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Migrant Exodus Puts Strain on Ailing Thai Economy

Migrant Exodus Puts Strain on Ailing Thai Economy

By Amy Sawitta Lefevre on 03:04 pm Jun 21, 2014

Samut Prakarn, Thailand. Lek Numthong, who supplies foreign laborers for construction sites on the fringes of the Thai capital, normally has a truckload of workers eager to make a day’s wage. But his pick-up has been all but empty for a week.

Only two Burmese workers are sitting in the back.

About 200,000 Cambodians, a key component of the migrant workforce, have turned tail and gone home. The clumsy rhetoric that apparently precipitated their departure may be the first misstep in the efforts by the generals now running the country to revive an economy battered by months of political turmoil.

“They’ve scared them,” said Lek. “Almost every Cambodian worker without a permit has fled. Gone.”

Thailand’s military seized power last month in a bloodless coup, saying it acted to end half a year of often violent protests that triggered the removal of Prime Minister Yingluck Shinawatra. Her brother, Thaksin Shinawatra, ousted by the army in 2006, was premier for more than five years.

The junta rounded up activists and announced policies with a nationalist tinge it said would “get Thailand back in order.”

Last week, a junta spokeswoman said the army would “arrest and deport illegal migrants.” Unverified stories of Cambodians being beaten, or even killed, spread quickly through fields and construction sites, setting off a rush to the border.

The ministry of labor says about 70 percent of those who have left were in the building and farming sectors. Foremen at building sites, where casual workers earn the equivalent of less than $10 a day, have scrambled to find replacements.

Somchao Tanterdtham, Managing Director at N.C. Housing PCL, a real estate developer, says business has been hit.

“I know that around 80 percent to 90 percent of workers have disappeared from some projects,” he said.

But workers from Myanmar, formerly known as Burma, have stayed put. They form the largest group among Thailand’s 2.3 million registered foreign laborers.

In Myanmar, newly emerged from nearly five decades of dictatorship and isolation, the labor market offers fewer options than Cambodia and its large garment industry.

“Why would I go? There is no job for me in Burma,” said Than Za, as he picked lychees and dumped them in a large basket at an orchard in Rayong, 140 kilometers southeast of Bangkok.

Since the Cambodians started heading for the border, the military has denied there is any plan to deport migrant workers.

Foreign ministry officials met the Cambodian ambassador and said workers without papers were welcome to return to Thailand — and its better-paid jobs — once their documents were in order.

“Tightening regulations is not aimed at migrants but to punish those who take advantage of them,” Jeerasak Sukhonthachart, the ministry’s top official, told Reuters.

Exploitation and ill-treatment

Southeast Asia’s wealthier economies are heavily reliant on migrant workers from their poorer neighbors. Thailand, the third region’s biggest importer of migrant labor after Malaysia and Singapore, has enforced regulations loosely and many workers face exploitation and ill-treatment.

Employers frequently confiscate identification documents to keep unregistered workers from running off and to maintain pay rates below the national minimum wage.

There are no official statistics on the number of undocumented workers in Thailand, but government estimates have put the figure at more than 1 million.

Christian Lewis, of political risk consultants Eurasia Group, said the recent tough talk was lip-service to the ultra-nationalists who are among the coup-makers most ardent supporters, and the effects of the exodus were likely to be short-lived.

“It will probably not see much serious follow-up action since certain sectors of the economy depend so heavily on imported labor,” Lewis said. “I don’t see it presenting an outsized risk to stability. It is unlikely to redraw the lines of support for the junta.”

Some employers on the ground remained unfazed.

“We rely on technology more than human labor, so the impact should be limited,” said Prasert Marittanaporn, Senior Executive Vice President at CH Karnchang Pcl, one of Thailand’s largest construction firms.

At a Bangkok construction site, where more than 1,000 laborers poured cement and perched on the edge of unfinished flats well beyond their means, Cambodian worker Suphan, 42, thought many of his countrymen would soon return.

“They will come back soon,” he said. “Maybe in a few weeks because there are no jobs for them at home.”

Some workers suggested politics might have played a role and accused nationalists and Thaksin’s rivals of spreading rumors.

Thailand and Cambodia have a history of enmity but Cambodia’s veteran leader, Hun Sen, was a close ally of Thaksin, who wooed rural voters with social benefits while in office.

Bangkok’s traditional elite vilified Thaksin for his close relationship with Hun Sen against the background of a long-running territorial dispute. Workers said Thailand’s fraught relations with its neighbor sowed unease among Cambodians.

“We were told they wanted to make an example of us because Hun Sen is Thaksin’s friend,” said Rith Chavy, 21, a bricklayer.

Analysts said illegal migrants in any event made for a convenient scapegoat for generals craving legitimacy.

“The conservative establishment feels that these foreign migrants will cause problems in the future, including a rise in criminal activities,” said Kan Yuenyong of the Siam Intelligence Unit. “There is some benefit to having a common enemy so that the public feels the military is safeguarding them.”

 

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KB Kee is the Managing Editor of the Moat Report Asia (www.moatreport.com), a research service focused exclusively on highlighting undervalued wide-moat businesses in Asia; subscribers from North America, Europe, the Oceania and Asia include professional value investors with over $20 billion in asset under management in equities, some of the world’s biggest secretive global hedge fund giants, and savvy private individual investors who are lifelong learners in the art of value investing. KB has been rooted in the principles of value investing for over a decade as an analyst in Asian capital markets. He was head of research and fund manager at a Singapore-based value investment firm. As a member of the investment committee, he helped the firm’s Asia-focused equity funds significantly outperform the benchmark index. He was previously the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. KB has trained CEOs, entrepreneurs, CFOs, management executives in business strategy, value investing, macroeconomic and industry trends, and detecting accounting frauds in Singapore, HK and China. KB was a faculty (accounting) at SMU teaching accounting courses. KB is currently the Chief Investment Officer at an ASX-listed investment holdings company since September 2015, helping to manage the listed Asian equities investments in the Hidden Champions Fund. Disclaimer: This article is for discussion purposes only and does not constitute an offer, recommendation or solicitation to buy or sell any investments, securities, futures or options. All articles in the website reflect the personal opinions of the writer.

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