Burmese migrants welcome tax break – The Irrawaddy

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http://www.irrawaddy.org/article.php?art_id=22805

Burmese migrant Ko Saw at work at Puchong 12, Kuala Lumpur (Photo: Simon Roughneen)

KUALA LUMPUR –  Burmese migrants across Southeast Asia have welcomed a recent decision by the Burmese government to end the practice of collecting income tax from migrants abroad.

In late 2011, the Burmese government announced that Burmese workers abroad would be exempt from Jan. 1, 2012, from paying a 10 percent salary levy to Burmese embassies in the region –a payment seen as onerous and unjustifiable, given that workers paid taxes in the country where they lived and worked.

In interviews last year, Burmese migrants in Malaysia, Singapore and Thailand all railed against the levy, payable when Burmese nationals sought to renew their passports at embassies in the region.

Kyaw Kyaw, a Burmese national living in Singapore, told The Irrawaddy by email: “I’m glad to hear that tax has been removed. All the people are happy about that news.”

However, despite the new waiver, Kyaw Kyaw still has to pay taxes owed last year. “My passport needs to be renewed at the end of this month, so I need to pay around 3,000 Singapore dollars in taxes to the Myanmar [Burmese] embassy. I got a lot of headache from this problem,” he added.

The Burmese government announced the tax regime change as part of a surprise series of reforms since a quasi-civilian government took office in March 2011. Chit Shein, the director-general of the Department of Labor in Naypyidaw, said in a recent telephone interview that “the Myanmar government is very interested in this issue and as per President Thein Sein’s speech on March 30, 2011, will work to ensure worker rights both in Myanmar and abroad.”

However, some Burmese overseas say that more needs to be done. Tun Tun, head of the Burma Campaign Malaysia, an NGO that assists Burmese workers in Malaysia, said that the end of the income tax “is a very good decision for our migrants,” but criticized the passport application process at the Burmese embassy in Kuala Lumpur as slow and bureaucratic.

Some who applied for passports in October are still waiting to receive them, he said. “Other nationalities, such as Nepalese or Indonesians, which have a lot of migrant workers here, too, get their passports much faster.”

Burmese passports are valid for just three years, compared with decade validity for some countries. Burmese migrants have to undertake the time-consuming process and sometimes expensive process more often than others.

“It should be for 10 years,” said Tun Tun, speaking by telephone in Kuala Lumpur.

While millions of Burmese migrants travel abroad without official documentation and therefore don’t have to deal with their embassy or pay Burmese tax, the legal vacuum leaves them vulnerable to exploitation and trafficking, particularly in Malaysia and Thailand.

The Malaysian and Thai authorities have introduced measures to enable migrants to register legally — but migrants need to acquire passports from their home countries to avail of these registration options.

Migrants send hundreds of millions of dollars back to impoverished families in Burma  — a business opportunity for both the Burmese government and banks.

On Nov. 25, 2011, the Central Bank of Myanmar granted eleven private banks permits trade foreign currencies. Andy Hall, a migrant worker advocate at Mahidol University in Bangkok, said that the Burmese government is trying to formalize remittances through the banking sector, which might be a challenge given that an informal money transfer system, or hundi, enables Burmese abroad to send money back to families even in remote areas where banks are not present.

“It will be difficult for banks to compete with that network,” said Hall, who added that “there is a lot of concern among migrants that the bank fees will be high.”

The Burmese government may be lining up a longer-term Philippines-style policy where emigration is officially supported as a way of compensating for a stagnant or under-performing domestic economy. A tenth of all

Filipinos live overseas, and money that “OFWs” (overseas Filipino workers) remit makes up approximately the same percentage of the country’s economy.

A study published by the World Bank in 2008 estimated that Burmese remittances formally totalled US $150 million. However, other studies suggest that the total could be three to four times that amount. With the bulk of the money coming through the hundi system, a precise measurement is impossible.

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