"SHAN ... are an ethnic group of Southeast Asia. The Shan live primarily in the Shan State of Myanmar (sometimes known as Burma), but also inhabit portions of Mandalay Division, Kachin State, and Kayin State, and in adjacent parts of China, Thailand, Cambodia and Vietnam. The Shan number approximately 6 million, but a population census has not been taken.
The Shan dwell mostly on the plains of the Shan Plateau, which is drained by the Salween River. The capital of Shan state is Taunggyi, which is a small city of perhaps 150,000 people. Other main Shan cities include Kengtong and Tachileik." Wikipedia
If the boy that you met in Chiang Mai told you he was Shan he is probably from Myanmar and may be in Thailand legally though a lot of Myanmar citizens come illegally into Thailand.
I have heard that it is very expensive and that it takes a long time for a Myanmar person to get a passport. The actual price I cannot help you with.
It may be that the boy was intending to get a Thai passport in which case the amount would be ludicrous unless it was an 'under the counter one'.
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