Money


I’m constantly astounded at how little money people get by with here.

The Lao government gives scholarships to a third of univeristy students. How much is a Lao government university scholarship worth? About $7 to $9 US dollars a month, so about $100 a year.

The government plans to double the scholarship amounts soon.

This is what three million kip looks like. Holding that much cash makes you feel like Monty Burns.

I visited a bank last week to get a cash advance from my credit card. Seated next to me is a 12 year old boy, swivelling around on his chair in an expression of boredom. In front of him the teller is tying together wads of 5000 kip notes with platic string. The complete package of money is the size of six bricks joined together. There are another two packages of money the exact same size. Another two staff are working on counting the notes and putting the packages together. I’ve concluded all three packages are very likely to be given to the boy. The situation reminds me of the stories of hyperinflation from post World War I Germany or modern day Zimbabwe, where the price of bread doubles between breakfast and lunch, and you need to carry a wheelbarrow full of notes to the store to buy some milk

I left the bank with the following questions:

  1. Why so much money? What could it possibly be used for?
  2. Why is it in 5000 kip notes? The highest denomination in Lao is 50’000 kip. 5000 kip is worth about 50c in USD.
  3. Why has this 12 year old boy been entrusted as the courier for this large amount of money.

Lao KipInflation in Laos
Laos was heavily affected by the East Asian economic crisis of 1997. Over the following two years the currency loss 80% of its value to the USD. It use to be 1000 kip to 1 USD, and now sits at around 9600 kip to 1 USD. People don’t trust the kip anymore, so hold large amounts of money either in USD or in Thai baht, often with banks located in Thailand. Inflation in the years following the East Asian economic crisis was in excess of 100% per year.

The 6 months rent my house had to pay in advance was a total of 21 million kip. All the calculators here have an extra button for “00” which types the zero twice. The Lao word for calculator, when translated literally, means machine that thinks a lot.