Evolving informal remittance methods among Myanmar migrant workers in Thailand

ABSTRACT

In the Thailand–Myanmar remittance corridor, while the bulk of Myanmar migrant workers rely on informal money transfer operators, the informal operators themselves utilise a bank branch network to deliver funds to families of the migrant workers. Paradoxically, the expanding bank branch network has fostered informal money transfers. Against this backdrop, we examine determinants in migrant workers’ choice of informal operators based on a questionnaire survey of Myanmar migrant workers in Thailand. The empirical results indicate that migrant workers who sent remittances to town were, while having alternative choices of remittance operators, more likely to choose the informal operators that utilised bank branches for delivery of funds to recipients. It implies that expanding the branch network of Myanmar banks is conducive to competition among informal money transfer operators.

KEYWORDS:

• Migrant worker remittances
• informal remittance methods
• bank branch network
• Myanmar

JEL CLASSIFICATION:

• E26
• O16
• O17

Acknowledgements

The survey of Myanmar migrant workers was conducted under supervision of Premjai Vungsiriphisal (Chulalongkorn University). The author wishes to acknowledge constructive comments from Luch Likanan on an earlier draft of this paper, and informative discussions with Theingi and Hla Theingi (Assumption University). Last but not least, the author is indebted to the respondents of the survey. The author is solely responsible for any remaining errors and omission.

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

1. Adams and Page (2005) find positive impacts of remittances on economic growth and poverty reduction.

2. Giuliano and Ruiz–Arranz (2009) and Aggarwal, Demirguc–Kunt, and Martinez Peria (2011) show positive impacts of remittances on financial development in their cross-country panel data analysis.

3. According to the survey of central banks in 40 countries by de Luna Martinez (2005), MTFs are not subject to reporting requirements in 62% of the surveyed countries, and thus workers’ remittances through MTFs are not recorded in the balance of payment statistics unless MTFs themselves use banks for international settlements.

4. See Kubo (2014) for details of foreign exchange regulations and the structure of market for foreign exchange.

5. Huguet, Chamratrithirong, and Richter (2011) report that as of end 2010, there were 1513 workers who had entered Thailand from Myanmar via the formal recruitment scheme (Memorandum of Understanding between the Myanmar and Thai Governments) and 812,984 registered workers who had been irregular status, but were granted work permits through the Nationality Verification process. In addition, there were estimated 1,444,803 irregular workers from Thailand's three neighbouring countries, Cambodia, Lao PDR and Myanmar. According to the proportion of Myanmar migrant workers in the Nationality Verification process, we consider 87.2% of these irregular workers were Myanmar nationals.

6. The median of the remittances was also THB 15,000 per annum in the 2002–2003 survey of Myanmar migrant workers by Turnell, Vicary, and Bradford (2008).

7. According to Selected Monthly Economic Indicators by the government of Myanmar, total export in fiscal year 2007 was USD 6401.7 million.

8. Western Union offered a waiver of the fixed fee for remittances up to THB 10,000 temporarily for the period from January to April 2015.

9. The up-front fees are charged by Thai banks. The Thai banks also offered temporarily waiver or reduction of the transfer fee.

10. Mae Sot–Myawaddy is a major economic corridor between the two countries. Other border points, though smaller scale, between Thailand and Myanmar are Mae Sai–Thachileik in the north and Ranong–Kawthaung in the south.

11. In November 2014, we interviewed a Thai business man, married to a Myanmar migrant, who ran a Burmese ethnic general shop in Surat Thani province and had been operating money transfer business for two decades. He had branch shops in Myeik and Kawthaung in Myanmar. For transmission of remittance information between the originating and payment points, he invested in costly satellite communication systems in the 1990s. Nowadays, the transmission of remittance information is made through mobile phones.

12. As of March 2013, there were 1003 bank branches, of which about half were those of state banks, namely Myanma Economic Bank and Myanma Agricultural Development Bank (Foerch, Thein, and Waldschmidt 2013).

13. Turnell (2014) offers an overview of Myanmar's banking system.

14. In interviews of Myanmar migrant workers in Bangkok in August 2014, some migrant workers reported that there were third type operators residing in Myanmar who advertised their remittance fees and exchange rates via short message services of mobile phones. Such operators could be accessed by emails, and they instructed remitters to deposit money to their Thai bank accounts, guaranteeing instant money transfers to the branches of Myanmar banks that the remitters designated.

15. In the survey, we asked migrant workers the exchange rate that the informal operators offered to them when they sent remittances, but only few respondents answered the exchange rate.

16. The data for the recent period was not available to the author.

17. The boundary between money transfer operators and relatives/acquaintances is not clear as some of relatives/acquaintances turned out to be money transfer operators.

18. Only 85 respondents answered the amount of remittances.

Additional information

Funding

This work was supported by the Economic Research Institute for ASEAN and East Asia (ERIA).

Notes on contributors

Koji Kubo

Koji Kubo is a senior research fellow at the Institute of Developing Economies, Japan External Trade Organization (IDE-JETRO). His research interests include economic reforms and evolution of informal economy in Myanmar. He has published articles on Myanmar in Journal of Southeast Asian Economies and Asian-Pacific Economic Literature.