YANGON—Several of Myanmar private banks are charging nearly Ks 15 (US$0.015) per US dollar on international money transfers in addition to the transfer service fee, raising concerns among the local business people.
“I usually work with my export earnings deposited in United Amara Bank, Asia Green Development Bank and Kanbawza Bank, especially for importing cars,” said one automobile importer.
“These days, local banks have begun charging Ks 10 to Ks 15 per dollar for money transfers to foreign countries. My money come from export earnings. In the past, if I transferred US$ 5,000, my counterpart in any foreign country fully received the US$ 5,000. Now, extra fees are charged without prior notice. This will cause losses to local businessmen like us.”
The additional fee, which many private banks are currently charging on international money transfers ,varies between Ks 10 (US$ 0.01) and Ks 15 (US$ 0.015) per U.S. dollar.
“We did it with the approval of the Central Bank,” said Than Lwin, vice-chairperson of Kanbawza Bank and adviser to the Ministry of Finance.
So far, there is no official record of the government allowing private banks to charge these fees.
State-owned Myanmar Foreign Trade Bank, and Myanmar Investment and Commercial Bank, do not impose such additional charges.
“In the past, there was little difference between the local currency exchange market and that of foreign countries. Nowadays, there is a big gap between the figures. To narrow the gap of exchange rate situations, we are collecting the additional charge,” said an official of one private bank, requesting anonymity.
Currency exchange rates in private banks are based on the index rate announced by the Central Bank. Therefore, the exchange rates by private banks do not vary much.
“Private banks had informed the Central Bank about the difficulties they were facing due to the differences between the local currency exchange rate and that of the international market, but the Central Bank told them to see to it themselves,” said the official.
“Every day there are transactions of millions of dollars. The banks say that they are unprofitable and ask for additional money, about Ks 15 per dollar. It leads to losses for businessmen. Now, we are discussing filing a complaint with the Central Bank,” said an exporter.
Despite the additional fees some private banks have ceased offering money transfer services altogether, saying that they produce losses, said Soe Tun from the Myanmar Rice Federation.
Such delays and disruptions in money transfers will negatively affect businesses, and it is a sign of Myanmar’s poor financial systems, he said.
“Local businessmen have to pay extra fees for exports. Even if an extra fee of Ks 15 per dollar is paid, some banks suspend [money transfers] due to the shortage of US dollars in their foreign accounts. This shows the poor banking system of our country. If it persists, Myanmar’s trading activities will freeze. It will cause havoc with the commodity prices. The Central Bank needs to solve this problem,” Soe Tun told Eleven Media on Thursday.
Deputy Minister for Finance Maung Maung Thein said it is impossible to adopt the floating currency exchange system under current conditions. There are still steps to be taken for the transition.
He said that the Interbank Market that allows transactions between banks would first have to be launched before taking steps to start the floating market system, in which currency exchange rates are set due to market forces.
Under the Thein Sein administration, the Central Bank has adopted the managed exchange rate system. Changes in the market have occurred since the system began on April 2 last year. Then, the exchange rate was Ks 818 per U.S. dollar. On July 8 this year, the exchange rate increased to Ks 1,004 per U.S. dollar. Yesterday, the exchange rate was Ks 975 per U.S. dollar.
Many people recognize that the currency exchange system is one of the key areas for Myanmar’s financial reforms. However, critics say the government is still unable to launch a stable and uniform currency exchange rate system.
Source: ELEVEN Myanmar