Fri 7 Feb 2014
Filed under: Business / Trade,Inside Burma,News
It has long been the advice passed on to visitors to Burma: Bring crisp US dollars, nothing else is accepted here.
But the continuing insistence of money changers that cash is untainted threatens to stain the country’s reputation in spite of economic reforms.
Many ticketing agencies, airlines, small currency exchange shops and private banks’ exchange counters will turn away old or damaged, or even slightly crumpled, dollars. Imperfect currency might be accepted, but often at much lower exchange rates—despite strictly bearing the same value.
While the country begins to shed its image as a hermitic dictatorship, now open for business, and for many more tourists, the obsession with new currency leaves some visitors bemused.
Journalist Tin Maung Than recounted that when a friend from the United States visited recently, he tried to buy an air ticket form Rangoon to Bagan with old dollar bills. The former editor-in-chief of Thint Bawa magazine said the bills were initially accepted, but the travel agency later tracked Tin Maung Than down at his home and asked for newer notes instead.
“They told me that they want to have different, newer notes because local airline did not accept the dollars,” he said.
“Local banks also refused to take it, and the currency exchange counters do not pay reasonable prices for such old notes. It’s very hard to exchange old notes anywhere places at Burma, even notes that are just creased.”
Tin Maung Than said there was no reason it was so difficult to offload notes, and warned that it only enhanced the backward image many foreigners have of Burma.
“We should question why private banks are not accepting these kind of notes, or who is responsible, it may impact to country’s image,” he said.
In October 2012, Central Bank Deputy Governor Win Thaw announced that the bank would accept old notes in a bid to eradicate the practice. But the announcement insisted that damaged bills would be of lower value.
The reluctance to accept dirty dollars dates from before 2011 and recent reforms under the government of President Thein Sein, when exchanging Burmese kyat into any foreign currency was illegal with a few exceptions. The Burma government offered tourists its own Foreign Exchange Currency, or FEC—at an “official” exchange rate of 6 kyat to the dollar. That system was only abandoned when the kyat was floated in March 2012.
In the early 2000s, when Western economic sanctions against Burma began to bite, local banks had difficulty trading dollars outside the country. Most external trade went through Singaporean banks, which demanded crisp bills.
Than Lwin, the vice chairman of Kanbawza Bank insisted the bank was now accepting anything but seriously damaged dollars.
“We’re accepting old dollars as much as we can, but we have difficulty because we still do not have branches of US banks here. If they set up here, it will be easy to change such old dollars,” he said.
“The Singapore banks we deal with still only want new notes. If they’re old, they paid lower exchange rates.”
Maw Than, a senior economist and advisor to President Thein Sein said the Central Bank was responsible for solving the problem, and urged customers to complain if private banks will not accept old foreign currency, or offer reasonable rates for it.
“The Central Bank of Myanmar has authority to speak with private banks, ask why they aren’t accepting these old notes and find out solution,” he said.
A high ranking Central Bank official, who would only comment on condition of anonymity, said private banks could accept old currency, and that failure to do so would only disadvantage them in attracting customers.
“The Central Bank of Myanmar has allowed [private banks] to open bank accounts with foreign banks for import-export business. They have electronic accounts, and if cash is accumulating, they can send it to foreign banks,” the official said.
“We don’t tell them not to accept old foreign currency notes, and we are just supervising the Burmese banking sector so that banks do no harm. The currency exchange issue is a matter of market competition. If a bank won’t accept old notes, customers will go to another bank.”