Download IMPACTS OF THE ASEAN (ASSOCIATION OF SOUTH EAST ASIAN

South East Asia Journal of Contemporary Business, Economics and Law, Vol. 2, Issue 2 (June)
ISSN 2289-1560
2013
IMPACTS OF THE ASEAN (ASSOCIATION OF SOUTH EAST ASIAN NATIONS)
ECONOMIC COMMUNITY ON LABOUR MARKET AND HUMAN RESOURCE
MANAGEMENT IN THAILAND
Dr Natenapha Wailerdsak (Yabushita)
Thammasat Business School
Thammasat University, 10200 Bangkok, Thailand
Email: [email protected], [email protected] Tel: (+66)- 85 808 2344
ABSTRACT
The development of human resources has been the first topic to be argued when Thailand has to prepare for entering as part of
ASEAN Economic Community (AEC) in 2015. All relevant parties were aware that human resources would be one of Thailand's
major weaknesses. This article is divided into four parts. The first analyzes the characteristics of labour market and labour
productivity (or output per workers) of the ASEAN countirs. The second part of the article illustrates the impacts and trade-offs
of the AEC on the cross-border mobility of both skilled and unskilled labours. Forever more, the AEC is expected to make
possible the free movement of workers in the region, especially in the seven professional fields that are under the mutual
recognition arrangements (MRAs), as well as unskilled labors, along with the higher market opportunities and greater business
investment that comes with borderless international trades. The third part examines the international human resource
management (IHRM) of Thai-born multinational enterprises. In the future, they must accept a diversity of human resources
owing to the inflow of ASEAN workers, the sending of executives to work abroad, and strategically managing local staffs. The
final part summarizes the significant opportunities and challenges to the country.
Keywords: ASEAN Economic Community (AEC), labour market, international human resource management (IHRM),
multinational enterprises (MNEs), Thailand
1. Introduction
The ASEAN Economic Community (AEC) will be established in 2015, the year that all ASEAN members have agreed to enact
zero tariff rates on virtually all imports (by 2010 for the original signatories and by 2015 for the CLMV countries – Cambodia,
Laos, Myanmar, and Vietnam). The AEC aims to eliminate tariff barriers and solidifies the ASEAN’s commercial negotiating
power through the community’s functioning as a ‘single market’ and the world’s ‘production base’. Not only will there be free
movement of goods and investments, but one of the goals set in the AEC Blueprint is the free flow of skilled labour, allowing for
the managed mobility of or facilitated entry for the movement of natural persons engaged in cross-border trade and investmentrelated activities. Therefore, all relevant parties are aware that ‘human resources’ may be one of Thailand’s major weaknesses.
This article is divided into four parts. The first elucidates the characteristics of the labour market and labour productivity (or
output per worker) of the ASEAN countries. Currently (2012), the ASEAN commands a combined GDP (gross domestic
product) of US$ 2.3 trillion, with a total trade value of US$ 2.1 trillion, a combined market of 600 million consumers, rising
purchasing power, an expanded middle class, and a large market for highly-productive labour forces.
The second part of the article illustrates the impacts and trade-offs of the AEC on the cross-border mobility of both skilled and
unskilled labour. Forever more, the AEC is expected to make possible the free movement of skilled workers in the region,
especially in the seven professional fields that are under the mutual recognition arrangements (MRAs) – medical practitioners,
dentists, nurses, engineers, architects, accountants, and surveyors – along with the higher market opportunities and greater
business investment that comes with borderless international trade. However, the ASEAN Blueprint is silent on flows of
unskilled labour. In fact, Thailand has hosted an estimated three million migrant workers, mainly from the neighbouring
countries with the greatest number coming from Myanmar, followed by the Lao People’s Democratic Republic and Cambodia.
The third part of the article examines the international human resource management of Thai-born multinational enterprises
(MNEs). Following the realization of the AEC, the Office of the Board of Investment of Thailand began to focus on encouraging
Thais to invest more outside the country, especially in other ASEAN countries, instead of placing an emphasis on encouraging
foreign investors to invest in the country. In the future, Thai MNEs must accept a diversity of human resources owing to the
inflow of ASEAN workers, the sending of Thai executives to work abroad and strategically managing local staff. They need to
urgently produce global human resources for the ASEAN market so as to enhance their competitiveness.
The final part summarizes the significant opportunities and challenges to the country.
2. ASEAN and Labour Markets
The ASEAN was established on 8 August 1967 by the leaders of five countries, Thailand, Indonesia, Philippines, Malaysia and
Singapore, primarily to promote peace and stability in the South East Asian region. Over 40 years later, following the signing of
the ASEAN Charter in 2007, the ASEAN has morphed into a ten-member organization with a legal personality.
The ASEAN has several naturally-endowed advantages in building prosperity. With land of 4.46 million square kilometres, it has
a relatively large combined market of 598 million people with a combined GDP of US$2.3 trillion in 2012 at current market
prices. Put in perspective, the ASEAN’s population is half that of China or India (the world’s two most populous nations)
representing 8.8 per cent of the total population in the world. Its GDP is about one-fifth of that of the United States (the world’s
largest economy), or equal to the world’s ninth-largest country (if the ASEAN is considered as one country). The region is
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