US$ billion 0.2 1.7 5.1 Baht billion 3.5 43.7 202.3 % of GDP 0.0 1.6 3.6 Shares by country Japan 29.5 28.9 37.6 US 30.9 14.3 12.1 EU 15.5 9.4 18.7 ASEAN 6.1 10.2 14.5 Hong Kong 10.3 15.5 6.2 Taiwan 0.6 6.9 2.5 Shares by sector Industry 32.3 37.3 51.6 Trade 19.7 17.9 15.3 Services 7.3 3.8 7.3 Finance 5.2 6.6 4.7 Real Estate 2.8 23.0 5.6 Construction 15.2 8.3 0.8 Other 17.6 3.1 14.7
dominant, was increasingly mobile in search of low-cost production strategies that could circumvent new labor protection standards and Thai labor unions; the “virgin territory” Ling (2004) writes about (see also Klein 2007). Through the creative destruction that left many hundreds of domestic firms closed or converted into majority foreign companies, there was an opportunity to assert a new model for production that reflects what Arnold and Pickles (2011) refer to as “dual-space economies.” In certain high-value sectors, such as the auto industry and electronics, foreign companies predicted that over the long term it would be profitable to continue manufacturing in Thailand. In many cases, including the auto industry, ownership converted to foreign-majority, FDI increased, and
production increasingly targeted the export market in light of low domestic consumption (Nathenapha 2008). This high-value production represented Thailand’s “First World” economy. For labor-intensive sectors like garment production, the crisis coincided with a broader global decrease in profit rates. Thus, investors in Thailand and elsewhere sought to drastically reduce the cost of this industry through a number of initiatives that
effectively relegated garment production to “Third World” spaces. As elsewhere, in Thailand this meant the break-up of larger firms with assembly-line systems into a
network of sub-contractors filling orders at a piece-rate for multinational companies. This further linked the garment industry in Thailand to the new global economy, while
lowering the cost of production significantly.
But while some states who had had thriving garment sectors outsourced production to other countries with lower wages, fewer rights for workers, and less regulation, firms in Thailand looked to its borders where the wages and working conditions enabled competition with markets in China and Bangladesh. Instead of
instilling companies with policies of fiscal responsibility, Walden Bello (1998: 48) and colleagues observed, “Thailand’s manufacturers took the easy way out: relying on ever cheaper labor,…reducing the size of factories to contain production costs and inhibit unionizing, and farming out more and more production to temporary workers, contract workers, and migrant workers.” This reflects a global pattern of rendering migrants into flexible labor, a pattern that often intersects with various forms of displacement,
economic crisis, gendered assumptions, and neoliberal spatial fixes (Castles and Miller 2009; Bacon 2008; De Genova 2005; Massey 1999; Castells 1975).
This was a new era for the Thai garment industry which, in order to remain competitive, relocated itself to the site of cheaper production costs, less regulation, less accountability, and lower wages: Mae Sot. Based on the history described above, the Thai-Myanmar border, particularly Mae Sot, was an ideal host for a less formal garment industry based on subcontractors. As I have shown, Mae Sot emerged as a particular space with characteristics that made it attractive to multinational investors looking to locate capital in a setting with little to no regulation. Dennis Arnold (2010) stresses that local business leaders, and town, district, and provincial authorities, heavily lobbied investors and the central Thai government to make Mae Sot a special economic zone. As a space where stakeholders have thrived on largely illegal trade in timber, gems, and all the other black market goods moving between Myanmar and Thailand, this was the perfect environment to build an unregulated labor-intensive sector. In addition, Thailand’s outlying provinces, like Tak, have lower minimum wages than central
provinces, such as those around Bangkok that used to host the many hundreds of garment factories that have since been disassembled and moved to the margins of the state (Piya
2007). Finally, the large surplus of women migrants spoke to the gendered ideas that women can earn less, work at a contract or piece-rate, including from home, and are easier to manage and fire (Wright 2006). It was not necessary, Mae Sot’s business leaders and local authorities argued, for firms in Thailand to outsource production to neighboring countries with cheaper costs because they could offer a site for “Third World” production without crossing borders, built on the backs of mostly women migrants from Myanmar.
With investors receiving exemptions from paying taxes on imports, businesses, machinery, raw materials, and equipment, regional capital eagerly clustered in places like Mae Sot (Silp 2007; Maneepong 2006). The Federation of Thai Industries, which started in Mae Sot in 1996 with thirty members, now has 144 (FTI 2013). The number of firms investing in Mae Sot jumped in 2000 when it became easier to hire migrant workers legally (Interview, Federation of Thai Industries, 6 February 2014). As of 2013 in Mae Sot there are 365 registered factories with 49,101 workers, the vast majority of whom are migrants from Myanmar (FTI 2013). See Table 3 to compare Mae Sot district with the other districts of Tak Province (see also Map 1 in chapter 1).
Table 3 Registered factories in Tak Province
No. District # Factories Capital (millions of baht) Male Female Total
1 Muang Tak 146 5,044.3 1,874 432 2,306
2 Baan Tak 32 343.9 539 159 698
3 Sam Ngao 18 3,680.9 487 254 741
4 Mae Ramat 23 173.2 246 269 515
5 Tha Song Yang 18 33.9 238 80 318
6 Mae Sot 365 6,013 13,774 35,327 49,101
7 Phob Phra 26 125.7 259 47 306
8 Umphang 10 37.6 36 4 40
9 Wang Jao 39 876.4 351 157 508
Mae Sot’s registered factories represent more than six billion baht of annual capital (US $186 million) (Federation of Thai Industries 2013).
As a result of such growth and the town’s strategic location, today Mae Sot features in new regional spatial bodies that re-imagine the geography of mainland Southeast Asia in economic terms
and that recast the role of women and men in global production circuits. That is, Mae Sot is now one of a set of focal points on the maps of regional governmental bodies, investors, and multinational financial institutions, particularly the Asian Development Bank and the Association of Southeast
Asian Nations (ASEAN) (see Photo 7). These maps convey the notion that Mae Sot plays a significant role in broader regional development as it represents Thailand’s
westernmost point on what is known as the East-West Economic Corridor, part of a development plan for the Greater Mekong Subregion (GMS) (see Map 6), sponsored by the Asian Development Bank (Glassman 2010).42 The East-West Economic Corridor and the Greater Mekong Subregion are both constructs of the Asian Development Bank and ASEAN geared towards enhancing economic activities among mainland Southeast Asian
42
Recent changes in Myanmar that have led to the lifting of international sanctions and an influx of foreign investment inspired fear among some Thai employers that they would lose their migrant labor force. Since 2012, the Japanese have begun investing in large-scale infrastructural development projects on the Burmese side of the border—what will become production zones with even lower costs—in order to take advantage
Photo 7: Former PM Yingluk Shinawatra on a billboard showing Mae Sot as the keystone of the ASEAN Economic Community
countries, strengthening south-south linkages and enabling greater global competitiveness (Glassman 2010, Asian Development Bank 2009). Incorporating China’s Yunnan
Province, Myanmar, Laos, Thailand, Cambodia, and Vietnam, the GMS is quickly expanding its capacity for regional trade via transport routes that cut across borders and connect trade zones in these various countries (Asian Development Bank 2011). The East-West Economic Corridor represents the first and only route connecting the Indian Ocean (the coast of Myanmar) and the South China Sea (the coast of Vietnam) and is part of ASEAN’s and regional financial institutions’ (like Asian Development Bank) efforts to better plug the GMS into circuits of global trade (Arnold and Pickles 2011; ADB 2009). As Map 6 illustrates, Mae Sot lies squarely on the Asia Highway and represents the gateway to Thailand and territories east. As such, the town is expected to continue to grow dramatically in the next decades as the flow of multinational investment is
channeled through this town.
Map 6: Greater Mekong