Role of Hundi in Border Trade Payment of Northern Thailand- Myanmar Before and After 2021 Military Coup

Abstract

Myanmar considers border trade more important than international trade. Due to the economic sanctions imposed by the West since the military government took power in 1996 up until the latest one in 2021, Thailand -Myanmar border trade has been characterized by more informal trade than previously. Border trade has developed despite being subjected to long-standing international trade barriers. This study aims to convey an understanding of how the informal border payment, “Hundi”, works as the border-trade -payment between Myanmar and Northern Thailand. Even though hundi is an informal transfer system it is widely used as an alternative banking system. Especially, hundi is used in the financing of legitimate businesses, to prevent exacerbating the problems of access to credit of different states. This study draws on available literature and open-source reporting, as well as extensive field research by interviewing trusted sources for more than 30 informants (i.e., border-trader, money changer, money transfer operators, business leaders, hundi operators, immigrant labors, government officials, commercial banking staffs) in the northern part of Thailand with the border city in Shan state, Myanmar during 2017-2022. This study found that hundi plays a significant role as both a substitute and complement to cross-border trade and payment across the border of Myanmar-Thailand. After the recent political instability, and expansion from a formal banking sector to a mobile money services, in the short term, we are unlikely to see an elimination of the hundi system completely.