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Friday, November 28, 2008

Reports - Pilot ethical production 2002

Burma Labour Solidarity Organization

PILOT REPORT on ETHICAL PRODUCTION 14.2.2002
Introduction
Due to the deteriorating economy, the unstable political situation, and the decade long closure of the
universities, the unemployment level has dramatically increased in Burma under the military
government's rule. Further more, extremely low wages and rocketing commodity prices make it
increasingly difficult for the average citizen to provide for their daily needs. Taxes, porter fees, USDA
fees, etc. place an additional burden on their survival.
This deterioration of living standards in Burma under the military government has lead to an alarming
rise in the numbers of Burmese leaving the country. Those who are able to obtain a passport find work
abroad, usually illegally, and send money home. Most Burmese, however, flee to neighboring
countries and become part of the growing illegal migrant labor pool there. Those who are forced to
escape to neighboring countries such as Thailand, India and China, hope to create a better life for their
families. Increasingly many more families are crossing into Thailand including the elderly and
children. These families have fled from the different states and divisions of Burma and from both the
countryside and urban area.
On June 25, 1996, the Thai government passed a resolution allowing migrants from Burma, Laos and
Cambodia to be employed as unskilled laborers in 43 of the 72 provinces, in 7 types of work in 11
sectors. These sectors include agriculture, fishing, downstream industries, construction quarries,
pottery and brick industries and in domestic labor. 303,088 migrant workers registered for the twoyear
work period. 263,782, or 87%, of registered migrants are people from Burma.
But, after the collapse of the Thai economy and the currency flooding announced by the Thai
government in July 1997 the National Security Council and the Labor Ministry announced a policy to
deport 300,000 undocumented migrant workers by May 1st 1999 .They also announced that there
would be no renewal of work permits. The Thai Government implemented its deportation policy of
Burmese migrant workers in November 1999, and all Burmese migrant workers were deported by
Thai authorities to the Burma border.
Thailand's economic situation later changed, however, and on July 27, 2001 the Labor Minister Dej
Boonlong said employers in 10 different types of business hiring Burmese , Laotian and Cambodian
workers must now register their foreigen employees with the provincial authorities and pay 4500Baht
per worker. A total of 559,541 foreign workers were registered in the labor ministry campaign by
October 25 2001, paying 1.8 billion Baht in fees to the state.
Of the total 559,541 foreign registered workers, including Laotians and Cambodias, in Thailand,
447,093 were Burmese. 47,489 of these Burmese workers were registered in the Measod area, Tak
Province.
Background
In 1995 there were only 5 garment and knitwear factories in Maesot, Tak Province. Two industrial
zones have been developed in Thailand over the last decade because industrialists and employers can
hire Burmese migrant workers at very low wages. One is the Maesot area and the other is situated in
southern Bangkok.
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Japan is the world's most expensive country in which to operate a business due to high labor, rental
and expatriate costs, according to a survey by the Economic Intelligence Unit (EIU). After Japan, the
United States and Germany rank as being the most costly, mainly due to high labor costs.
Thailand, however, was ranked as one of the cheapest countries to run a business, ranking 29th
in the EIU survey of 31 countries; only Hungary and Indonesia placed cheaper. The survey
examined labor costs, business travel costs for expatriate staff, corporate taxes, perceived
corruption levels, office and industrial rents, telecommunications and transport costs.
Elsewhere in the region, Hong Kong came in 14th place despite having the lowest corpoerate taxes,
followed by Korea and Taiwan. On the other hand, Thailand is deemed to be more stable in its
political situation than some of the other Association of Southeast Asian Nations ( Asean) countries.
Many foreign companies, especially from Taiwan and Hong Kong , have moved to the Maesot area to
take advantage of these benefits.
In November 1999, when the Thai government forced the deportation of illegal migrant workers,
there were 72 registered factories, included canneries and textile factories, in Maesot, Tak Province.
After the registration period for Burmese migrant workers, on October25, 2001, it was estimated that
there was a total of 120 factories including more than 50 small, medium and large textile industries in
the Maesot area, Tak Province.
Body of the report
We estimate that there are nearly 60 clothing factories in the Maesot area including small domestic
garment factories.
Regarding footwear industries, there are only two factories owned by Thai businesses in the Maesot
area. The products of the footwear are occasionally exported to Australia and Canada. Some of the
companies relating to the large garment and knitwear factories are from Hong Kong and Taiwan and
some are joint venture companies with Thai businessmen.
Some factories are owned by Thai businessmen. Sometimes, foreign companies lease these factories
for operations. For example, the Chow Knitting Industrial Co. Ltd and New Products KnitWear Co.
Ltd are included in the list of the largest factories leased for operations . In the last two years, these
factories have each employed between 4,000 and 3,000 workers.
In November 1999, most Burmese migrant workers were deported by the Thai government back to
Burma. At that time, 30 industrialist from Hong Kong and Taiwan, who had invested 13 billion
Baht in the Maesot area alone, sent a open letter to the Thai government urging against the mass
deportation of Burmese migrant workers. They had established the factories in agreement of the board
of investment's promotion agency, and the letter stated that the Thai Goverment's deportation program
totally broke this policy of foreign investment and that it was not fair because they had lost their
investments after all the factories stopped work due to the lack of Burmese workers.
Some large companies became business partners with smaller and medium sized factories. During
peak production when buyers place big orders and need a punctual delivery, the companies may share
quotas with other business partners in the Measot area. For example, Chow Knitting Industrial Co Ltd
has a partnership with the T.S.P. Industrial Co Ltd.
In the clothing industries, materials and labels were to be imported from the company's original
countries such as Hong Kong. The labor is done in Thailand and the finished product is then
exported to it's final destination such as the U.S.A.
If a company has a packing section in the factories then it is almost certainly a company that is
exporting to the foreign market directly. The Thai Customs Department insists that all clothing made
in Thailand must have the words "Made in Thailand" written on the label. Order sizes range, but may
be as large as 150,000 dozens.
Before an order is finished, a quality control checker (QC) will be sent by the buyers to check both the
quality and that products exactly match the product samples previously sent. American buyers who
have placed a big order usually will not accept even the slightest deviation. If a product does not meet
the expected quality, it is sent back to the factories.
475 members of the Thai Government Industries' Association provide 85% of the country's
garment exports. Mr. Suchart Chantranakaracha, the association's president said garment
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exports to the U.S. in the first 10 months of 2001 had slumped and had contributed to an 8%
fall in the country's total garment exports, down to 3.1 billion dollars in 2001.
The United States is the largest export market for Thailand, accounting for one-fifth of total
shipments. Among the top ten export categories to the United States, six declined, led by electrical
circuits, computers and accessories, foot wear and footwear parts.
The textile industry employs 843,200 people, representing 2.5% of the work force in Thailand.
Thai exports to USA
Jan-Oct 2001
Product Value (US$ m) % chng
Computers and equipment 1,371 -17.2
Garments 1,345 -7.4
Frozen shrimp 946 56.7
Electrical circuits 624 -35.7
Gems and jewelery 474 15.4
Televisions, radios and parts 456 -12.2
Rubber products 286 -1.1
Travel accessories 269 -0.6
Footwear and parts 265 -11.8
Furniture and parts 214 -8.7
Source: Business Economics Department, Commerce Ministry
Top 15 export products
Jan-Oct-2001
Product Value (US$m) % chng
Computers 6,537.5 -6
Electrical circuits 2,976.9 -17.9
Autos and parts 2.,707.4 7.2
Apparel 2,417.3 -8.6
Frozen shrimp 1,851.0 49.9
Gems and jewellery 1,495.4 9.8
Plastic pellets 1,421 -10.1
Televisions 1,302.4 -15.9
Rice 1,218.2 -7.7
Natural rubber 1,108.5 -11.5
Air-conditioners 1,045.0 9.4
Rubber products 913.6 1.9
Steel and related products 905.2 -24.9
Electrical appliances & parts 864.9 -4.2
Chemical products 781.4 -21.8
Source: Business Economics Department, Commerce Ministry
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Conclusion
1. Most of the garment and knit wear companies are from Hong Kong and Taiwan. Some companies
are joint ventures with Thai businessmen.
2. Most of these products were exported to the U.S.A.
3. The clothing industry moved to the Measod area because of very low wages in the labour market
and because the workers there have no rights.
4. " Made in Thailand" really means, "The Burmese migrant workers made these
products".
Reference
1. Dignity denied, published by the Asia Pacific Forum on Women, Law and Devlopment (APWLD)
2. Bangkok Post's "Business News"
3. 2001 Year-end Economic Review
4. Interviews with senior Burmese Migrant workers
Than Doke
In charge of Documentation and Research
BLSO

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