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ORGANIZING UNDER THE NEOLIBERAL TRADE POLICY OF

Special Economic Zone


(May 2008)

Junya Yimprasert and Numnual Yapparat


Thai Labour Campaign

Contents:

1. What are we talking about?........................................................................................................... 3 

2.Thailand under neoliberal free trade policy.................................................................................. 4 

3.Thailand and Industrial Export Promotion.................................................................................... 5 


Foreign direct Investment - FDI: ................................................................................................... 6 

4. From Industrial Estates to BOI Three Economic Zones and the becoming of the Special
Economic Zones.................................................................................................................................. 7 
The Industrial Estate Authority of Thailand ................................................................................. 8 
Advantages of Industrial Estate .................................................................................................... 9 
Location of the EPZs .................................................................................................................... 10 
Minimum Wage Scale and relocation ........................................................................................ 10 
Thai Special Economic Zones..................................................................................................... 11 
From Export processing zone to special economic zones: The Relocation of the Industry
from high wage zones to lower and border town: .................................................................... 12 
Two examples of Special Economic Zones at border towns. ................................................ 13 

5. Brief information on electronic industry ..................................................................................... 14 


Keys players: top 10 exporters.................................................................................................... 15 

6. Organizing in the Special Economic Zones .............................................................................. 15 


General problem of Lamphun Industrial Estate.................................................................15
Union in Lamphun Industrial Estate ..................................................................................16
A case of Japanese's manufacturers ‘Hoya Glass Disk’ ...................................................16
Example of campaign for the compensation and reinstatement of the Sony Technology’s
union’s leaders: .................................................................................................................19
Relocation of the industries: Khon Kaen Experience ........................................................21
7. Conclusion ..................................................................................................................................... 22 

Reference: .......................................................................................................................................... 24 

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Abbreviations

BOI Board of Investment


EPZ Export Processing Zone
FDI Foreign Direct Investment
FTA Free Trade Agreement
NESDB National Economic and Social Development Board
SEZ Special Economic Zone
WTO World Trade Organization

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The WTO agreements are lengthy and complex because they are legal texts covering a wide
range of activities. They deal with: agriculture, textiles and clothing, banking, telecommunications,
government purchases, industrial standards and product safety, food sanitation regulations,
intellectual property, and much more. But a number of simple, fundamental principles run
throughout all of these documents. These principles are the foundation of the multilateral trading
1
system.

Thailand is a country that entertains


The principles of WTO The trading system should be ..
great ambitions with regard to WTO’s
.
conception of a ‘global village market without discrimination — a country should not
economy’. discriminate between its trading partners (giving
them equally “most-favoured-nation” or MFN status);
and it should not discriminate between its own and
This article concentrates on the impact foreign products, services or nationals (giving them
of the WTO rules and regulations that “national treatment”);
Thailand’s ambitions will cause to be free — barriers coming down through negotiation;
predictable — foreign companies, investors and
kicked into effect - without public
governments should be confident that trade barriers
hearing or public consultation or (including tariffs and non-tariff barriers) should not be
respect for democratic principles. raised arbitrarily; tariff rates and market-opening
commitments are “bound” in the WTO;
more competitive — discouraging “unfair” practices
such as export subsidies and dumping products at
below cost to gain market share;
more beneficial for less developed countries —
giving them more time to adjust, greater flexibility,
and special privileges.

1.

What are we talking about?


Thailand is accelerating its development by adopting all neoliberal free trade policies; both
under its membership in multilateral trade institutions like the World Trade Organization, World
Bank, International Monetary Fund (IMF), and its membership in regional trade agreements
including the Asia Pacific Economic Cooperation, ASEAN, the Europe Trade Agreement, and
the Asia-Europe Meeting (ASEM).

Since early 1960’s, Thailand, through the National Economic and Social Development Boards
(NESDB), has been faithfully following all suggestions from the World Bank and the United
States, starting with a five-year plan in 1961 called the “National Economic Development Plan."
The NESDB, which has now added the word ‘Social’ to be National Economic and Social
Development Plan, has been the most influential office in design the direction of country’s
economic development management within the office of the Prime Minister. Thailand is
currently under the 10th Plan, covering the period of 2007-2011.

1 Preamble of WTO, Principles of the trading system,


http://www.wto.org/english/thewto_e/whatis_e/tif_e/fact2_e.htm

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2.

Thailand under neoliberal free trade policy

Thailand was a Kingdom with full judicial independence until the reign of King Rama IV
of Chakkri Dynasty. During his reign, the King conceded to the regime of "Extraterritorial
Judiciary" of foreigners through the signing of Bowring treaty within which judical
independence was partly forsaken. Treaties of this nature were created not only with
Great Britain but also with other foreign powers during the late Nineteenth Century.
The study of the new criminal law theory of the draft royal decree on the offences against
body and life R.S. 118 / Chunchay Rochanasaroj

Thailand has always fully participated in the regional and global trade. Look back in the
history, in 1855 Thailand was forced to sign the Bowring’s Treaty with the UK, which was
in effect for over 70 years. After signing with the UK, Thailand had to conditionally sign
the same kind of treaties with 14 other countries: US, France, Denmark, Portugal,
Netherlands, Germany, Sweden, Norway, Belgium, Italy, Austria-Hungary, Spain, Japan,
and Russia.

The Bowring Treaty is the first FTA that Thailand has been, openly, forced to signed. At that
time such agreement was forced by the gun of colonial power, and at the present time similar
agreements are still forced by power of the economic powerful nations. The Thai and Bowring
Treaty is a good historical example of how trade agreements with powerful nations have been
conducted.

Without consultation with Thai citizens and a process which has by-passed many constitutional
regulations, Thailand has now negotiated and signed the Free Trade Agreement (FTA) with the
US, China, India, Australia, New Zealand. This has created a lot of protest among those
effected by the agreement. Apparently, Thailand signed FTA or is in negotiation with 11
2
countries as follows;
1. ASEAN-EU FTA (14/1/2551 16:21:30)
2. EFTA (27/9/2550 10:08:46)
3. BIMSTEC (27/9/2550 10:06:24)
4. Bahrain (27/9/2550 10:05:23)
5. Peru (27/9/2550 10:04:44)
6. Japan (27/9/2550 10:03:51)
7. United States of America (27/9/2550 10:03:04)
8. India (27/9/2550 10:02:26)
9. New Zealand (27/9/2550 10:01:48)
10. Australia (27/9/2550 9:59:24)
11. China (27/9/2550 9:55:18)

In 1960, Thailand introduced industrial promotion laws. These laws clearly aim to support
investors to take a leading role in investment and industrial management, and this has been the
3
guiding principle of later industrial promotion laws in Thailand.

2 Information from Thai FTA : http://www.thaifta.com/

3 More information on Board of Investment (BOI), http://www.boi.go.th/clean/index.asp?mid=2


4
The Implementation of the industrial management is mostly promoted un the industrial zones
which has been managed and designed by the Industrial Estate Authority of Thailand ( IEAT),
IEAT currently “manages 38 industrial estates spreading out to all the regions of Thailand,
which consist of 12 industrial estates that owned and managed by IEAT and 26 industrial
4
estates jointly developed with private sector”.

Chart: Foreign Direct Investment [FDI] to Thailand

3.

Thailand and Industrial Export Promotion


Under the industries promotion laws since 1960’s, Thailand has passed the Industrial Export
Promotion Bill which provided the road map law on export promotion for the last 29 years.

The Industrial Export Promotion Bill, which provides the foundation for later bills, in summation
gives a guarantee to private investors that the government will not take over their private
property and will not initiate any new state business in competition with private investors.
Government also provides incentives on tax, machines, materials, and personal tax. The bill
also allows the companies to bring professional employers that allow foreign companies to take
land ownership. 5

4 Industrial Estate Authority of Thailand, http://www.ieat.go.th/view_static.php?lang=en&content=history

5 http://www.boi.go.th/clean/index.asp?mid=2

5
On July 1966, the Thai government set up the Board of Investment for Industry which is
managed by the Prime Ministry Office. In 1972, the Board of Investment for Industry bills were
amended and renamed “Board of Investment" (BOI) and it’s scope was expanded to cover
agriculture, mining, and services.

Since 1972, Thailand under the BOI has been shifting focus from industrial promotion to export
promotion and doing lot of promotion to appeal to both local investors and foreign direct
investment. The bills on BOI have more recently been amended in 1991 and 2001.

Foreign direct Investment - FDI:

Foreign direct investment which nearly 70% from Asian transnational corporations are important
investors in industries promotion zones in Thailand. In Electronics, for example, Japanese’s
investors dominate the industry and since 1970 they also account for 40% of foreign direct
investment to Thailand.

The FTA Watch reported that the Free Trade Agreement with China has greatly impacted the
farmers in Northern Thailand that produced garlic, onion, and cold climate fruits. In particular,
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the garlic producing farm land has rapidly been reduced from 130,000 rais to only 50,000 rais,
not long after the FTA between Thailand and China took affect.

6 2.2 rai is equivalence to 1 acer.

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The FTA with Australia and subsequent FTA with New Zealand have greatly impacted Thai
dairy producers. FTA Watch reports that the FTA with Australia that was signed on 5 July 2005
is going to impact 100,000 dairy producers (of the 117 dairy cooperative total), one million small
scale farmers and one million cow faming families.

The FTA with the US, which is frozen due to the current political situation in Thailand, is going to
have a large scale impact because the negotiation will broadly cover all aspects of Intellectual
Property Rights, trading and services sectors, investment, banking, telecommunication, etc.

Many economic mechanisms have been introduced for Thailand to gradually open up the
county to fully participate in the global free trade.

4.

From Industrial Estates to BOI Three Economic Zones and the


becoming of the Special Economic Zones
Under the Board of Investment (BOI) zoning, Thailand has been divided in to three industrial
promotion zonings.

Zone 1 - granted: 1) 50 per cent reduction of import duty on machinery that is subject to import
duty of not less than 10 per cent; 2) Corporate income tax exemption for 3 years for projects
located within industrial estates or promoted industrial zones, provided that such a project with
capital investment of 10 million baht or more (excluding cost of land and working capital) obtains
ISO 9000 or similar international standard certification within 2 years from its start-up date,
otherwise the corporate income tax exemption will be reduced by 1 year; and 3) Exemption of
import duty on raw or essential materials used in the manufacturing of export products for 1
year.

Zone 2 - granted: 1) 50 per cent reduction of import duty on machinery that is subject to import
duty of not less than 10 per cent; 2) Corporate income tax exemption for 3 years, increased to 5
years for projects located within industrial estates or promoted industrial zones, provided that
such a project with capital investment of 10 million baht or more (excluding cost of land and
working capital) obtains ISO 9000 or similar international standard certification within 2 years
from its start-up date, otherwise the corporate income tax exemption will be reduced by 1 year;
3) Exemption of import duty on raw or essential materials used in the manufacturing of export
products for 1 year.

Zone 3 - Approved projects located in the remaining 58 provinces shall be granted: 1)


Exemption of import duty on machinery; 2) Corporate income tax exemption for 8 years
provided that a project with capital investment of 10 million baht or more (excluding cost of land
and working capital) obtains ISO 9000 or similar international standard certification within 2
years from its start-up date, otherwise the corporate income tax exemption will be reduced by 1
year; 3) Exemption of import duty exemption on raw or essential materials used in the
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manufacturing of export products for 5 years.

7 http://www.boi.go.th/english/about/boi_privileges_by_location.asp

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TLC decides to conduct a survey in Khon Kaen, the industrial zone in Northeast Region,
which has an electronic factory and two unions successfully formed. Also the survey is
conducted at the Northern Border Trade Zone, Chiengsan Port, which is the navigation
port between China and Thailand trading.

Chart 1: BOI zonings

Zone 1 : includes Bangkok, Samut


Prakan, Samut Sakhon, Nakhon
Pathom, Nonhtaburi and Pathum
Thani
(Bangkok and 5 provinces)
Zone

2 : includes Ang Thong,


Ayutthaya, Chachoengsao, Chon
Buri, Kanchanaburi, Nakhon
Nayok, Phuket, Ratchaburi,
Rayong, Samut Songkhram,
Saraburi, and Suphanburi
(12 provinces)

Zone 3 : encompasses the


remaining 58 provinces

The Industrial Estate Authority of Thailand

The BOI zoning areas are designed to be promoted under the Industrial Estate Authority
of Thailand (IEAT). IEAT is a state enterprise under the jurisdiction of the Ministry of Industry,
established in 1972 to carry out the country's industrial development policy. IEAT plays an
important role in both industrial development and environmental protection, by developing
suitable locations to collectively accommodate industrial factories in a systematic and orderly
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fashion. IEAT acts as a mechanism of state to spread industrial growth to every part of Thailand
8
using "Industrial Estates" as implementation tools.

Currently, IEAT manages 38 industrial estates spreading out to all the regions of Thailand,
which consist of 12 industrial estates that owned and managed by IEAT and 26 industrial
estates jointly developed with private sector.

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There are 2 categories of industrial estate:

• General Industrial Zone: General Industrial Zone means an area designated for
industrial activities or other activities beneficial to or connected with industrial activities.
• Export Processing Zone: Export Processing Zone means an area designated for
industrial activities, trading or services or other activities beneficial to or connected with
industrial activities, trading or services for the purpose of exporting products.

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Thailand Export Promotions Zonings
pattern location

Industrial Estate, IE Designate location

Export Processing Zone, EPZ

Bonded Warehouse, BW or Duty Free Shop, DFS) Port town

Free Trade Zone, FTZ and Duty Free Port Port town

Tourist & Recreation Center Tourist attractions location

Special Border Economic Zone, SBEZ Border towns

Advantages of Industrial Estate

The advantages an Industrial Estate Program can offer industrial operators in an export
processing zone (EPZ) under the Industrial Estate Authority of Thailand are numerous. A few
main benefits that account for most of the companies that apply for the Industrial Estate
Program are listed below:

8 Ibid

9 http://www.customs.go.th/Customs-Eng/EPZ/EPZ.jsp?menuNme=FreeZone

10 Research and public health development’s plan department, Citizen’s manual on Special Economic
Zones, The SPZs targets area, Public Health Research Institute, 2005 page 21

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• Relief from Special Surcharges and Import/Internal Taxes/Duties: Machinery,
equipment, tools and supplies including parts of them removed from the EPZ for the
purpose of producing goods and constructing, assembling, or installing a factory or a
building in the EPZ are not subject to special surcharges under the Investment
Promotion Act, import duty, excise tax, and value added tax.
Similarly, materials removed from the EPZ for the purpose of manufacturing goods are
also not subject to special surcharges under the Investment Promotion Act, import duty,
excise tax, and value added tax.
• Relief from Export Duty, Excise Taxes, and Value Added Tax: Goods imported under
Section 49 of the Industrial Estate Authority of Thailand Act B.E. 2522, including
products and by-products arising from manufacturing in the EPZ are not subject to
export duty, excise tax, and value added tax, provided they are exported out of the
country.
• Entitlement for Export Tax Refund/Exemption Schemes: Merchandise entitled to
export tax refund/exemption schemes when exported is still qualified for such schemes
after it is removed from the EPZ.
• Zero Tax Rate: A zero tax rate is applied to calculate VAT in the following
circumstances:
1. Sale of services or goods among industrial operators whether in the same or
different EPZs;
2. Sale of services or goods between industrial operators and bonded warehouse
licensees; and
3. Domestic merchandise removed from the EPZ.

Location of the EPZs

At present, 2008, there are altogether nine EPZs in Thailand as listed bellow:

Lard Krabang Industrial Estate (Bangkok);


Bangpoo Industrial Estate (Samut Prakarn);
Northern Region Industrial Estate (Lamphun);
Leam Chabang Industrial Estate (Chonburi);
Bo-Win Industrial Estate (Chonburi);
Lard Krabang Industrial Estate (Bangkok);
Baan Wa High-Tech Industrial Estate (Ayudthaya);
Bangpa-In Industrial Estate (Ayudthaya);
Plang Yaow Industrial Estate (Gate Way City, Chachoengsao); and
Southern Region Industrial Estate (Chalung, Songkla).

Minimum Wage Scale and relocation

With the promotion of the BOI and later by the floating of minimum wages from three levels,
from 2001 onward, the minimum wages in Thailand have been floated from 3 levels to provincial
levels. After the economic crisis in Thailand in July 1997 that Thailand has to devalue of it
currency exchange to nearly 100%, the employers associations become powerful in proposal
any wages’ increase and make the whole country wages float to the level of provincials, not at
the three level wages that has been set since early 1970’s.

The progressive unions have been strong against these changes but far less powerful than the
employers. Because some provinces have little if any union representation, the tripartite
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working groups on wages are mostly in the hand of employer representatives and government
officers, which are very much aligned with employers rather than to union leaders. As a result,
the latest wage scale, in 2008, Thailand has 22 levels of minimum wage scales ranging from
144 baht to 194 baht (4.3-5.8 USD). It is 50 baht(1.5USD) differences between the lowest and
the highest [50 baht difference]. 44 provinces’ minimum wages are 150 baht and below;

Minimum Wage Act was enforced under ministerial declaration of the Ministry of Interior
in 1972. Subsequently, it was transferred to be enforced under ministerial declaration of
the Ministry of Labour and Social Welfare in 1972. Legislature on minimum wage in
Thailand was first passed in 1973. A three party panel was formed comprising of
representatives from the government sector, employees and employers to decide on the
rate. By law, minimum wage was defined as:
“The payment (Excluding payments in kind such as clothes and food) sufficient for the
employed and two additional family members to dwell in the society”.

Arokia Dass, Wages, Labour Focus, Thai Labour Campaign, September, 2007

Comparison of Minimum wages in Thailand from 2006 and 2007.

Thai Special Economic Zones

The Special Economic Zone bill’s proposal was proposed by the Thaksin Government on 11
January 2006, just a few days before the ending of Thaksin's first term. The proposal is like
selling Thailand to capitalists and foreigners; under the proposal the SPZ’ director operates
under the authority of the Prime Minister and has sole power to do anything, including using
absolute power to take any land; forestry, national conservation lands, sea, and monastery, and
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also allows for use of force to obtain private land.

The bill’s proposal gives rights to foreigners to lease any land for no less than 50 years and not
more than 99 years. Thais who are not authorized to enter the SPZ can be jailed for 3 months
and can receive a maximum of 200,000 baht [5,000 Euro] fine.

Although this bill has not passed cabinet approval, the whole country is already under the SPZ’s
plan, which is being promoted by many ministries throughout Thailand, especially in all towns
bordering the neighboring countries Burma, Laos, Cambodia and Malaysia. Two examples of
SPZs implementations are as follows:

Chart: Four decades under the Cold War Propaganda to Neo-liberalism.

From Export processing zone to special economic zones: The Relocation of the
Industry from high wage zones to lower and border town:

The impacts of the special economic zone in the south on 5 southern border provinces include
entrepreneurs’ voices calling for reduction of alien workers’ registration fees and the
unresponsiveness of new graduates to the market demands. As a result, the Ministry of Labour
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is ready to link the demands of establishments to educational institutions.

The Special Zone Bill is designed to create “Special Zones”, commonly known as “Special
Economic Zones”. By and large, the creation of such zones is not intended to embrace only
economic but also political, administrative and business administration activities, emulating the
special economic zones in the People’s Democratic Republic of China. As a matter of fact, the
notion is that it is anticipated that these “Special Zones” will enable the authorities to accelerate
the economic and social development of the country. This Bill has, nonetheless, provoked

11 http://eng.mol.go.th/infocus_jan1907.html

12
negative reactions in some circles and private sectors that the Government should take into
consideration. The author is of the view that the creation of such “Special Zones” with good
12
governance will be beneficial to Thailand.

A cabinet meeting on January 11 approved on principle a draft bill to set up an administrative


body of a special economic zone bill, which has 110 articles and will result in cancelling of many
existing bills on investment and finances in particular. This bill empowers development plans to
acquire land and stimulate investment by all means. The organization status is similar to a
public agency and shall act as a one-stop-service to industrial, agriculture, commercial and
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tourism development.

Two examples of Special Economic Zones at border towns.


14
Myawaddy – Mae Sod Zones

Source: Tak Chamber of Commerce.

Establishment of a special economic zone in Myanmar’s Myawaddy, a border town with Thailand,
is underway under an economic cooperation strategy program of four Mekong countries, the
official newspaper New Light of Myanmar reported Thursday.

Under the Ayeyawaddy-Chao Phraya-Mekong Economic Cooperation Strategy (ACMECS)


agreed upon at a summit of Cambodia, Laos, Myanmar and Thailand in Myanmar’s ancient city of
Bagan in November 2003, the Myawaddy special economic zone in southeastern Kayin state
constitutes one of the three proposed zones to be set up on the Myanmar-Thai border. The other
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two are in Hpa-an in the same state and Mawlamyine in southern Mon state.

The Tak Chamber of commerce is very influential on the Special Economic Zones of Tak and
Myawaddy, the news continue to say that ‘Meanwhile, the Myanmar authorities are deliberating
to lease land to foreigners for the development of the three proposed special economic zones
being planned by Myanmar and Thailand to mainly attract foreign investment into the projects.’

The period of lease is designated as being a minimum of 75 years, according to the ministry,
which added that levying of profit tax will be relaxed for re-investment with the profit earned
annually.

16
The three special economic zone projects are set to start in 2007.

12 The University of the Thai Chamber of Commerce.


http://www2.utcc.ac.th/index.php?option=com_content&task=view&id=226&Itemid=57

13 http://www.fpps.or.th/news.php?detail=n1110566836.news

14 Source from Tak Chamber of Commerce and TLC’s field work in Mae Sod

15 http://www.takchamber.com/index.php?lay=show&ac=article&Id=343288&Ntype=1

16 ibid

13
Laos Special economic Zone

Another example is the opening of Laos to special economic zone in Savannakhet,


funded 100 percent by a Malaysian company;

A memorandum of understanding was signed this week between a Malaysian Company, Outclass
Finance, and the Lao government in order to establish a special economic zone in the southern province
of Savannakhet.

The MoU has led to the establishment of a new joint venture company, the Free Zone Development
Corporation, which will plan and develop the area, which has been designated the Savan-Seno Special
Economic Zone.

Photo: Site A (305 ha),


located immediately
upstream of
Savannakhet capital
city (Khanthabouly)
and next to the new
Mekong River Bridge,
the construction of
which will start in 2003;

The design of the


bride over the Kong
River from Thailand
to Suvannakhet -
Lao

Under the current agreement


Outclass Finance will take 70
percent of the zone’s profits,
while the zone’s
administrators will receive the
remaining 30 percent.

The land area that has been


allotted for the zone
comprises of two parts, one
305ha and the other 20ha.

According to a press release


the zone will be divided into 5.
three principle areas, an
export processing zone, a free Brief
trade zone and a free service information on electronic industry
and logistics centre.
Foreign direct investment and Asian transnational cooperations are important investors in the
electronics industry in Thailand:

14
According to the Department of Industry works, Ministry of Industry, there are 798 Factories
listed as ‘electronics’ manufacturing’. In this numbers the export manufacturers listed are 273
companies producing;

• computer and parts 65 companies


• Electricity’s circuit 6 companies
• Printing parts
• Electronic part 78 companies
• Telephone 44
• Fax and communication materials 33
17
Keys players: top 10 exporters
1. IBM storages Products (Thailand)
3. AMD (Thailand)
4. Delta Electronics (Thailand) Public
5. Cannon Hi Tech (Thailand)
6. Cal-com Electronic (Thailand)
7. Microchip Technology (Thailand)
8. Philips Semiconductor (Thailand)
9. Mini bare Thai
10. Fujitsu General (Thailand)

18
In 2003, the industry employs 300,000 workers and contributes 10% to GDP.

6.

Organizing in the Special Economic Zones


19
General problem of Lamphun Industrial Estate

Lamphun Industrial Estate was established in 2023, aiming to be an agribusiness estate,


however, after 1998, the estate was opened for FDI. At present, the estate is dominated by
20
electronic industry of 67 manufactures, most of which belong to Japanese investors.

Lamphun is quite known for its toxic waste problems related to the electronic industry. For
example, Lamphun Industrial Estate is where, in 1993-1994, twleve young workers [younger
than 35 year old] died with the same symptoms. Specialists have reported that the cause of

17 Export Management Department, Department of Export Management, November, 2002

18 Report on the development of industrial and technology, Chulalongkorn University, for the
National Science and Technology Development Agency (NSTDA)
19 www.http://www.ieat.go.th/index_thtest.php?lang=th

20 http://www.thaingo.org/cgi-bin/content/content2/show.pl?0287

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dead is from high levels of lead in blood.

The other problem of concern of the Lamphun Industrial Estate is the toxic waste that is
poisoning the underground water that many laypeople of Lamphun drink.

The workers in the industrial zones are also facing many kinds of pressure; working long hours,
high output rates set by management, and lack of proper health and safely protective
equipment, all of which cause stress and health problems.

Because the estate is facing a labour shortage problem, the management is stating the length
of employment in the employment contract, with the condition that if any workers breech the
contract, they must pay a very large fine. The contracts also state that workers cannot re-apply
to work in other factories within several square kilometers after their resignation. This kind of
contract is well-known as a ‘slavery contract’.

Union in Lamphun Industrial Estate

There are only two unions, so far, that are successfully formed in Lamphun Industrial Estate
since 1923. The two unions are registered as industrial unions, where every worker from the
same industry can apply to be member.

The first union, the Jewelry and Ornament Union was formed in May 2006, and was followed by
the Hoya Grass Disk Workers Union in January 2008.

Anucha Meesap, the president of Jewelry and Ornaments workers union, stated that the
union was successfully formed because there was high discrimination in the workplace,
and when workers face problems they cannot bargain with the management. However,
since the union was formed, some workers’ rights are protected, but not all. The
management is trying to destroy the union by victimizing the union's leaders and
members by transferring their duties to different sections, reducing their over time, and
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in the worst cases forcing workers to resign.
22
A case of Japanese's manufacturers ‘Hoya Glass Disk’

On Dec 11, workers for Hoya Glass Disk (Thailand) Ltd submitted their petition with 3,286
signatures to Lamphun Provincial Labor Protection and Welfare Office. Their demands include
pay rises, bonuses, health care extended to cover family members, and other improvements to
benefits and working conditions

"Hoya is the biggest factory in the Lamphun industrial estate. For 5-6 years, it has never
improved the workers' welfare to reflect the economic situation. For example, one of our demands

21 Source:
http://www.prachatai.com/05web/th/home/page2_print.php?mod=mod_ptcms&ContentID=4150&Syste
mModuleKey=HilightNews&System_Session_Language=Thai สืบค้นเมื่อวันที่ 10/5/07

22 This study is from visiting the union during strike, from news reported in www.prachatai.com and form
follow up telephone interviews of leaders of the unions and advisor. Much thanks to Srithon
Pruengwichathon, president of Hoya Grass Disk Labour Union, Suchat Trakulhutit [Friends of Women
Foundation] and Jetsada Chotikitpiwat Democratic group for social welfare

16
is for a petrol allowance. With the soaring price of petrol, the daily allowance the company gives
us has been kept at 20 baht for 4 years already," said the leader.
http://www.prachatai.com/english/news.php?id=478

The strike of over 3,000 workers of the biggest electronic manufacturer in Lamphun Industrial
Estate, 40 kms south of Chiengmai from December 11, 2007 until the settlement, January 25,
2008 has woken up labour unions in Thailand, bringing attention to poor working conditions and
discrimination and violations of freedom of association of workers in the remote Lamphun
Industrial Estate – over 687 kms north of Bangkok.

Hoya Glass Disk was established in 1995. The strike of Hoya Glass Disk workers has come to
an end on midnight of 25 January 2006 resulting in the successful forming of a union on 17
January 2008.

Since the strike of Hoya’s workers many problems related to their poor working condition and
wages has been exposed from their lists of demands:

Photo: prachatai.org

• Another demand is an increase in special pay for work that causes physical strain, such
as standing, or presents risks, such as handling chemicals or working in high places.
• "The company pays 7 baht a day for work that need standing all day long. We asked for
3 baht more. In fact, however, the company can cut this, and we cannot legally complain
about it."
• He said many workers had worked there for 10 years or more, mostly in the production
section. "But they hardly receive any raise, say one baht a year. Not enough to feed their
families."
• He said the Hoya Company concealed its profitable turnover, revealing only the losses.
In 2006, it was found listed as the fifth biggest profit making company in Thailand, about
4,700 million baht.
• The workers continue to work while making demands and negotiating with the employer,
as they do not want production to be affected or halted, he said.

17
23
Demands and results of negotiations as of Jan 26, 2008 .
Demands Results

1. Bonuses of 2.5 times salary for all The company agreed to pay bonuses due in April 2008 for production
workers without classification. workers or ‘operators' with ‘D' evaluation and above at least one time the
salary, and for workers with ‘A' evaluation at least 1.5 times the salary,
based on the current method of calculation.

For bonuses due in December 2008, both sides will have a joint
consideration by October 2008.

For other employees, the company will adhere to the current practice.

2. Increase of daily petrol allowance Settled on Dec 26, the increased amount will be 35 baht.
from 20 to 50 baht

3. 20% increase in daily wages and The increment of the official minimum wage set by the Labour Ministry will
monthly salaries, and additional be added to the daily wages for daily-waged workers.
increases in accordance with
raises in the minimum wage set by Monthly-salaried workers will receive the increment times 30 days added to
the government. their salaries, and their pay rise will also be based on the company's yearly
turnover of the previous year, effective on Jan 1, 2009.

4. Change of status of workers with Daily-waged workers with at least 5 years employment will receive monthly
at least 3 years service to that of salaries.
monthly-salaried workers.
Those who have worked since before March 21, 2003, will receive monthly
salaries starting from April 2008.

Those who have worked since March 21, 2003, will have to pass the
evaluations set by the company twice a year, April and October, to receive
monthly salaries.

5. Health care extension to cover Settled on Dec 26, 2007.


parents, spouses, children and 3
siblings. Extended to cover parents, spouses and children.

5,000 baht a year for daily workers, and 6,000 baht a year for monthly
workers.

6. Improvement to workers' parking Settled on Dec 13, 2007.


lot by making concrete floor for
motorcycles, and roofs for cars. To be finished by July 2008.

7. Increase of traditional holidays The company agreed on 15 traditional holidays a year with the next New
from 13 to 15 days with the New Year running from Dec 31, 2008-Jan 3, 2009, and the next Songkran from
Year running from Dec 30-Jan 4, April 13-16, 2008, and in the event that the company asks them to work on
and Songkran from April 12-16. those days, the workers can decide to work or not.

8. Special pay for work causing Special pay for work that causes visual strain and present risks such as
physical strain or presenting risks: handling chemicals or working in high places will be studied by May 2008,
10 baht up from 7 baht per day for and the conclusions will be considered by January 2009.
work requiring workers to stand;
10 baht for work that causes visual Workers who signed to accept reduced special pay for work requiring them
strain and presents risks such as to stand from 7 baht per day to 5 baht per day can choose to receive the
handling chemicals or working in previous amount of 7 baht.
high places.

23 Translated by Ponglert Pongwanan, information from


http://www.prachatai.com/english/news.php?id=500
18
9. Improvement to factory utilities. Settled on Dec 13, 2007.
• provision of hot drinking water in
addition to cold drinking water, Provision of hot and cold drinking water will be available by February, 2008.

• change of faucets with sensors to Tap water facilities will be fixed and improved by February, 2008.
manual controls,
Improvement to cafeteria, and increase of TVs with cable TV by February,
• improvement to cafeteria, and 2008.
increase of TVs with cable TV.

10. 5 days absence from work and 15 See Table below.


days vacation per year.
Workers can take 5 days leave a year while receiving wages, and will not
receive wages for days exceeding this.

11. Payments for workers with steady Workers with 10 years employment receive 10,000 baht, 15 years
employment: employment 15,000 baht, and 20 years employment 20,000 baht.
• 5 years employment to receive
5,000 baht;

• 10 years employment to receive


10,000 baht; and

• 15 years employment to receive


15,000 baht.

12. Maintaining other employment Agreed, and in compliance with labour laws.
agreements, welfare and
traditional practices.

13. No persecution, demotion, or Settled on December 13, 2007


dismissal will be imposed upon
workers who participate in making
these demands.

Example of campaign for the compensation and reinstatement of the Sony


Technology’s union’s leaders:

Brief in formation of Sony Technology:

Share holders:
Sony Holding (Asia) B.V., Netherlands 2,615,935 + 807,000 shares
Sony International Singapore 1,694,010+1,883,000 shares

Revenue 8,654,372,838 Baht [ 188,138,539.96 Euro].

Managing Directors team are all Japaneses


Mr. Akira Takada, Mr. Tochio Toyama, Mr. Tesuya Hakusui, Mr. Satoshi Okawa, Mr. Hitochi
Miyakawa

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Problem at Sony Technology:

The working condition before the union


was formed and the Sony Campaign Fact Sheet on Sony Technology [as off
cases were settled in October 2007 was August 2007]
reported that workers;
• have to submit medical certificate Workers:
even for a day of sick leave 1,300 regular, directly employed by Sony
• forced over time work 3,500 sub-contracted labour force from nine
• not providing proper workers’ manpower companies
space for pregnant women
• changing holiday’s date without Working hours-
informing the workers Day shift: 08:00-20:00
• discrimination on working Night shift: 20:00-08:00
performance 40 minutes lunch break
• workers have to submit medical 10 minute - morning break 10.00 - 10.10
certificates for their annual leaves - Afternoon break 15.00 - 15.10
• dismissed immediately after Evening 17.30 – 18.00
damaged work Holiday Sat – Sun
• recording of toilet time used
Benefit:
There have been rich experiences of the • transportation
Thai Labour Campaign (TLC) in • 10 baht / day for food subsidy
conducting corporate campaigns showing • Diligent money 500-800 baht per month
significant results with the Sony union’s • Night Shift 80 baht/day
leaders dismissal case.

18 union leaders of Sony Technology Company, in the Eastern Seaboard Industrial zone, were
dismissed on July 12. The Eastern Seaboard Unions Group and the Sony Union have
approached Thai Labour Campaign to help campaign. TLC’s director went to the Eastern
Seaboard Union Group office on August 5, to discuss with 16 dismissed workers [who want to
pursue the case and struggle for reinstatement] and the union organizers and help plan
campaign strategy.

On 6th August, these 16 dismissed workers, together with TLC directors and union’s organizers
from the Eastern Seaboard Industrial Zones, approached the Ministry of Labour for help. TLC
also published the article on the case on the same day and details can be found at:
http://www.thailabour.org/wnews/070805.htm

TLC has reported the case to ATNCs Network and the Good Electronic Network and the Clean
Clothes Campaign in the Amsterdam and requested the support from these Amsterdam base
organizations to make arrangements for the TLC director to deliver the letter from the dismissed
workers to the Sony Holding, Netherlands, which is one of the biggest share holders of Sony
Technology. The meeting took place on September 12 which leads to the restatement. See
detail of http://www.thailabour.org/wnews/070904.htm and
http://www.goodelectronics.nl/index.php?option=com_content&task=view&id=20&Itemid
=1

Finally, the Sony dispute was settled on October 8, 2007. The result can be read from the email
20
sending to Good Electronics’ coordinator, “I attach file of Sony workers return to work. Out of 16
workers -- despite big offer from Sony Technology that offer 150,000 baht on top of normal legal
compensation and back wage, for these workers in order not to return to work -- six workers
remain solid and refuse the offer and go back to work.”

Photo: Eastern Seaboard Unions Group

On the morning of 12 October, 2007, six dismissed Sony Technology union leaders who
had refused to take the compensation package offered, returned to work for the first
time since July 12, 2007. They received many roses showing warmest welcome from
their joyful co-workers and union members. They said their work section was loud with
happy voices and welcome remarks from their co-workers.

Relocation of the industries: Khon Kaen Experience

During the past years, TLC staff have travelled to Khon Kaen a number of times for different
work including meetings, conferences, giving training to women’s leaders on Gender and Trade
Literacy and conducting surveys on migrant workers and workers in the industrial zones. In the
research, TLC staff conducts an in-depth interview with several workers in Khon Kaen Industrial
estates from 30 Marc – 4 April 2007. This field survey gives a mixed picture of whether having
the industries in their communities is beneficial or creates toxic waste in the environment. While
most workers were and are still farmers, they said that they have to give up being cash crop
farmers and only grow rice and vegetables for family consumption while earning extra money
from working in the factories. Nevertheless, they have reflected their dissatisfaction with the low

21
wages they have received. This is because most of the workers receive only the minimum wage
level -- 150 baht [4.5 USD] a day -- which is not enough for their families' needs. Thus, the
income from factories is supplemental to the family and used as capital for farming season.

The Khon Kaen Industrial Estate was set up in 1977. The province is about 400 kms northeast
of Bangkok. In 2003, its’ population is 1.77 million. The most updated data from 2001 states that
the gross provincial product is 72,886 Baht. The industries in the provinces are sugar mills,
whisky, puff and paper, rubber, garments and the growing electronics industry. In a 2001
statistic, there are 4,669 factories registered there. Mostly are Small and Medium Enterprises
(SMEs).

Currently there are two electronics manufacturing industries but the number is increasing. The
industries faced labour shortages until they had to reduce their qualification standards and open
employment for older age workers as well. Employment is mostly on short term and temporary
contracts.

Role of the unions

There are only two unions in the Khon Kaen province: the Phoenix Puff and Paper Mills, formed
in 1982, and the newest Ethanol Labour Union, formed in 2006.

Phoenix Puff and Paper is owned by an Indian businessman. Before the union was formed the
working condition in the factory was very bad. With the help from union leaders in Bangkok,
after much difficulty the Phoenix workers union was successfully formed in 1982. After twenty
years of union operations, the working situation is better and workers have good welfare. The
president of the union state that nowadays, workers in that area all want to work in the Phoenix
factory. However, the company employs only about 1, 000 regular workers, and the rest are
employed through temporary employment.

Because it is the first union in the Northeast Region, Phoenix Labour Union is a key
union in the Northeast region that is recognized and provides help to workers from other
factories that want to organize unions.

7.

Conclusion
This article is aimed to draw the picture of Thailand under the neo-liberal free trade agenda. It
may be the same with many developing/south countries around the world, in particular, the
need to reconstruct and develop countries after long periods of colonialism. The political
instability and fighting for democratization of these developing countries leaves democracy in a
premature state, thus giving space to militaries to take control over governments or becoming
the government themselves. These undemocratic governments, of which Thailand is a good
example, have pushed for alliance with the powerful nations including the US and follow the
neo-liberal policy that is instructed by powerful nations with the propaganda of market’s
opportunity to get ‘market access’ in return. But what kind of market access is another question
for debate.

As a result, the whole world is oriented to be living in a ‘single market model’, or ‘global villages
economy’ of Hollywood and MTV celebrities.

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Besides, under this neo-liberal agenda, all the developing countries are being forced to compete
with each other to manufacturing goods for the biggest buyers -- US, EU, and Japan. Most of
the control of these developing countries is on ‘keeping cheap labour’ for competitiveness and
to control workers against exercising freedom of association.

Thailand has opened up the country to be export orientated and the US, EU and Japan are the
biggest markers for three decades. All of the policy makers only think at the macro levels, and
these policies have been decided by only few key stake holders led by the National Economic
and Development Board and Board of Investment which have all board members who are high
government officials, Ministers and business people. There is no participation of general public,
not to mention workers or poor representatives.

Thus, we have to witness the exploitations in many aspects of the investment promotion policy.
Lamphun Industrial Estate is a good example. A very small town like Lamphun, one of the
oldest cities in the North of Thailand that has history trace back for over 1,300 years, is
becoming toxic from waste from electronic industries that have been there since 1923.
Lamphun and Chiengmai, a centre of tourist destinations in Thailand, which is 30 kms north of
Lamphun are going to be effected from this Lamphun Industrial Estate that have minimum
health and safety protection and environmental impact plans.
.
Mae Sod and Maewaddy Industrial town are aiming only to exploit cheap labour form Burma
and to produce household goods to supply Burma. The working conditions of workers in Mae
Sod, have been written in many research papers as being very exploitative and in violaetion of
24
many laws in Thailand, not just labour laws.

The anti-union policy is very strong in Thailand and most of the special economic zones workers
are heavily pressured, not just from the management but from local authorities and mafia
groups as well. The workers will faced all kind of pressure when they show interest in forming
the union or exercising their freedom of association rights. It is unsurprising that after two
decades of the establishment of Lamphun and Khon Kaen Industrial Estates there are only 2
unions in each of these estates.

Despite all these difficulties and hardships to exercising their rights, the Hoya workers’ struggle
has given hope to many workers and labour activists in the export processing zones that
organize unions. Although organizing can be dangerous, if there is unity and solidarity among
the workers and support of the media and pubic, it is possible. Furthermore, there are questions
of how to strengthen unions and expand them to cover workers in the all industries within the
whole country, where currently, only 1.5% [half a million] of the total 36 million workers in the
labour force are organized.

So what is a new form of organizing in these zones? These questions are not just about a new
form of organizing, but rather they are about the reform and removal of industrial zones that
bring more destruction especially to environment, communities and natural resources than
health and happiness to the local workers and communities.

24 More information: The Race to the Bottom By Junya Yimprasert and Petter Hveem
http://english.nca.no/article/view/1683/?TreeMenu=109

23
Reference:

Dennis Arnold, the Situation of Burmese Migrant Workers in Mae Sod, Thailand, City University
of Hong Kong, Working Paper Series 71, November 2004

Junya Yimprasert and Petter Hveem, the Race to the Bottom, Norwegian Church Aid
Occasional paper series, o1/ 2005

Nipon Poapongsakorn and Somkiet Tangkitvanich, Impact of New Production Techonologies on


Labor: A Case Study of the Electronics Industry.

National Economic and Social Development Board, the competitiveness of Thailand, 2546
http://www.nesdb.go.th/Default.aspx?tabid=117 , date 24/4/2007

Royal Denish Embassy, Bangkok, Sector over view; electronic industry in Thailand, 23/06/2006

Thailand National Economic and Social Development Board, www.nesdb.go.th

United Nation, A case study of the electronics industry in Thailand, New York and Geneva,
2005

Website:

http://www.nectec.or.th
World Trade Organization, www.wto.org
World Bank, www.worldbank.org
International Monastery Fund: www.imf.org
Board of Investment: www.boi.go.th
Department of Industrial Work, Ministry of Industry: http://www.diw.go.th/diw/index.asp
National Economic and Social Development board: http://www.nesdb.go.th/
Department of Labour Protection, Ministry of Labour: www.labour.go.th
Thai Labour Campaign: www.thailabour.org
Prachatai News: http://www.prachatai.com/english/

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