A Russian ruble coin and the Russian Mir payment system logo on a bank card in Moscow. / AFP
The junta-controlled central bank is laying the foundation to allow the use of Russian Mir cards in Myanmar by December, according to Russian state-owned news agency RIA.
It quoted Central Bank of Myanmar (CBM) governor Than Than Swe as saying that the cards could be used in Myanmar within six months, once technical issues are resolved and mutual certification for connecting national payment systems, especially for cross-border transactions, is completed.
“We can start using Russia’s Mir cards in Myanmar and our cards in Russia. Implementation of all this may take some time, but I expect that this will happen in December this year,” Than Than Swe told reporters at the five-day St. Petersburg International Economic Forum, which ended on June 18.
Junta officials announced plans to use the Russian cards in August of last year as they faced increasing financial sanctions and dwindling foreign reserves, particularly U.S. dollars.
Mir, which means “Peace”, is a card-payment system for electronic fund transfers established by the Central Bank of Russia in 2017, following sanctions. Mir card is operated by the Russian National Card Payment System.
The CBM and regime officials have discussed a partnership with the Central Bank of Russia and signed a memorandum of understanding to integrate payment systems between the two countries, said Than Than Swe.
In a report released on Tuesday, the World Bank said that over the six months to June, the regime has imposed additional administrative restrictions on outbound financial transactions, and extra scrutiny of imports.
Restricted access to foreign exchange has made it more difficult for companies in Myanmar to import necessary supplies, the World Bank report said.
Than Than Swe, who was appointed by the junta, held talks with the chair of the Bank of Russia at the St. Petersburg forum. The talks on cooperation between the two countries, ranging from capacity-building initiatives, financial cooperation, and mutual payments through integrated systems.
Russia created Mir to avoid reliance on Visa and MasterCard, which have since stopped operating in the country. The withdrawal of Visa and MasterCard from Russia led to increased use of Mir cards in the country. However, Mir cards are unwelcome in most other countries.
They are accepted in a handful of former Soviet republics and a few countries, like Vietnam, offer limited use of the cards. Last year, state banks in Turkey suspended the use of Mir cards over fears of U.S. sanctions on the Russian National Card Payment System.
If the Mir card is used in Myanmar, it will allow direct payments between the Russian ruble and the kyat, but its use will be very limited.
U Moe, a banking expert in Yangon, said the Russian cards will be used by foreign nationals visiting Myanmar for pleasure or business, not by Myanmar citizens travelling abroad.
“People from Myanmar will be able to use cards from local banks, for example KBZ or AYA, overseas through the JCB payment [system],” he said. However, they will only be able to use Mir cards in countries that accept them, he explained.
He described the effort by the junta to accept Mir cards in the country as “a preparation of the regime to make it more convenient for tourists or businessmen from Russia” to visit Myanmar.
“For most Myanmar people, we have nothing to do with it since we can’t even use [Mir cards] in Thailand or Singapore,” he said.
Than Than Swe agreed that allowing the cards to be used in Myanmar was aimed at increasing tourism. She told reporters at the St. Petersburg forum that she “hopes for an increase of flows from both countries in the tourism sector.”
This may be wishful thinking.
Russia is not near the top of the travel list for Myanmar citizens seeking vacations, while efforts to attract Russian tourists to Myanmar have so far failed.
Both countries are locked out of international financial networks by sanctions.
The junta is desperately attempting to alleviate a currency crisis that is worsening as international sanctions increase.
It is considering joining the New Development Bank operated by Brazil, Russia, India, China and South Africa to help offset its isolation.
The junta is attempting to integrate Myanmar into the Russian payment system to maintain its foreign exchange reserves and stabilize the kyat, financial experts said last year when the idea was first proposed.
New sanctions imposed by the U.S. Treasury on June 21 on two junta-controlled banks—Myanma Foreign Trade Bank and Myanma Investment and Commercial Bank—were designed to make it more difficult to facilitate foreign-currency exchange within the country that enabled transactions between the military regime and foreign weapons suppliers.
Since the February 2021 coup, Myanmar has imported goods and materials worth at least US$1 billion, including from Russia, according to the U.S. Treasury’s Office of Foreign Assets Control.