At banks in Myanmar, it’s not unusual to see people lugging huge and heavy gunny sacks into the lobby.
Once inside, they’ll split open the sacks, and out will pour cash. To process the deposit, bank tellers have to count and check every note – no small feat when each gunny sack can hold as much as 250 million kyats (S$250,000).
Their largest note is worth 10,000 kyat (S$10).
The adage that ‘cash is king’ is never more true than in Myanmar, where “people typically use cash for large transactions such as buying a car or even an apartment”, said Mr David Wang, deputy managing director of AYA Bank.
ATM cards are uncommon here, and credit cards are usually issued to those from middle-income and the higher-income. “Myanmar is predominantly a cash-based society. One big challenge is that there’s no credit bureau here. So it’s very difficult to ascertain the credit standing of a customer,” he said.
While the government has been trying to move towards more cashless transactions – a credit bureau is in the pipeline, Mr Wang says – for now, people still lug cash around.
Mr Wang said he has had customers, especially those who own businesses, deposit as much as 10 billion kyat (S$10 million) in cash with the bank.
He said that banks in Myanmar typically have cash holdings of between 5 per cent and 10 per cent - significantly more than Singapore banks with less than 1 per cent of cash-on-hand.
But could change be in the wind? Mobile penetration in Myanmar has risen from 15 per cent to about 80 per cent in just three years, and some are saying that mobile banking and payments is the way to go - possibly even before a credit bureau is established.
Compared to the hassle of needing to determine credit standings for credit card issuance, mobile banking only requires one to have a basic Internet connection to be able to make cashless payments.
“There is immense opportunity in the mobile wallet segment. But it is still at a very early stage where a lot of challenges still remain. It also depends on how the country evolves as time goes by,” Mr Wang said.
The programme Money Mind goes to Myanmar in a special episode on its economy and investment climate, this Saturday, June 10, at 10.30pm SG/HK.