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Should Thailand worry about Low Wages in Burma ?

Japanese investors are considering a shift from Thailand to Burma where a large pool of low-cost workers is bound to attract labor-intensive manufacturing industries.

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myanmar road workers

Japanese investors are considering a shift from Thailand to Burma where  a large pool of low-cost workers is bound to attract labor-intensive manufacturing industries. Japan’s industrial investors stayed with Thailand through the army coups, the Bangkok-paralyzing massed Red-Shirt protests, and the mismanaged floods of 2011 that swamped so many Japanese-owned factories. But a huge labor force in Burma ready to work for one-sixth of a Thai wage could be a turning point.

The visit to Burma earlier this week by Japanese Prime Minister Shinzo Abe’s has certainly got the government of Prime Minister Yingluck Shinawatra in Bangkok worried. It helps explain why last week during a trade promotion visit to Tokyo she apologized to Japanese business leaders for “any inconvenience caused” to them and their businesses in Thailand in recent years and promised to do better.

myanmar road workers

Road workers in Myanmar: Transportation is just one aspect of the country’s infrastructure that requires huge development. Picture: Yukari Sekine

“Please be patient with Thailand and we will amend and change the regulations for you and other investors,” Yingluck told a Tokyo conference. “Our government will try to make sure that Thailand will be a good place for investments for you all in the future,” she said in response to calls for changes in Thai rules on investment.

“We will try to work out and implement regulations that will suit the investors, as we want to make Thailand the regional hub,” Yingluck said.

Political analysts have been quick to the view that Japan’s intensifying interest in Burma is about seeking to counterbalance the influence of China, but trade and business pundits note that Japanese investment in large-scale manufacturing follows the cheap labor market.

via Low Wages in Burma Threaten Thailand’s Hold on Japanese Investors | The Irrawaddy Magazine.

On paper at least, Burma has all the elements required to create another Asian economic miracle. With a population of 48 million, the country has a large pool of low-cost workers custom-made to attract the labor-intensive manufacturing that jump-started income growth from South Korea to Malaysia.

Natural resources, such as timber and minerals, could woo billions in foreign investment. And its strategic position nestled between China and India could turn Burma into a prime location for tapping into the megagrowth of those two Asian giants.Translating that promise into real dollars isn’t going to be easy, however. Lots of nations possess the potential for economic greatness. The problem is that few are ever able to realize it. Burma has been a case study in that failure.

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