Some conjectures

This survey reveals that remittances sent from Burmese migrant workers in Thailand directly alleviate the poverty of individuals and households to whom they are sent. Remittances are also likely to provide for individual benefits in allowing greater access to health services and education. Health and education appeared only weakly in our survey results as independent motivations for sending remittances, but it is ventured that both are likely to also reside implicitly within the survival rubric.

The survey also suggests, however, that any national economic development benefits allowed by remittances are largely absent in the Burmese context. The circumstances of Burma’s political economy instead undermine the broader processes that might otherwise be apparent.

Remittances and foreign reserves

As noted at the outset of this chapter, an important benefit often yielded by remittance flows is the extent that they provide sizeable and relatively stable flows of foreign reserves. This attribute is greatly undermined in the Burmese context by the fact that hundi is the most common method by which remittances are made. As demonstrated, hundi works via ‘netting’ transactions that minimise the flow of foreign exchange.

Remittances and business capital

Elsewhere, remittances have provided businesses in recipient countries with otherwise scarce capital. Establishing or expanding a business is a strong motivation for remittances in many countries and circumstances. Paying remittances for the purpose of business is not, however, a strong motivating factor in the context of Burma. Even if simple survival was not an all-consuming force, Burma’s dire economic and political circumstances would tell against substantial investment flows. Indeed, given the risks, it is probably in their own best interests that Burma’s migrant workers are unwilling to expose their hard-earned gains in this way.

Remittances and financial development

The ‘leveraging up’ of the development potential of remittances through formal financial institutions is much celebrated. Similarly highly regarded is the way that remittance flows might themselves stimulate the development of financial institutions. Unfortunately, these attributes are likewise absent in the circumstances in which Burmese migrant workers find themselves. This is because, first (and as noted above), about 60 per cent of our survey recipients do not possess Thai work permits—a fact that would automatically (legally) rule them out of holding an account at a bank in Thailand. Of course, even among the 40 per cent that do hold work permits, the additional documentation hurdles for opening a bank account remain formidable.

Second, and probably more significant than first-mile obstacles, are the last-mile problems in Burma itself. Put simply, and especially since the banking crisis of 2003, Burma’s formal financial system remains distrusted and dysfunctional. Burma’s banks eke out a marginal existence in an environment hostile to the survival of financial institutions and they are not an effective instrument to facilitate remittances or, indeed, even to gain from them.

Impact of the ‘Saffron Revolution’

In the wake of what has become widely known as the Saffron Revolution of September–October 2007, money transfers to Burma (of all types) ceased to function. Formal bank-based instruments were suspended in the days of high chaos in September, but in October the impact of US and other international sanctions made even those foreign banks normally happy to do business with Burma think twice. Even the normally extremely resilient hundi system seized up for a few days, including that (central to this chapter) channelling funds from Burmese workers in Thailand. There was, however, a significant difference between the problems faced by the formal and informal systems—the latter being a function not of systemic problems of hundi networks themselves, but of fears that Burma’s military regime might resort to its time-honoured practice of suddenly ‘demonetising’ certain denominations of the kyat. Money transfers to Burma have resumed since the 2007 demonstrations, but the situation remains uncertain and volatile.