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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

system.1

Thailand is a country that entertains great ambitions with regard to WTO’s conception of a ‘global village market economy’.

This article concentrates on the impact of the WTO rules and regulations that Thailand’s ambitions will cause to be kicked into effect - without public hearing or public consultation or respect for democratic principles.

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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

The principles of WTO The trading system should be .. .

without discrimination — a country should not discriminate between its trading partners (giving them equally “most-favoured-nation” or MFN status); and it should not discriminate between its own and foreign products, services or nationals (giving them “national treatment”);

free — barriers coming down through negotiation; predictable — foreign companies, investors and

governments should be confident that trade barriers (including tariffs and non-tariff barriers) should not be 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.

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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 countries as follows;

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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 guiding principle of later industrial promotion laws in Thailand.

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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

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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 estates jointly developed with private sector”.

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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

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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, the garlic producing farm land has rapidly been reduced from 130,000 rais

6 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.

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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 manufacturing of export products for 5 years.

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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

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

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

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fashion. IEAT acts as a mechanism of state to spread industrial growth to every part of Thailand using "Industrial Estates" as implementation tools.

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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.

There are 2 categories of industrial estate: 9

• 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.

Thailand Export Promotions Zonings10

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 is ready to link the demands of establishments to educational institutions.

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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

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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 governance will be beneficial to Thailand.

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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 tourism development.

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Two examples of Special Economic Zones at border towns.

Myawaddy – Mae Sod Zones14

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

two are in Hpa-an in the same state and Mawlamyine in southern Mon state.15

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

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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

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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

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Brief information on electronic industry

Foreign direct investment and Asian transnational cooperations are important investors in the electronics industry in Thailand:

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 three principle areas, an export processing zone, a free trade zone and a free service and logistics centre.

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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

Keys players: top 10 exporters17

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

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6.

Organizing in the Special Economic Zones

General problem of Lamphun Industrial Estate19

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 electronic industry

20 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 in the worst cases forcing workers to resign.

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A case of Japanese's manufacturers ‘Hoya Glass Disk’22

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&SystemModuleKey=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

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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.

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Demands and results of negotiations as of Jan 26, 200823

. Demands Results

1. Bonuses of 2.5 times salary for all workers without classification.

The company agreed to pay bonuses due in April 2008 for production 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 from 20 to 50 baht

Settled on Dec 26, the increased amount will be 35 baht.

3. 20% increase in daily wages and monthly salaries, and additional increases in accordance with raises in the minimum wage set by the government.

The increment of the official minimum wage set by the Labour Ministry will be added to the daily wages for daily-waged workers.

Monthly-salaried workers will receive the increment times 30 days added to 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 at least 3 years service to that of monthly-salaried workers.

Daily-waged workers with at least 5 years employment will receive monthly salaries.

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 parents, spouses, children and 3 siblings.

Settled on Dec 26, 2007.

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 lot by making concrete floor for motorcycles, and roofs for cars.

Settled on Dec 13, 2007.

To be finished by July 2008.

7. Increase of traditional holidays from 13 to 15 days with the New Year running from Dec 30-Jan 4, and Songkran from April 12-16.

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

8. Special pay for work causing physical strain or presenting risks: 10 baht up from 7 baht per day for work requiring workers to stand; 10 baht for work that causes visual strain and presents risks such as handling chemicals or working in high places.

Special pay for work that causes visual strain and present risks such as handling chemicals or working in high places will be studied by May 2008, and the conclusions will be considered by January 2009.

Workers who signed to accept reduced special pay for work requiring them to stand from 7 baht per day to 5 baht per day can choose to receive the previous amount of 7 baht.

23 Translated by Ponglert Pongwanan, information from http://www.prachatai.com/english/news.php?id=500

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9. Improvement to factory utilities. • provision of hot drinking water in

addition to cold drinking water,

• change of faucets with sensors to manual controls,

• improvement to cafeteria, and increase of TVs with cable TV.

Settled on Dec 13, 2007.

Provision of hot and cold drinking water will be available by February, 2008.

Tap water facilities will be fixed and improved by February, 2008.

Improvement to cafeteria, and increase of TVs with cable TV by February, 2008.

10. 5 days absence from work and 15 days vacation per year.

See Table below.

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 employment:

• 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.

Workers with 10 years employment receive 10,000 baht, 15 years employment 15,000 baht, and 20 years employment 20,000 baht.

12. Maintaining other employment agreements, welfare and traditional practices.

Agreed, and in compliance with labour laws.

13. No persecution, demotion, or dismissal will be imposed upon workers who participate in making these demands.

Settled on December 13, 2007

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 cases were settled in October 2007 was reported that workers;

• have to submit medical certificate even for a day of sick leave

• forced over time work • not providing proper workers’

space for pregnant women • changing holiday’s date without

informing the workers • discrimination on working

performance • workers have to submit medical

certificates for their annual leaves • dismissed immediately after

damaged work • recording of toilet time used

There have been rich experiences of the Thai Labour Campaign (TLC) in conducting corporate campaigns showing significant results with the Sony union’s 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

Fact Sheet on Sony Technology [as off August 2007] Workers: 1,300 regular, directly employed by Sony 3,500 sub-contracted labour force from nine manpower companies Working hours- Day shift: 08:00-20:00 Night shift: 20:00-08:00 40 minutes lunch break 10 minute - morning break 10.00 - 10.10

- Afternoon break 15.00 - 15.10 Evening 17.30 – 18.00 Holiday Sat – Sun Benefit:

• transportation • 10 baht / day for food subsidy • Diligent money 500-800 baht per month • Night Shift 80 baht/day

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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

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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 many laws in Thailand, not just labour laws.

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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

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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/