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Cablegate: Remittances From Thailand Lift Incomes in Burma

VZCZCXRO0839
PP RUEHCN RUEHDT RUEHHM
DE RUEHCHI #0097/01 1750959
ZNR UUUUU ZZH
P 230959Z JUN 08
FM AMCONSUL CHIANG MAI
TO RUEHC/SECSTATE WASHDC PRIORITY 0788
INFO RUEHC/DEPT OF LABOR WASHINGTON DC
RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS
RUEHCHI/AMCONSUL CHIANG MAI 0851

UNCLAS SECTION 01 OF 04 CHIANG MAI 000097

SIPDIS

G/TIP
DEPARTMENT OF LABOR FOR ILAB
USAID DCHA - DOROTHY TAFT

E.O. 12958: N/A
TAGS: ECON EFIN PREL PHUM EAID EIND ELAB ETRD TH BM
SUBJECT: REMITTANCES FROM THAILAND LIFT INCOMES IN BURMA

REF: 2008 CHIANG MAI 96: "AFTER NARGIS, A BORDER TRADE BOOM IN THAILAND'S FAVOR"

CHIANG MAI 00000097 001.2 OF 004


Sensitive But Unclassified

-------
Summary
-------

1. (SBU) Remittances transferred from the one-to-two million
Burmese migrant workers in Thailand are an important source of
income for their families in Burma. With migrant workers
transferring about half of their incomes to their relatives in
Burma, anywhere from $375 million to $1 billion could be flowing
from Thailand to Burma annually in remittances alone. Because
"carriers" transfer money or goods by hand into Burma, some
experts believe these remittances have a significant impact not
only on Burma's GDP but also on bilateral trade flows and the
macroeconomic stability of the Burmese kyat. However, earning
these remittances comes at a cost for Burmese migrants, who
generally face weak labor rights and poor living conditions in
Thailand. Nonetheless, these migrant laborers continue to
struggle to support their families in Burma, illustrating that
this dispersed population abroad is really an interconnected
network that has potential beyond the transfer of money to
include the transfer of ideas. End summary.

-------------------------
Burmese Labor in Thailand
-------------------------

2. (SBU) From government tyranny to absolute poverty, Burma
offers no lack of push factors for its people to flee their
homeland in search of something better. In neighboring
Thailand, robust manufacturing and agricultural sectors eager
for cheap labor provide the pull factors abroad. The result is
an estimated one-to-two million Burmese laborers scattered
across Thailand but centralized in three places: the western
border town of Mae Sot, the seafood processing Gulf region south
of Bangkok, and Thailand's manufacturing hub in Bangkok itself.
Leaving their hometowns in search of work, these laborers are
usually young, single people who have volunteered to move abroad
with one objective: earn money to support their families in
Burma.

3. (SBU) From poor working conditions to costly money transfer
schemes, Burmese laborers in Thailand face many challenges in
trying to remit money to their families. However, their
earnings here still manage to find their way home, helping to
lift the direly low incomes of their relatives in Burma.
Moreover, with so many Burmese working across Thailand, these
remittances appear to add up, having a significant impact not
only on individual families, but also on the Burmese economy
overall. Some experts even speculate that these remittances
play a key role in explaining Thai-Burmese trade patterns as
well as the macroeconomic stability of the Burmese kyat.

--------------------
Remittances to Burma
--------------------

4. (SBU) A survey of Burmese laborers and labor organizations in
Mae Sot during a June 11-13 trip there by Consulate officials
revealed potentially significant levels of remittances from
Thailand, despite relatively low earnings. Manufacturing
workers in Mae Sot usually earn wages one of two ways -- either
hourly wages or earnings based on output -- although both are
subject to Thai minimum wage laws. In both cases, Burmese
laborers in Mae Sot reported that daily earnings at most local
knitting and garment factories are about 85 baht (or $2.60). In
contrast, the minimum daily wage in Mae Sot is 151 baht ($4.60).
The $2 difference between the actual average daily wage and the
minimum wage is reportedly justified by other benefits that the
companies provide workers, including room and board (see para
13). Some workers who have resided longer in Thailand, remained
loyal to a specific company, and have been promoted can earn as
much as $10 per day, though this is rare in Mae Sot where most
supervisory positions are filled by Thai staff.

5. (SBU) Surveys among Mae Sot-based workers revealed that the
range of monthly remittances from one worker to Burma was from
500 to 2000 baht ($15 to $60); however, most workers and labor
groups reported that the average remittance falls around 1,200
baht ($36) monthly. The highest remittance we heard was from a
Burmese female in a supervisory position who could afford to
send 5,500 baht ($170) per month to her family. Overall,
workers seemed to be able to afford to remit about half of their
earnings to Burma using the other half for local consumption.

6. (SBU) Labor groups reported that Mae Sot wages are lower than

CHIANG MAI 00000097 002.2 OF 004


Bangkok wages, where the minimum wage is 200 baht ($6) daily.
Burmese laborers tend to enter Thailand via Mae Sot and
eventually travel to Bangkok in search of better paid work. As
a result, only about 10% of Thailand's Burmese migrants reside
in Mae Sot; most live and work in or around Bangkok or in the
seafood processing zone in Samut Sakhon on the Gulf of Thailand.
Mae Sot-based labor groups said that the longer distance
between Bangkok and Rangoon does not lessen the likelihood of
these laborers remitting wages to Burma. On the contrary, they
estimated that with higher wages, these laborers should be
remitting more to Burma than the relatively poorer Mae Sot
workers.

7. (SBU) Using the data we collected from migrant sources and
labor groups, post estimates that annual aggregate remittances
to Burma from Thailand range from a low of $375 million to a
high of $1.125 billion. See data annex in para 20 for
additional detail.

8. (SBU) The range of $375 million to $1.125 billion in
estimated yearly remittances to Burma from Thailand is
significant for bilateral trade, according to an advisor from
Tak province's Chamber of Commerce. The advisor noted that the
value of goods exported to Burma through Mae Sot yearly is about
$365 million, almost the same level as the (low-end estimate of)
remittances (reftel). Because carrying goods across the border
into Burma is a key element in the remittance process (see para
9), this advisor believes that the vast majority of Thai exports
through Mae Sot corresponds directly to the increased purchasing
power in Burma provided by remittances.

--------------------
The "Carrier" System
--------------------

9. (SBU) The system of transmitting money into Burma is costly,
risky, and low-tech. Most Mae Sot migrant workers hire carriers
to transfer their money to Burma. They described the system as
follows: A worker will bring his remittance in Thai baht to a
merchant in Mae Sot advertised as a "money changer." This
merchant will contact a partnering merchant in Burma, usually
located near the family's village, and notify the family that it
can pick up the remittance, which is paid out in Burmese kyat.
To transfer the money between the two merchants, a Burmese
"carrier" will carry the money (or goods of equal value) from
the Thai merchant to the Burmese merchant. The remittance is
charged approximately 5-7% commission for each merchant, such
that an original remittance of $30 is reduced to about $26 once
it reaches the family. An advisor to the Tak Chamber of
Commerce told us that he believes this informal trading system
which also serves as a currency exchange is critical for
maintaining the stability of the Burmese kyat.

10. (SBU) For workers based in Bangkok or elsewhere in Thailand,
the system has an additional step: transferring the funds to
Mae Sot via a Thai middleman. A Burmese worker in Bangkok will
connect with a local Thai who will agree to accept his money and
deposit it in a Thai bank account. A partnering Thai middleman
in Mae Sot will withdraw the funds and take them to one of the
"money changer" merchants in Mae Sot to complete the rest of the
carrier cycle. In this case, a third commission is charged for
the middleman. The large population of Burmese migrant workers
in Bangkok, therefore, becomes evident in Mae Sot by the herds
of young Thais loitering around ATMs on their cell phones
waiting for their next transaction.

------------------------------
Remitting from Beyond Thailand
------------------------------

11. (SBU) The network of Burmese migrants remitting money to
Burma extends beyond Thailand to Malaysia, Singapore, Indonesia,
and the U.S. Without any banking links with Burma, U.S.-based
and other overseas Burmese migrants will remit money through Mae
Sot as well. A sign in Burmese at the Siam Commercial Bank
(SCB) branch in Mae Sot advertises pick-up hours for a service
known as MoneyGrams. The service allows individuals overseas,
though most are in the U.S., to transmit money to someone in Mae
Sot through the SCB for a small fee.

12. (SBU) Because most regular SCB costumers do not use the
service, the staff believe that the large majority of the
senders and recipients are Burmese. Because the recipient must
show a valid ID, yet another market of Thai middlemen exists to
collect the money on behalf of unregistered Burmese migrants.
The SCB reported that about 25 MoneyGrams are received per day
each valuing $100 to $200. Through this bank branch alone, that
equates to about $600,000 to $1.2 million yearly in money

CHIANG MAI 00000097 003.2 OF 004


transfers from outside Thailand, likely being remitted to Burma.

-----------------------------
Labor Rights and Registration
-----------------------------

13. (SBU) All of these remittances to Burma via Mae Sot come at
a heavy cost, however. Burmese workers in Thailand face
unsatisfactory labor rights, poor working and living conditions,
and unstable income. Two Burmese laborers from the Thaipop
Knitting factory in Mae Sot told us that their wages are based
on output, a common practice among the knitting factories. Each
worker is paid 170 baht ($5.15) for every 12 sweaters produced.
The workers said it takes 16 hours to produce 12 sweaters, such
that their hourly wage is about $0.31. Based on an eight-hour
work day, this is about $2 less per day than the minimum wage in
Mae Sot, which Thaipop justifies by providing quarters, rice,
water, and electricity to the workers. The workers insisted
that the value of these basic in-kind reimbursements could not
possibly equal the $2 given up in wages. They said that
pleading for the extra $2 per day in cash instead of in kind
would be unwise since they could not find another place to stay
and would likely be fired from their job for making the request.

14. (SBU) A Burmese laborer from another knitting factory
reported that she also earned the estimated $0.31 per hour based
on 12 sweaters produced over 16 hours. Employees at her factory
tend to work 13 hours per day totaling 3,500 baht ($106) per
month. Workers are required to sign an agreement that the
difference of $58 per month between their cash wages and the
minimum wage is covered by their room and board. This female
worker reported that the housing for single females is a large
room shared by 30 people, each with enough space for a sleeping
mat and a few personal belongings. For those with spouses, the
quarters are inadequately small for more than one person. The
company bars children from staying in the quarters.

15. (SBU) One way for workers to improve their quality of life
in Mae Sot is through registration with the Thai authorities.
Registration, which costs 3,800 baht ($115) provides workers
with very affordable health care and certain rights and
privileges such as freedom of mobility outside of the factory
compound. Unfortunately, registration is becoming an
increasingly difficult task. Labor groups reported, and the
Federation of Thai Industries confirmed, that a recent change in
Thai regulations stipulates that new hires are not eligible to
register. This includes laborers who were registered while
employed by a company, resigned, and moved to another company.
These workers lose their registration status and cannot reapply.


16. (SBU) Moreover, labor groups said that companies tend to
allow only about half of their Burmese staff to register
threatening the others with being sacked. By keeping some staff
unregistered, the company maintains greater control over
workers' mobility and their dependence on the employer. The
Federation of Thai Industries of Tak province denied that any of
its member companies have unregistered workers, but admitted
that some companies will fill empty jobs temporarily with
unregistered workers.

17. (SBU) The Burmese workers from these two knitting factories
all said that despite the challenges in low wages, few labor
rights, and poor working conditions, living in Mae Sot still
pays off. One of the male Thaipop factory workers said that he
will continue to struggle to support his family until he can
return to a Burma that has jobs and democracy. He said he hopes
for the day he can fight for labor rights in his own country.
The female worker from the other knitting factory said that
supporting her family members who recently lost their homes in
cyclone Nargis is the only real incentive for her to live and
work in Mae Sot.

-------
Comment
-------

18. (SBU) The high level and impact of Burmese remittances from
Thailand are promising signs that, though this population of an
estimated one-to-two million is scattered across Thailand, it
maintains a significant and well-connected network with families
on the ground in Burma. In addition to raising incomes inside
Burma, these migrant workers provide the life support necessary
to keep their families hopeful for a better economic future.
Moreover, this network, though highly informal and potentially
fragile, may be a resource for transferring democratic ideals as
well as money into Burma.


CHIANG MAI 00000097 004.2 OF 004


19. (U) This cable was coordinated with Embassies Bangkok and
Rangoon.

----------
Data Annex
----------

20. (SBU) Based on estimates of Burmese migrant populations and
their remittances to Burma from laborers and labor groups in Mae
Sot, post made the following estimates of aggregate remittances:

(1) Remittances from Burmese Manufacturing Workers in Mae Sot:

-- Population: 60,000 to 80,000 Burmese workers

-- Estimated Yearly Remittances: $22.5 to $45.0 million

-- Percentage of Burma's GDP: 0.16 to 0.33 percent

(2) Remittances from Burmese Workers in All Sectors in Mae Sot:

-- Population: 100,000 to 150,000 Burmese workers

-- Estimated Yearly Remittances: $37.5 to $84.38 million

-- Percentage of Burma's GDP: 0.27 to 0.62 percent

(3) Remittances from Burmese Workers in All Sectors Across
Thailand:

-- Population: 1 million to 2 million Burmese workers

-- Estimated Yearly Remittances: $375 million to $1.125 billion

-- Percentage of Burma's GDP: 2.74 to 8.21 percent

Note: Gross Domestic Product of Burma is $13.7 billion (Burma
Country Notes). Low estimate applies a remittance value of
1,000 baht ($30.30) per month; high estimate applies a
remittance value of 1,500 baht ($45.45) per month.
MORROW

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