Companies flee Bangkok in search of cheap labor

[aRobotnamedWAR]

"Thai and foreign companies operating in the country are relocating operations..."

It's not a matter of cheap labor. It's all about cost effectiveness. If laborers produced quality work, showed up when they are supposed to, worked full shifts, and the government offered economic incentives, there would be no reason to move operations to another country. The surrounding countries get it....They pay their workers less for more time spent on the job (Another issue which needs to be discussed, but this article is not about that), and workmanship is consistent. Those governments offer more economic incentives and guarantee that business contracts will be fulfilled. This is a policy and work model Thailand has not embraced yet, and they will pay for it when their major industry of the future is the production of nam pla. Which, by the way, Vietnam produces a much superior product.

i know of a few companies who have left because government officials hit them up with crazy fines. *samsung**cough cough** fines so crazy i dont want to say it.

[Enoon]

Deputy Finance Minister was on CNBC yesterday and made that quite clear that Thailand will not be a place for cheap labor and will not mind seeing companies that came here due to low wages moving to neighbouring cheaper countries. I have to agree with that policy that Thailand need to concentrate on higher value production to move away from the middle income trap. But we also need better education and vocational reforms to match this new policy.

Hi Eric,

It's difficult to a agree with the Deputy Finance Minister as a matter of practicality.

One could argue that Thailand has some deep structural problems that it has not yet addressed. Some of the country's foundational culture (of which most are deafeningly proud) is based on distinct social and class hierarchy that has nothing necessarily to do with achievement. A society like Thailand which is deeply feudal but nicely wrapped in a thin veneer of modernity CANNOT avoid the middle income trap. Indeed, the traditional power structure RELIES on the middle income trap.

To move up the value chain, Thailand can only be competitive if the traditional elite share power and wealth and educate and empower the rest. The country needs a strong, reasonably educated middle class.

So, while the Deputy Finance Minister, as many in Thailand, knows all the right words to say, the country is at any moment in time at least 1 generation away from any meaningful change.

There simply are not enough Sino-Thai, educated abroad rich kids to leave the country competitive. Where are the initiatives from the elite (many of whom are exceptionally wealthy) to build world class education facilities and modernize the country?

There was just a report yesterday that Thailand has among the LOWEST worker productivity of the 60+ countries surveyed. Among the LOWEST English (as a non-native) language ability in the world.

Tough to imagine them overcoming these structural challenges with any efficiency. They need to change the meaning of what it means to be Thai and Thainess. That will be a VERY PAINFUL awakening for the entire country.

-

Sanuk Out, Hard Efficient Work in

"Where are the initiatives from the elite (many of whom are exceptionally wealthy) to build world class education facilities and modernize the country?"

That there are none is not surprising. That's not the way that the minds of Imperialists (in this case internal Imperialists) work.

The last thing that they will do is something that erodes their "differential".

For past reference see Bourbons, Romanovs, et al.

[Thian]

I have several companies in Bangkok. From cosmetics till ISP and software development. I already started to look outside Thailand for employees, production facilities, and better service. Skilled IT engineers are hard to find. Especially in the e-commerce business. Thai only know 3 buttons <Ctrl><C> & <Ctrl><V>. There is not even 1 Thai that was able to write payment applications. They only could copy and paste and do poor translations. All programs used by banks are mostly illegal copies of software that we developped or illegal software from outside Thailand. They buy only for 1 pc and install it on every pc (mostly done with some cracking by very cheap Indians).

Thai employees don't want to work, they only want to have money. Motivation is zero point zero, using their brains is absolutely not done, attitude of zero point zero and they're World Champion in lazyness, loyalty not to the company but only to themselves and direct friends.

In the past I had to hire for 1 product line of a cosmetic product, 8 Thai, 2 supervisors included. Now a days same thing is done by 3 Cambodians. Thai asking 15k/month each for doing shit. 2 Cambodians working harder and having produtivity more than 8 Thai for only 10k/month each (with less failures). For the cosmetic part we only do stocking and distributing in Bangkok. Production is nowadays done outside Thailand. They must be able to read English because it is an export product. 3 out of 10 shippings still go wrong due to the lack of thinking or motivation. Working, they rather play all day long on their phones.

ISP, we already started changing server locations to Singapore and USA. Higher speeds, better connections and in the future no problem with a single gateway in/out Thailand. The whole ISP company has only 1 skilled Thai that has been trained by us. (After graduation of Assumption University with a Masters). The other hired Thai are sweeping the floor, answering the phone (playing with it all day long), cleaning the tables, bringing coffee (after 1 year, she still asks me 3x per day how I want my coffee).

To be short, Thai don't care about their jobs. They only do it for the money that comes in. I predict that Thailand will sink in the next 5 years. My predictions always came out before. The only thing that keeps up the Thai economy are the "rich" and the "rich" tourists. For export they are already losing it from upcoming economies. (except for some rotten rice). The economy is more and more consuming inside Thailand. For e-commerce we already see a decrease of Thai customers since September 2014 and it is going down fast. (only 10% of our customers is based in Thailand, we're growing outside).

So just blame everything to foreign companies, don't take a look at yourselves. It's the only thing were Thai are champions in, besides lazyness.

BTW: Translations of our software into Thai is taking 5 - 6 times as long than into any other language. Why ??? Big question mark, WHY ???

Because you don't know how to motivate them? You have to promise a bonus if it's done in time plus a big party in a place like tawandang and you pay all.

If you want fast servers then pm me and i can help you go get fibre from the biggest supplyer.

For english i also know plenty well educated thai in the IT-business. They all have very good jobs though so it's gonna cost money....english speakers are rare here but i know plenty.

Edited January 21, 2016 by metisdead
2. Please do not modify someone else's post in your quoted reply, either with font or color changes or wording.

[Squeegee]

Having read this and other articles by Mr. Euhara, it sounds to me that he is just trying to put people off from investing here. His choice of examples and his travel program are spectacularly naïve.

Inward investment in most countries is a big challenge, one of the biggest losers is Japan, so Mr. E seems to be trying to scare people. Before TV members start Thai bashing consider :-

Vietnam , Laos and Cambodia do not have the electricity we do. Show stopper for big employers to go there.

Ditto roads, transport damage on the way to market from products made in these countries is severe.

Attendance rates are worse, the work ethic here is better. Thailand has done a pretty good job of balancing salaries and staying competitive. You pay peanuts you suffer.

Infrastructure around BKK is struggling. The current investment in roads around Amata with roads to Laem Chabang port will keep us ahead of the game.

I could go on, but I got work to do, figuring out how to improve this year on the 22% increase in business we achieved last year from 2014.

Most clueless post of the day so far. It's like an EnglishJohn post for economics (without the unhinged flames). It's not just the lack of perception of Thai reality, it's the wholesale lack of understanding of SE Asian countries and their history in tandem with absolutely no insight into the future.

One doesn't even have to go into economics: one can simply visit any restaurant in a tourist area to see the level of professionalism. In Thailand they don't smile and don't care; in Viet Nam they leave you in no uncertain terms your business is appreciated and they know how to say "Enjoy your meal."

Thailand was in the right place at the right time in history to pretend it was something it isn't (a civilized democracy) whereas Viet Nam, thanks to American stupidity going on international witch hunts equivalent to the McCarthy trials set back Viet Nam economically and made an unnecessary enemy of them when Ho Chi Minh was never a communist like the Chinese or Russians, indeed America didn't just ignore Minh's plea for help, it began working with him then went back on its word.

The Vietnamese must not be underestimated. They fully deserve everything good that's now coming to them in direct counterpoint to Thailand's not deserving anything, and your clueless post misses the reality on just about every level.

All the things you complain about have been issues for years...so why did you locate to thailand in the first place...was it for the cheap sex?

But no competition for cluelessness from this post, which is just an irrelevant exercise in low brow stupidity.

[scorecard]

Deputy Finance Minister was on CNBC yesterday and made that quite clear that Thailand will not be a place for cheap labor and will not mind seeing companies that came here due to low wages moving to neighbouring cheaper countries. I have to agree with that policy that Thailand need to concentrate on higher value production to move away from the middle income trap. But we also need better education and vocational reforms to match this new policy.

Hi Eric,

It's difficult to a agree with the Deputy Finance Minister as a matter of practicality.

One could argue that Thailand has some deep structural problems that it has not yet addressed. Some of the country's foundational culture (of which most are deafeningly proud) is based on distinct social and class hierarchy that has nothing necessarily to do with achievement. A society like Thailand which is deeply feudal but nicely wrapped in a thin veneer of modernity CANNOT avoid the middle income trap. Indeed, the traditional power structure RELIES on the middle income trap.

To move up the value chain, Thailand can only be competitive if the traditional elite share power and wealth and educate and empower the rest. The country needs a strong, reasonably educated middle class.

So, while the Deputy Finance Minister, as many in Thailand, knows all the right words to say, the country is at any moment in time at least 1 generation away from any meaningful change.

There simply are not enough Sino-Thai, educated abroad rich kids to leave the country competitive. Where are the initiatives from the elite (many of whom are exceptionally wealthy) to build world class education facilities and modernize the country?

There was just a report yesterday that Thailand has among the LOWEST worker productivity of the 60+ countries surveyed. Among the LOWEST English (as a non-native) language ability in the world.

Tough to imagine them overcoming these structural challenges with any efficiency. They need to change the meaning of what it means to be Thai and Thainess. That will be a VERY PAINFUL awakening for the entire country.

-

Sanuk Out, Hard Efficient Work in

I generally agree. In regard to the last paragraph IMHO this will happen but not tomorrow.

What will be the catalyst? IMHO when large numbers of Thais see clearly that the majority of all citizens in the majority of next door countries have a much better quality of life, then this will start to spark some more serious discussion and create a demand for change. As already said, it's not tomorrow.

Aligned to this I believe another factor is the current large numbers of poor and a lot of the so called middle class citizens, the 'passive' citizens. This will need to change as part of the ultimate demand for change and I suggest it's the same catalyst I mentioned in the paragraph above.

I often note the slowly changing attitudes and discussions I see between my Thai adult son and his same age colleagues / old university buddies etc. More and more they have an opinion and they have little hesitation to state their case. Always politely of course.

Edited January 21, 2016 by scorecard

[DrTuner]

Very welcome trend. Thailand is too centralized to BKK.

[trogers]

Companies work on 5-10 business plan they are not moving because of wages they are moving because they know the JUNTA will not hold democratic elections next year or in the forseeable future. The country will finish up in a civil war.

Bullshix.

Sure. These companies also would not have business dealings with China because it is communist... ?

[trogers]

I have several companies in Bangkok. From cosmetics till ISP and software development. I already started to look outside Thailand for employees, production facilities, and better service. Skilled IT engineers are hard to find. Especially in the e-commerce business. Thai only know 3 buttons <Ctrl><C> & <Ctrl><V>. There is not even 1 Thai that was able to write payment applications. They only could copy and paste and do poor translations. All programs used by banks are mostly illegal copies of software that we developped or illegal software from outside Thailand. They buy only for 1 pc and install it on every pc (mostly done with some cracking by very cheap Indians).

Thai employees don't want to work, they only want to have money. Motivation is zero point zero, using their brains is absolutely not done, attitude of zero point zero and they're World Champion in lazyness, loyalty not to the company but only to themselves and direct friends.

In the past I had to hire for 1 product line of a cosmetic product, 8 Thai, 2 supervisors included. Now a days same thing is done by 3 Cambodians. Thai asking 15k/month each for doing shit. 2 Cambodians working harder and having produtivity more than 8 Thai for only 10k/month each (with less failures). For the cosmetic part we only do stocking and distributing in Bangkok. Production is nowadays done outside Thailand. They must be able to read English because it is an export product. 3 out of 10 shippings still go wrong due to the lack of thinking or motivation. Working, they rather play all day long on their phones.

ISP, we already started changing server locations to Singapore and USA. Higher speeds, better connections and in the future no problem with a single gateway in/out Thailand. The whole ISP company has only 1 skilled Thai that has been trained by us. (After graduation of Assumption University with a Masters). The other hired Thai are sweeping the floor, answering the phone (playing with it all day long), cleaning the tables, bringing coffee (after 1 year, she still asks me 3x per day how I want my coffee).

To be short, Thai don't care about their jobs. They only do it for the money that comes in. I predict that Thailand will sink in the next 5 years. My predictions always came out before. The only thing that keeps up the Thai economy are the "rich" and the "rich" tourists. For export they are already losing it from upcoming economies. (except for some rotten rice). The economy is more and more consuming inside Thailand. For e-commerce we already see a decrease of Thai customers since September 2014 and it is going down fast. (only 10% of our customers is based in Thailand, we're growing outside).

So just blame everything to foreign companies, don't take a look at yourselves. It's the only thing were Thai are champions in, besides lazyness.

BTW: Translations of our software into Thai is taking 5 - 6 times as long than into any other language. Why ??? Big question mark, WHY ???

All the things you complain about have been issues for years...so why did you locate to thailand in the first place...was it for the cheap sex?

More likely the reliability of power supply...?

[onni4me]

Where to start..?

Perhaps as a customer, how you see Thai company serving its customers? Everything on time? Quality exceeding expectations? Accountability? Good communication skills? Best after-services and help phone line? Guarantee on product in case of malfunction or brake down?

Hah!

No responsibility whatsoever! Last time I complained that my rather expensive stainless steel water filter system was leaking and not working as it should after less tahn one year of use and I took it with a pickup to the shop i bought it...imagine what they said? Did they say they would fix it immediately and were sorry for the inconvenience? Did they offer me free service?

In you dreams!

They simply said that I didn't win the lottery regarding this particular water filter machine! Think awhile the gullibility of this answer before you go on. They have a customer that can afford an expensive machine and how do they treat him when something goes wrong? Mai pen rai! They really couldn't care less! We got your money so go an screw yourself!

I took the machine in a stainless steel shop where they kindly fixed it for 300 Baht. Later I bought the malfunctioning parts for a thousand or so Baht and after that the machine has worked as it should. Someone less interested probably would have given up.

This type of attitude is prevalent in Thai business practices. Screw the customer! Low quality product, maximum profit. No service. No returns. No help. Take your pick.

What comes to workers they abuse them as well. Long hours, little pay. Need to have some sort of a degree to work for a job that really can be thought in a day or two. No use of ones own brain, ask the all-knowing boss. Jobs filled with relatives not based on merit or experience.

I know more than a few intelligent and clever Thais that just got bored working for their less-than-clever employers. They started their own little business and seem more happy that nobody is telling them to lick their behinds with 300 Baht a day.

I see this country failing due to the mentality. Not because normal Thais would be any less capable than any other Asians or people from any other country. I also despise everyone here saying that they should be grateful for a job opportunity of 10 K Baht a month producing excellent work and complaining that they can't this or that. Shame on you!

[haroldc]

We have tried doing that moving our labor based company of over 100 skilled works to Vientiane Laos first

and than to Khon Kean, we did saved on salaries, but the skill level, attendance and loyalty for the job

was abysmal to say the least, we ended up with revolving door or workers coming and going according

to their family whims and farming seasons....

I work with a Singapore technology-based company with subsidiaries in Thailand and Laos. We find our Lao employees (all university graduates) to be highly motivated and capable, so much so that in 2016 we will freeze production capacity in Thailand and double production capacity in Laos. Our Lao employees are very well paid by Lao standards, yet their salaries are only 50% of what we would need to pay in Thailand.

One of the investors in our Lao subsidiary is also an investor in the Lao operations of Aderans Co., Ltd. a Japanese company that is one of the world's largest manufacturers of human-hair wigs.

See http://asia.nikkei.com/Japan-Update/Japan-s-Aderans-opens-new-plant

He tells me that the productivity of the Lao employees (skilled hand-workers) is twice that of the Thai employees and also exceeds that of the Filipino employees.

If a company has in-country management that can understand and adapt to Lao culture and society, it is definitely possible to hire, train, and retain a high-quality Lao workforce.

[Thian]

Good that they leave BKK, it's far too busy here anyway and it drives the prices up.

[Balance]

Deputy Finance Minister was on CNBC yesterday and made that quite clear that Thailand will not be a place for cheap labor and will not mind seeing companies that came here due to low wages moving to neighbouring cheaper countries. I have to agree with that policy that Thailand need to concentrate on higher value production to move away from the middle income trap. But we also need better education and vocational reforms to match this new policy.

Yes, Thailand needs to this, along with a couple of hundred other things. To just make the statement, "But we also need better education and vocational reforms to match this new policy" does not conjure the magic wand. Expats who pay attention know that a girlfriend or wife with male children is a deal killer. There is something systemically wrong with the way boys are raised here, and this starts at a very young age. By the time they are in high school they have figured out how to go after the proverbial free lunch.

Going to work, getting there on time, doing their job with some pride in what they do does not exist. But the real problem in Thailand is that anyone entering the workforce, whether they have a high school degree or a Masters Degree knows that there is no space for advancement; the idea of "upward mobility" for those who apply themselves is almost completely absent, with one major exception. Meritocratic advancement does not really exist; it is still about who your family is. It is my experience that even if an employer want to base compensation on ability and performance, it is a fact that it cannot be done due to the politics of the labor market.

I think there is little doubt that if this does not change, the out-migration of the brightest and most ambitious to Hong Kong or Singapore will increase. The Thai middle class that wants a better life for their children will export them to countries where they can thrive based on their ability and willingness to work hard. Thailand will loose.

[trogers]

Deputy Finance Minister was on CNBC yesterday and made that quite clear that Thailand will not be a place for cheap labor and will not mind seeing companies that came here due to low wages moving to neighbouring cheaper countries. I have to agree with that policy that Thailand need to concentrate on higher value production to move away from the middle income trap. But we also need better education and vocational reforms to match this new policy.

Yes, Thailand needs to this, along with a couple of hundred other things. To just make the statement, "But we also need better education and vocational reforms to match this new policy" does not conjure the magic wand. Expats who pay attention know that a girlfriend or wife with male children is a deal killer. There is something systemically wrong with the way boys are raised here, and this starts at a very young age. By the time they are in high school they have figured out how to go after the proverbial free lunch.

Going to work, getting there on time, doing their job with some pride in what they do does not exist. But the real problem in Thailand is that anyone entering the workforce, whether they have a high school degree or a Masters Degree knows that there is no space for advancement; the idea of "upward mobility" for those who apply themselves is almost completely absent, with one major exception. Meritocratic advancement does not really exist; it is still about who your family is. It is my experience that even if an employer want to base compensation on ability and performance, it is a fact that it cannot be done due to the politics of the labor market.

I think there is little doubt that if this does not change, the out-migration of the brightest and most ambitious to Hong Kong or Singapore will increase. The Thai middle class that wants a better life for their children will export them to countries where they can thrive based on their ability and willingness to work hard. Thailand will loose.

They lose their brightest and hardworking manpower to countries overseas. And what manpower that is left is pampered by politics and ministerial laws, till their already low productivity is priced out of the market.

[taichiplanet]

Having read this and other articles by Mr. Euhara, it sounds to me that he is just trying to put people off from investing here. His choice of examples and his travel program are spectacularly naïve.

Inward investment in most countries is a big challenge, one of the biggest losers is Japan, so Mr. E seems to be trying to scare people. Before TV members start Thai bashing consider :-

Vietnam , Laos and Cambodia do not have the electricity we do. Show stopper for big employers to go there.

Ditto roads, transport damage on the way to market from products made in these countries is severe.

Attendance rates are worse, the work ethic here is better. Thailand has done a pretty good job of balancing salaries and staying competitive. You pay peanuts you suffer.

Infrastructure around BKK is struggling. The current investment in roads around Amata with roads to Laem Chabang port will keep us ahead of the game.

I could go on, but I got work to do, figuring out how to improve this year on the 22% increase in business we achieved last year from 2014.

Most clueless post of the day so far. It's like an EnglishJohn post for economics (without the unhinged flames). It's not just the lack of perception of Thai reality, it's the wholesale lack of understanding of SE Asian countries and their history in tandem with absolutely no insight into the future.

One doesn't even have to go into economics: one can simply visit any restaurant in a tourist area to see the level of professionalism. In Thailand they don't smile and don't care; in Viet Nam they leave you in no uncertain terms your business is appreciated and they know how to say "Enjoy your meal."

Thailand was in the right place at the right time in history to pretend it was something it isn't (a civilized democracy) whereas Viet Nam, thanks to American stupidity going on international witch hunts equivalent to the McCarthy trials set back Viet Nam economically and made an unnecessary enemy of them when Ho Chi Minh was never a communist like the Chinese or Russians, indeed America didn't just ignore Minh's plea for help, it began working with him then went back on its word.

The Vietnamese must not be underestimated. They fully deserve everything good that's now coming to them in direct counterpoint to Thailand's not deserving anything, and your clueless post misses the reality on just about every level.

All the things you complain about have been issues for years...so why did you locate to thailand in the first place...was it for the cheap sex?

But no competition for cluelessness from this post, which is just an irrelevant exercise in low brow stupidity.

spot-on about being in the right place at the right time. Thailand played the anti-communist card beautifully and thus got the Americans to build crucial infrastructure like roads and airports that gave it an advantage over the rest of 'developing' SE Asia. The 1979 BBC 'Soul of a Nation' doco touches on the 'communist insurgents' in Thailand.

https://www.youtube.com/watch?v=Y263zmpfziY

[JAG]

I have several companies in Bangkok. From cosmetics till ISP and software development. I already started to look outside Thailand for employees, production facilities, and better service. Skilled IT engineers are hard to find. Especially in the e-commerce business. Thai only know 3 buttons <Ctrl><C> & <Ctrl><V>. There is not even 1 Thai that was able to write payment applications. They only could copy and paste and do poor translations. All programs used by banks are mostly illegal copies of software that we developped or illegal software from outside Thailand. They buy only for 1 pc and install it on every pc (mostly done with some cracking by very cheap Indians).

Thai employees don't want to work, they only want to have money. Motivation is zero point zero, using their brains is absolutely not done, attitude of zero point zero and they're World Champion in lazyness, loyalty not to the company but only to themselves and direct friends.

In the past I had to hire for 1 product line of a cosmetic product, 8 Thai, 2 supervisors included. Now a days same thing is done by 3 Cambodians. Thai asking 15k/month each for doing shit. 2 Cambodians working harder and having produtivity more than 8 Thai for only 10k/month each (with less failures). For the cosmetic part we only do stocking and distributing in Bangkok. Production is nowadays done outside Thailand. They must be able to read English because it is an export product. 3 out of 10 shippings still go wrong due to the lack of thinking or motivation. Working, they rather play all day long on their phones.

ISP, we already started changing server locations to Singapore and USA. Higher speeds, better connections and in the future no problem with a single gateway in/out Thailand. The whole ISP company has only 1 skilled Thai that has been trained by us. (After graduation of Assumption University with a Masters). The other hired Thai are sweeping the floor, answering the phone (playing with it all day long), cleaning the tables, bringing coffee (after 1 year, she still asks me 3x per day how I want my coffee).

To be short, Thai don't care about their jobs. They only do it for the money that comes in. I predict that Thailand will sink in the next 5 years. My predictions always came out before. The only thing that keeps up the Thai economy are the "rich" and the "rich" tourists. For export they are already losing it from upcoming economies. (except for some rotten rice). The economy is more and more consuming inside Thailand. For e-commerce we already see a decrease of Thai customers since September 2014 and it is going down fast. (only 10% of our customers is based in Thailand, we're growing outside).

So just blame everything to foreign companies, don't take a look at yourselves. It's the only thing were Thai are champions in, besides lazyness.

BTW: Translations of our software into Thai is taking 5 - 6 times as long than into any other language. Why ??? Big question mark, WHY ???

If your two Cambodians are so much more productive than the three Thais they replace, why are you paying each of them only 2/3 what you paid each Thai? You are getting far more work for less than half the wages.

Thais may be lazy, but they will never motivate themselves ( or be able to be motivated by you or your managers ) if they see wages reduced and increased output expected.