington for a “general license,” a step that Myanmar’s central bank expects could take weeks or even months.
As a result, Western financial services are still non-existent in Myanmar and international credit and debit cards remain off limits — a frequent source of irritation for tourists and business executives now descending on the country.