Thailand: After the floods, plans for factories in IsaanBy Saksith Saiyasombut & Siam Voices Feb 20, 2012 9:00AM UTC
When the mobile cabinet meeting rolls into Udon Thani on February 21, Withoon Kamonlnaruemet, the president of the Khon Kaen branch of the Federation of Thai Industries, is prepared to woo cabinet members with a presentation. Mr. Withoon and a committee headed by Khon Kaen Governor Sombat Triwatsuwan plan to request a 50 million baht (US$1.6 million) appropriation to conduct a feasibility study and create the blueprints for Northeastern Thailand’s first industrial estate.
“Khon Kaen has all the favorable conditions to attract investors here. We are a hub in the Northeast for logistics, education, and health care. And we have golf,” Mr. Withoon said.
If Mr. Withoon’s presentation is as well received as he expects, thousands of jobs will be created in new Khon Kaen factories. However, it is not yet clear whether Northeastern laborers, long the backbone of Central Thailand’s industrial workforce, would follow investors back home to Isaan.
Heavy industry is not entirely foreign to Khon Kaen. Government policies have promoted the decentralization of industrial development for more than four decades. While most heavy industry remains concentrated in Greater Bangkok and along the Eastern Seaboard, Khon Kaen boasts 15 large industrial factories.
Yet despite decentralization policies intended to increase the incomes of workers in the Northeast, the manufacturing divisions of at least half of Khon Kaen’s large industrial factories are still staffed with Burmese laborers. “The fish net factories, the garment factories and the shoe factories,” Mr. Withoon explained, listing three of Khon Kaen’s five major areas of industrial concentration, “are mostly staffed with foreigners”.
Indeed a Ministry of Labor official, who wished to remain anonymous, is skeptical that a Northeastern industrial estate would offer wages that Isaan workers would find attractive. “The investors who move operations, will their decision be related to the 300 baht minimum wage policy?” she questioned.
Under the revised 300 baht policy scheduled to go into effect on April 1, the 300 baht per day minimum wage will only apply to Bangkok and six other provinces. Though Khon Kaen’s minimum wage will see a 40% increase to 234 baht per day, it will remain significantly below Bangkok’s.
While it is too soon to ascertain if the proposed industrial estate will draw Northeastern labor back home, the estate’s development seems relatively certain.
“The probability is about 70%,” Mr. Withoon predicted. He attributes the high likelihood to the 2011 floods which severely disrupted production and brought billions of baht in damage to factories in Central Thailand. “Businessmen are not in a position to take on any more risk,” Mr. Withoon explained, “and the government hasn’t come forward with a short-term plan or a long-term plan to deal with the threat of flooding. So, an industrial estate in the Northeast is looking pretty good to investors.”