Under sanctions and desperate for hard currency, the military regime is forcing Myanmar workers abroad to remit earnings through formal channels, with some warning it will only push more migrants to become undocumented.
By FRONTIER
Ko Min Aung* works for less than US$10 a day at a Bangkok furniture company and yet each month he manages to save around half of his meagre earnings to send back home to his parents in Magway Region.
The 25-year-old is one of some 332,000 Myanmar workers legally employed in Thailand under the terms of a Memorandum of Understanding signed between the two countries, according to Thailand’s Ministry of Labour. More than 1.5 million others work under other legal arrangements, while up to another million are estimated to be undocumented.
The MoU, signed in 2016 by the National League for Democracy government and put on hold after the 2021 coup until May last year, does little for workers’ rights but it fills a huge post-COVID-19 hole in the Thai labour market. It also provides a basic but regular source of income for migrants and their families back home in Myanmar, where the economy has cratered since the military takeover.
Those financial lifelines depend on workers like Min Aung using the centuries-old informal hundi system of money exchange that uses networks of friends, acquaintances and business associates. The hundi system works with the black market exchange rate, which is far more favourable than the official exchange rate, as the kyat has depreciated significantly since the coup.
Desperate for hard currency to fund its war machine, the regime is now trying to access that untapped source of revenue, but some warn it will only result in more migrant workers being undocumented and vulnerable to abuse.
The junta has ordered that, from September 1, workers abroad must begin transferring 25 percent of their salaries back to Myanmar through the formal banking system, where the regime can take its cut.
Workers like Min Aung will have to pay higher bank charges and a fee to the regime. Moreover, he will get far fewer kyat for his hard-earned Thai baht. Banks must use an exchange rate set by the Central Bank of Myanmar for remittances, of K83 per Thai baht, instead of the black market rate of K100.
“Twenty-five percent is a lot of money. We come to Thailand because we can’t get jobs in Myanmar and still the junta causes misery for workers abroad and makes us suffer,” said Min Aung, who tries to scrape together K500,000 to send home each month.
The new rules apply to Myanmar MoU workers in Thailand, Malaysia, Singapore, Japan, South Korea, Qatar and the United Arab Emirates.
“The military council needs foreign money. This is a way to channel money from workers to them at a time of great demand,” said U Aung Kyaw, spokesperson of the Labour Rights Foundation based in Samut Sakhon, Thailand. “Myanmar is already experiencing severe inflation and its consequences. Because there are no foreign reserves, I see the regime is attempting to get hold of hard currency from all sources.”
The new measure has been denounced by the National Unity Government, the parallel authority formed by lawmakers ousted in the coup, as “invalid” and “automatically void” in a statement issued on September 8. The NUG also threatened to “take effective and severe action against any agency or person” who exerts pressure on overseas workers to comply with it.
Getting their hands on workers’ cash
The cash-strapped junta has been trying to get its hands on remittances sent by overseas workers for over a year. In September last year, then Minister of Labour U Pwint San, who was dismissed one month ago, attempted to impose a similar measure. After being met with strong objections by overseas employment agencies, it was quietly shelved until now.
U Aye Chan*, the manager of one of those agencies, told Frontier that Pwint San convened several meetings last year, first suggesting that workers abroad should remit 50pc of their salaries through formal banking channels. But the agencies warned that such a high proportion would make working abroad financially untenable.
The junta then lowered the bar to 30pc, which was opposed again by the agencies, and eventually settled for 25pc.
“The military council has been pressuring domestic banks and overseas employment agencies to implement these plans for over three months,” said Aye Chan.
Now every Myanmar migrant working abroad under an MoU must sign an agreement to comply with the new directive, and has to open an account under the name of a relative in one of the 14 Myanmar banks regulated by the CBM. The Ministry of Labour will monitor the transactions.
Domestic and foreign banks have been gearing up for the new scheme for several months. Myanmar’s embassy in Seoul announced on May 19 that the CBM authorised Western Union, Ria Money Transfer and MoneyGram to remit salaries and wages of Myanmar workers abroad. Meanwhile, the 14 Myanmar licensed banks have linked up with 23 international remittance organisations.
Ayeyarwaddy Farmers Development Bank, known as A Bank, will use the exchange rate for remittances set by the CBM, a staff member, who asked not to be named, confirmed. The bank has also announced that it’s cooperating with DeeMoney, a Thai money transfer service, which launched a mobile phone application on July 19.
Meanwhile, Thailand’s Kasikorn Bank has partnered with KBZ Bank in Myanmar, also using the official remittance rate via Kasikorn’s K PLUS money transfer service.
Carrots and sticks
In order to enforce the measures, the regime is deploying both carrots and sticks. Those who fail to comply will be banned from travelling abroad for three years, while those who follow the directive will be entitled to a variety of tax exemptions.
“We don’t have a choice. The Ministry of Labour’s directives are unfair to the workers, yet we must follow them,” said 25-year-old Ko Ye Kyaw Thu*, who lives in Yangon’s South Dagon Township but is planning to move to Thailand. “It’s difficult to make a living here, so we have to go abroad to find work.”
According to figures made public last year by the Ministry of Labour, remittances from abroad totalled more than $6 billion over the previous eight years combined. Accessing that money is particularly pressing for the regime, after the United States imposed sanctions on two state-owned banks in late June, considerably reducing the junta’s access to foreign currency.
The junta’s labour ministry and CBM did not respond to requests for comment.
MoU workers and labour rights groups interviewed by Frontier are sceptical that the new policy will help the junta siphon off large amounts of foreign exchange. Instead, they argue that it will simply encourage workers under MoUs to join the vast pool of Myanmar migrants working illegally across Southeast Asia.
Aye Chan said that for the scheme to work, the regime will need to compromise by allowing workers to use the real market rate, currently around K3,500 to the dollar. This compares to the CBM’s remittance rate of K2,850, which is higher than the bank’s normal peg of K2,100 but still results in a loss. Other incentives will be needed, too.
“To be successful, the military council must also provide incentives for regular workers who remit 25pc per cent of their basic salary through the official banking system,” he said.
Ma Myat Mon Win*, an overseas employment agency manager in Yangon, predicted many overseas workers would simply opt to work illegally, despite the many risks that would entail.
“Before the military takeover, a small number of workers went abroad legally, but now those numbers are very high,” she said. “If the military council’s plan is implemented, the number of illegal workers may increase to more than ever before.”
* denotes the use of pseudonym for safety reasons
Correction: An earlier version of this article said remittances via licensed banks from Thailand to Myanmar were charged at K58 to the baht, according to the Central Bank of Myanmar’s official exchange rate. This has been corrected to K83 to the baht, to reflect an adjusted Central Bank rate for remittances.
