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21 Oct 2009

Thai Economy

Thai Workers Overseas: Income Repatriations Falling THB 5-10 Billion (Business Brief No.2668)

The latest situation of Thai workers employed internationally improves YoY. There were 12,403 Thais officially permitted to work abroad in August 2009, dropping by 3.2 percent YoY, against the 4.5 percent shrinkage in July. Meanwhile, the overall situation has improved over the situation in March 2009 when there were only 9,592 Thai workers officially permitted to work overseas. This was also the lowest level in 14 years (the monthly data has been complied since 1995.)
Compared to the data of previous month, the number of Thai officially permitted to work abroad, however, continues to decrease, reflecting the unstable recovery. Considering the situation of Thais working in each country, it is found that the number of Thai workers in some countries such as in Singapore, Malaysia and Israel has become worse than the situation of previous months. Although the total Thai workers’ income repatriations show a decelerated contraction from 16.8 percent shrinkage in July to 11.3 percent in August, the income repatriations have continued to contract for eight consecutive months (during the first-eight months of 2009.) As a result, the income repatriations dropped 14.7 percent YoY, or around THB6.2 billion, against the 11.9 percent growth in 2008.
Forthe trend of Thai workers employed internally over the remainder of 2009, KASIKORN RESEARCH CENTER is of the view that the recovery signal is still fragile. There are many risks ahead, particularly the economic trend and the worker-related policy of the destination countries. Although the economic trend of many popular destination countries for Thai workers, such as Taiwan, South Korea and Singapore signals a recovery, the unemployment rate in those destination countries remains high. As a result the business sector may take some time to adjust excess production capacity and absorb unemployed workers. Hence, demand for foreign workers, including Thais, may be on the decline.
Meanwhile, Thai workers overseas still face many restrictions, such as the labor-related policy. Many countries have introduced a policy to limit or reduce the number of foreign workers. In detail:
- Asian countries. For example, the government of Taiwan has planned to amend the regulations relating to foreign workers and may reduce the number of foreign workers in construction sectors and production industries in order to reserve those job positions for the local people. Meanwhile the government of Singapore encourages relevant parties to hire local workers rather than foreign workers. In Singapore, Thaiworkers are currently allowed to work in construction sector, shipyard industry and work as housemaids. On the part of Japan, its government also set a policy to hire Japanese workers rather than foreign workers. Hence, there are only some types of job (that Japanese do not want to do) available for foreign workers.
- Middle Eastern countries, such as UAE, Bahrain, Kuwait and Israel all issued policies to restricting foreign workers as well.
Amid these risks and restrictions, KResearch therefore maintains our 2009 projection for the number of Thai workers officially permitted to work overseas at 152,300–159,700, a decrease of 1.3-5.9 percent YoY – a continued contraction from the 0.1-percent shrinkage in 2008. Though the trend of Thai workers’ repatriation income will likely post a positive growth in November YoY (due to the low base effect of last year with a boost from the strengthening recovery of destination countries’ economies), income repatriations generated by Thai workers abroad in 2009 are expected to decrease 8.3-15.8 percent YoY to around THB5-10 billion, compared to the 11.9-percent growth seen in 2008 as a result of the decline in the number of Thai workers overseas in early 2009 in line with the ebbing demand for foreign workers. Nonetheless, an improved economic situation in destination countries in line with the global economic recovery may helps boost the situation for Thai workers abroad to gradually improve in 2010, which would in turn have some positive impact on their income repatriations.

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