How does the opening of ASEAN community relate to the people of Bangkok? : The effects (1)

    Recently, I have analyzed and written a lot about entering into the ASEAN community and have given a general picture. However, as Bangkok is the capital city of Thailand, it is the center for many activities. I, therefore, think that it will be very beneficial if there are detailed analyses conducted to find out answers to how the opening of the ASEAN community would affect Bangkok and people who live in Bangkok. 
     Entering and becoming one of the members of the ASEAN community affects the people of Bangkok in many ways and these are as follows.

     1) Unskilled labors are at a risk for unemployment 
     Entrepreneurs in Bangkok tend to face serious competition from products and services from neighboring countries, especially from countries which have lower labor costs. These affect some economic activities in Bangkok due to which products and services are not able to compete with others which are priced lower than them and which are available from neighboring countries. This could have the potential of causing businesses in Bangkok to lose market share and shutdown. Due to this, there will be movement of production plants to areas where labor is cheaper, which results from the domino effect of unemployment from uncompetitive industries.
     Moreover, the trade and investment liberalization within the ASEAN community will cause the flow of investment to move towards neighboring countries. This is because the investors who own production plants in Bangkok may move their plants to neighboring countries in search of new opportunities and lower cost based production.
     The global trend that is occurring consists of investors looking for new opportunities for investment which contains lower production costs than those found in China, examples of which are Indonesia, Myanmar, Cambodia, and Vietnam etc. The direction of investment as mentioned will affect the investment and employment in some industries negatively and in particular  labor belonging to labor intensive industries.
     2) Highly skilled labor encounter intensive competition. 
     ASEAN community will make people in Bangkok face greater competition from the foreign skilled labor. This is because countries in the ASEAN have agreed on 2 important agreements which will freely allow the movement of skilled labor within the region.
     The first agreement is the ASEAN Mutual Recognition Arrangements (MRAs) frameworks for professional qualifications to support the free movement of 8 professional services in the year 2015 namely engineering services, architectural services, surveying qualification, medical practitioners, dental practitioners, nursing services, accountancy services, and tourism professionals.
     The second agreement is the ASEAN Agreement on the Movement of Natural Persons (MNP) which allows transfers within the company (transfer overseas) covering the movement of labor in 25 occupations.
     3) The serious problem of a lack of labor
     The entrepreneurs in Bangkok have to encounter the problem of a lack of labor, both alien labor and skilled labor. This is because the opening of free trade and investment in the ASEAN will cause direct investments to be brought to new members of the ASEAN that have lower labor costs. .      Investment in these countries will cause a large increase in demand for labor, and cause foreign labor from Thailand to leave and return to their home countries. 
     Therefore, the entrepreneurs who employ foreign labor will encounter the problem of a lack of labor or the difficulty in being able to find labor. The mentioned problem will increase the cost of production and make products and services more expensive until they become uncompetitive.
For the problem of a lack of skilled labor, there are 2 important factors to consider:
     The first factor is that the trade liberalization in this region will cause some products and services produced in Bangkok to be exported more to the ASEAN. This will increase the scale of production and the demand for labor.
     The second factor is that the free movement of skilled labor will cause the problem of brain drain. The freer trade in services, especially in medical services, will welcome people in the neighboring countries to take up more medical services in Thailand. A greater number of medical practitioners in Thailand will move to work in neighboring countries such as Singapore, Brunei, and Malaysia where they will be provided with higher incomes than those offered in Thailand. The change will cause insufficient medical services to not be able to meet the demand in Bangkok. 
     4) Social and quality of life problem becoming more serious
     Bangkok will turn into a country with lots of foreigners coming to stay and work. This condition would cause conflicts due to differences in languages, cultures, religion, and personal way of life between the locals and the foreigners in Bangkok. There are also competitors in accession of occupation, accommodation, and resources by foreigners. This could increase the cost of living in Bangkok as a result of economic inequality between the foreigners and the locals. Crimes across the country may increase which may include the problem of drugs, human trafficking, illegal businesses, and financial laundering etc.
     The quality of life of some group of people in Bangkok may become worse, causing more strain on the environment, particularly air pollution, water pollution, and the problem of trash overflow. Furthermore, the free flow of products may cause low quality and low standard products to flood into the country. If the investigation of the quality and standard of the products are poor, these products can cause damaging impacts on domestic consumers. 
     We see that the entering to ASEAN community may cause many negative effects to people who live in Bangkok. However, the opening of the ASEAN community can also bring in opportunities for those who see it as such. I will also elaborate on the opportunities for the people of Bangkok in the next article.


Kriengsak Chareonwongsak
Senior Fellow at Harvard University’s Center of Business and Government.
Source : amthaipaperissue0088