The Long Shadow of Burma’s Bank Crisis
Sittwe, 27th March 03: The majority of businessmen in Rakhine State in western Burma have been reported to have been pinched by the recent currency shortage resulting from restrictions on amount withdrawal throughout Burma, our correspondent wrote.
In Sittwe, the capital of the western Burmese state, there are four private banks operating besides the lone government-owned Myanmar Economic Bank. The withdrawal of money in a week has been restricted to kyat five thousand for a kyat one hundred thousand deposit, kyat one hundred thousand for a deposit of kyat two million and so on. The restriction has put heavy pressure on the business community since the necessary amount of money could not be withdrawn for business deals and payment of wages and other relevant service charges. A well-known businessman of Sittwe told our correspondent that most of the people depend heavily upon the private banks for transactions, and the bureaucracy and unnecessary delay in the government banks have forced many of the businessmen to avoid transactions with the government banks. This trend has challenged the state-owned banks, which have been incurring losses even after facilitating a twenty-four hour service in all their branches. On inquiry a businessman told that it was just because of the loss of faith of the people on these banks that people carefully avoid to do transactions in those banks.
The currency crunch came after worried investors rushed to withdraw their savings from the country’s twenty private banks amid rumours that they were headed for collapse.
Meanwhile the action by the banks has proved to be profitable to a section of the corrupt bank officials and employees they simply take bribes and ‘manage’ the amount of money to be withdrawn. In many cases recommendations of the junta high officials have been put to the use of a newly created “bank black market” kind of money withdrawal, the businessman added. “Today I went to the private bank where I have a current account. I bribed the manager for the withdrawal of an amount totalling about double the permitted amount of withdrawal. Even in banking we have to bribe for the withdrawal of our own money now,” said the disgruntled businessman, “if that could not be done, I had to go to high state officials for recommendations, which by any way had to be obtained through bribing, too.”
Due to the banking crisis the unofficial exchange rate of the kyat has also appreciated against the Bangladeshi taka. Since last week the kyat is selling at fifteen hundred to one hundred takas, while previously the rate was as high as two thousand two hundred to one hundred takas in the border, resulting from the vanishing kyat in the market. The bid has caused heavy losses to the Burmese traders and business personnel who are engaged in the import and export between the two countries. “Less and less amount of trade is now carried everyday with Bangladesh, which accounts for losses in the overall export scene a domino effect indeed, and this is sure to result in casting a longer shadow not yet experienced,” concluded the businessman. #