- By Catherine A. TraywickCatherine A. Traywick is a fellow at Foreign Policy.
Myanmar’s economy has always run on cash — thick bricks of it, used by residents to pay for everything from household sundries to homes and cars. That’s slowly changing as global banks and financial services giants trickle into the country — but even in Yangon, Myanmar’s commercial capital, ATMs remain scarce and few businesses accept foreign credit cards. For those who bank with local Myanmar institutions, plastic is still a distant dream.
All of which makes the launch Tuesday of the country’s first-ever bank card a minor but significant victory. Offered jointly by Myanmar’s Cooperative Bank (CB Bank) and MasterCard, the reloadable prepaid card is intended only for accountholders traveling abroad. For now, that’s a small group: Just one in five Myanmar residents vacationed outside the country during the past year. Meanwhile, less than 10 percent of all residents have a bank account, in large part due to public distrust of the banking system.
Decades of mismanagement and impulsive decision-making by the former military regime eroded just about all of the country’s institutions, and tanked the national economy more than once. The most outrageous example of this occurred in 1987, when General Ne Win famously demonetized all banknotes of 25, 35 and 75 kyats, without warning or compensation, on the advice of an astrologer who reportedly told him that nine was his lucky number. He replaced the old notes with new ones divisible by nine, wiping out the savings of countless citizens and rendering 75 percent of the country’s currency worthless.
Myanmar’s banking system has come a long way since Ne Win imposed his brand of socialism on the country, but banks still struggle with negative public perception. As recently as 2011, rumors that CB Bank’s owner was feuding with a military crony compelled scores of accountholders to quietly withdraw their money — nearly throwing the company into bankruptcy in the process. Matters have steadily improved under President Thein Sein, whose economic reforms have brought some stability to Myanmar’s financial system and encouraged global financial institutions to enter the market.
By the end of 2013, around 500 business (mostly hotels and restaurants) are expected to accept foreign credits cards. Pretty soon, Myanmar’s banking few may be able to choose plastic over paper, too.