Cologne International Forum:
Welcome! Would you like to tell us a little bit about yourself and your role in this project?

Dr. Anna Sobiech:
My name is Anna Sobiech and I am a researcher at the Faculty of Economics, Management and Science at the University of Cologne. I am the main investigator and coordinator of subproject 3. My area of research is banking and I focus on a range of different types of financial institutions. In subproject 3, I am studying informal types of financial institutions.

 

Can you provide an overview of the subproject?

Subproject 3 examines how Myanmar migrants in Thailand use remittances during times of conflict. Remittances are the money that migrants send back to or receive from their family where they originate from. Remittances often represent a lifeline for migrants and their families. Thus, when remittances cannot be processed from either party, it can mean hardship. This makes research on remittances particularly interesting and important. 

 

So, remittances are relevant in relation to migration?

Exactly. In the Thailand-Myanmar corridor, Myanmar migrants who reside in Thailand send and receive remittances to and from their family/friends in Myanmar. This sending and receiving involves the transfer of money across the border and takes place via payment systems which process the transaction. In recent years, the Thai and Myanmar payment systems have increasingly become digital and various new payment service providers have emerged.

 

What is the importance of remittances regarding your project?

Our research project focuses on how payment structures evolve in the context of conflict and as such, the way migrants send and receive remittances. Our goal is to understand the channels and modalities that migrants use to send and receive remittances. For our project, we have chosen to focus on the Thailand-Myanmar corridor and more specifically the region of Mae Sot, a town at the Thai-Myanmar border where many Myanmar migrants reside.

 

What were some of your observations at the beginning of your research?

In the Thai-Myanmar corridor, we have formal and informal payment service providers. Formal means that a bank or a money transfer service like Western Union is involved. Formal service providers are registered with the financial supervisory authority and have to follow specific rules. At the same time, we also have informal payment service providers. These are traditionally very common in Myanmar. We call them Hundi. Unlike formal payment service providers, Hundi are not registered with any official financial authority. Yet, they still provide a means of transferring money across the border. In the Thailand-Myanmar corridor, we observe that Hundi are well integrated with the formal payment system. That is Hundi themselves make use of formal digital money transfers when processing remittances. The close linkage between Hundi and digital payment service providers raises a lot of questions: How resilient is this integrated structure? Does it adapt in the face of ongoing conflict? What does it mean for the cost of sending/receiving remittances? How do migrants interact with informal and formal payment service providers? What are the criteria for choosing different types of providers?  Essentially, these are questions that are relevant for our research project.

 

Can you give an example of informal payments?

Hundi (also called Hawala banking) is an ancient way of transferring money and interestingly a process that does not involve the actual movement of cash. To give you an example, imagine a migrant who is residing in Thailand, who wants to send 100,000 Kyat (around 40 Euro) to their family in Myanmar. To do so, the migrants goes to a Hundi broker in Thailand who then contacts a Hundi broker in Myanmar and orders the payment of 100,000 Kyat to the recipient (the migrant’s family). Importantly, money is being transferred between the migrant and the Hundi broker in Thailand, and again between the Hundi broker in Myanmar and the recipient. However, there is no transfer of money between the two Hundi brokers. Instead, the Hundi broker in Thailand now owes 100,000 Kyat to the Hundi broker in Myanmar. Because Hundi brokers are typically involved in the trading of goods across borders, they can use goods as a means to settle their debt.

 

So, essentially, there is no way to track the money?

Exactly. This is what also makes it difficult to do research on these informal payment structures. Our approach to tackle these issues was to conduct a survey amongst migrants to better understand how remittances are being sent and received via these channels.

 

How did you find people who would take part in these surveys?

We realized early on that it would be difficult to reach migrants, mainly because they are often not officially registered in Thailand. Our approach was to work together with a group of teachers from Help Without Frontiers, an NGO in Mae Sot which provides education for Myanmar refugees in Thailand. The teachers conducted the interviews on our behalf by approaching the parents of their students. This way, we managed to get insights from about 200 migrants.  

 

What are some of the questions, within your survey?

We asked questions about how often remittances are being sent and received and via which channels. We also asked migrants about the costs of sending remittances and the various criteria for choosing among different types of payment service providers.

 

What are some of your key findings so far?

One thing that sets our survey apart from existing surveys is that we are the first to document a strong linkage between informal payment providers (Hundi) and the formal payment system. For instance, the survey showed that migrants often combine Hundi providers with Wave Money - a formal, digital payment provider in Myanmar that offers domestic, but no cross-border, payment services. We also learned that the (monetary) costs of sending remittances via this combination of channels are considerably lower compared to  remittances being sent via formal payment service providers. The integration of informal and formal channels also makes the transfer of money faster and more user friendly - especially for the recipients who can access remittances from a large network of Wave Money shops across Myanmar. Our survey further showed that trust and transaction speed are key criteria considered by migrants when choosing to transfer remittance via informal payment service providers.

 

Would you say that further examining this development in the future is something you would be interested in?

Definitely. I think if we were to conduct the same survey in two years, we would be able to capture developments in migrants’ usage of remittance channels as more and more payment solutions are likely to become available in the future.

 

Would you like to share any other plans for the future of this project?

Well, we certainly would like to build on what we have already achieved and further develop our survey. Because of time and resource constraints, we so far limited our focus to the area of Mae Sot. I think it would be quite interesting to conduct the same survey in other towns of Thailand to get a better understanding of local differences in how migrants use remittance channels to send and receive money.

 

Thank you!