Myanmar’s informal money-transfer network is providing a financial lifeline to families struggling with economic hardship while enabling migrants abroad to bypass banking channels controlled by the military-backed government. Known as the hundi system, the decades-old network moves money through trusted agents and currency exchanges, offering better rates and lower fees than official alternatives.
For migrants who fled Myanmar following the 2021 military coup, the system also provides a way to support relatives without directly contributing to a government they distrust. Aung, 31, who previously worked at a state-owned bank in the government-controlled Bago region, sends between 3,000 and 5,000 baht (US$90-US$150) to his mother and sister each month through a village agent.
“I only use the agent in my home village. The exchange rate is better and the military does not get the money,” he said. “My agent is like my brother, I trust him 100 per cent.”
The government has sought to redirect these transfers into formal banking channels. Rules introduced in 2024 require migrant workers to send at least 25 per cent of their earnings home through official channels, with travel bans and passport confiscation among the penalties for non-compliance.
Nevertheless, the hundi network remains central to cross-border transfers. Non-public Finance Ministry data cited by Bloomberg put official remittances at US$5.6 billion last year, equivalent to about 38 per cent of foreign inflows. Myanmar’s government estimated that US$8 billion was remitted in 2015, although that figure included transfers through both formal and informal channels.
A decade ago, remittances were estimated to account for as much as 13 per cent of Myanmar’s gross domestic product. Their current share is unknown, but millions of people living abroad continue to send money home. Foreign direct investment barely exceeded US$1 billion last year, according to Myanmar state media.
The transfers are increasingly important to households facing rising prices and a weakened currency. Inflation reached nearly 25 per cent in June, according to the World Bank, while the kyat has lost about three-quarters of its value against the US dollar since the coup. The government, led by President Min Aung Hlaing, needs foreign currency to pay for essential imports.
The hundi system operates largely without physical cash crossing borders. In Thailand, agents pool baht collected from migrants in border towns such as Mae Sot and Mae Sai, using the funds to pay Thai exporters directly for goods. Myanmar importers then provide the equivalent value in kyat to hundi agents, who distribute the money to recipients’ families. Transaction fees typically range from 2 to 2.5 per cent.
The system offers exchange rates that can be twice as favourable as the official rate of about 2,100 kyat to the US dollar. It also serves Myanmar migrants in Malaysia, where transfers can be arranged through shops in Kuala Lumpur’s Pudu district and elsewhere in the Klang Valley. One migrant, Ju, said money usually arrived within a day. However, some customers had been cheated, prompting users to test unfamiliar agents with smaller transfers.
Thailand has its own reasons for seeking greater oversight. As many as 4.6 million Myanmar nationals were living in the country as of September last year, according to the International Organization for Migration. A report published last month by the Thai government-linked Institute for Strategic Policy described their movement as Southeast Asia’s largest single migrant-worker corridor.
Some Thai banks have partnered with Myanmar digital payment platforms, including KBZPay and AYA Pay, to offer competitive cross-border transfers. But opening a Thai bank account requires a passport and other documents issued or notarised by Myanmar’s embassy, creating barriers for exiles who entered Thailand illegally or fled military conscription.
Pana Janviroj, executive director of the Institute for Strategic Policy, said Thailand also needed to address the costs of providing healthcare, education and other services to migrant workers, suggesting employer contributions to welfare funds for legal employees. He warned that hundi users could face exploitation and said both governments had security interests in monitoring the flows because “a lot of grey money goes into this system”.
For some exiles, however, official registration remains unacceptable. Mark, who uses an anglicised nickname, said he feared that registering with authorities could expose him and his family to retaliation or military conscription.
“I don’t want to give the government any money to buy more guns and bombs to use on us,” he said.
