Human Resources & Payroll
By Dezan Shira & Associates
Editor: Maxfield Vandel Brown
With over 625 million inhabitants spanning 10 member states, ASEAN is endowed with a diverse workforce capable of supporting a multitude of manufacturing and service based investments. For those exploring opportunities or actively investing in the region, the benefits of being able to house entire value chains within the bloc must simultaneously be tempered with an understanding that availability of talent and the regulatory conditions under which staffing takes place are largely determined at the member state level. Navigating the dynamics of individual members is therefore a critical precursor to narrowing a search for opportunity within ASEAN and an integral component of strategic planning and expansion.
By Dezan Shira & Associates
Editor: Alexander Chipman Koty
As Myanmar continues to open up after years of isolation, many foreign investors and multinational companies are entering the country for the first time. For investors establishing businesses from the ground-up, skilled and experienced foreign workers are often brought in to oversee the establishment of new operations. The ability to employ skilled foreign workers is particularly important in Myanmar given the poor state of training and work-preparedness in the country. According to the Ministry of Labour, Employment and Social Security, of Myanmar’s population of approximately 52 million, there are only about 500 skilled workers who meet international standards.
The laws concerning the employment of foreign workers in Myanmar are still developing, as is the case with many other regulations governing the country’s rapidly changing business environment. Myanmar lacks a comprehensive work permit system for foreign workers, though the National League for Democracy-led government is drafting legislation to create a more cohesive framework. That being said, there are currently multiple paths for foreigners to acquire legal working status in Myanmar, which will be explored below.
The latest issue of ASEAN Briefing Magazine, titled “Human Resources in ASEAN“, is out now and available to subscribers as a complimentary download in the Asia Briefing Publication Store through the month of January.
In this issue of ASEAN Briefing
- Sourcing Talent in ASEAN: A Guide to Regional Opportunities
- Assessing Regional Wage Differentials
- Overtime and Social Insurance Compliance Considerations
By Zolzaya Erdenebileg
The Thai cabinet on November 22, 2016 approved the recommendations of the Central Wage Committee to increase the daily minimum wage rates by an additional five to 10 Thai Baht (THB) for 69 provinces with effect from January 1, 2017.
This will be the first adjustment in the country’s minimum wage rates since January 1, 2013. Currently, the minimum wage is THB 300 (US$8.39) per day across the country. The current minimum wage rate will be maintained in the eight provinces of Sing Buri, Chumphon, Nakhon Si Thammarat, Trang, Ranong, Narathiwat, Pattani and Yala.
By: Dezan Shira & Associates
Myanmar’s Ministry of Labour, Immigration and Population has extended e-visas to three overland crossings with the Kingdom of Thailand. Following a limited introduction of e-visas at select airports in July, the rollout of e-visas at land crossings has been applied since September 1st. The move is set to significantly reduce application times, and is being rolled out as part of a larger push to replace in person applications that were previously required.
Overland Crossings Set to Accept e-Visas
While more crossings are to be included in the near future, the three crossing that currently accept e-visas include Tachileik, Myawaddy, and Kawthaung. Similar to the rollout of e-Visas for aviation, the introduction of the e-visa program at land crossings is to be gradually expanded as athourities optimize their internal system.
- Tachileik: Located in the north of the country, Tachileik is a key point of transit for those traveling between Laos and Myanmar via Thailand.
- Myawaddy: Located in Central Myanmar, this crossing has become a hub for the transit of gems and other mineral resources flowing out of Myanmar.
- Kawthaung: The southern most crossing that has been opened to the land e-visa program. Primarily used as a transit point for tourists crossing between the two countries, the area is also known for agriculture products including: rubber, betel nut, cashew nut, coconut and oil palm.
By: Aysha Nesbitt
Though more companies than ever are making strides to manage and improve the image of their operations, the constant appetite for cost reduction exposes supply chains to the reputational risk of worker exploitation. With some of the world’s most cost competitive hubs, ASEAN and its regional competitors offer a diverse array of labor conditions. Investors choosing ASEAN as a means of gaining an edge over competitors must therefore be cautious of where they choose to commit capital and the characteristics of the markets in which these investments are made.
Of the nearly 21 million people in the world today trapped under forced labor, 56 percent reside in the Asia-Pacific Region. Forced labor refers to any work people are forced to do against their will, including bonded labor, child labor, and all slave practices. Today it is tied closely to construction, manufacturing and agriculture, with 68 percent of forced laborers working in these industries.
For investors in at risk industries seeking to expand into ASEAN and its surrounding competitors, understanding the factors that drive exploitation and creating investment strategies to avoid these risks can provide significant mitigation against future losses. Furthermore, given effective due diligence, the implementation of these strategies can come at a minimal up-front cost.
By: Maxfield Brown
Indonesia has announced its intention to propose a regional minimum wage for ASEAN during a recent World Economic Forum event held on the first and second of June in Kuala Lumpur. During the event, Indonesian officials cited wage disparities between low cost production hubs such as Vietnam and those economies with more expensive labor forces, and expressed concerns that these differences could result in a race to the bottom and ultimately lead to the exploitation of workers. The specifics of Indonesia’s proposal are expected to be released at the upcoming ASEAN manpower ministers’ meeting.
Surprisingly, there has been considerable fanfare behind the idea of an ASEAN minimum wage, with Cambodia and Vietnam among those showing support. However, the extent of regional commitment remains to be seen as nations continue to compete for capital inflows brought on by a number of pending trade agreements and relatively competitive workforces. Beyond doubts over the willingness of nations to implement a minimum wage, questions also arise over the current capacity of ASEAN as a whole to institute regional standards of this magnitude.
From the perspective of investment, collective commitments to a regional wage minimum bring up important questions over the structure of wage floors within ASEAN. With regard to regulation as a whole, talk of a minimum wage also necessitates reflection on the ability of ASEAN’s current treaty structure to institute and enforce regulations of this magnitude.
By: Alexander Chipman Koty
With the establishment of the ASEAN Economic Community (AEC) at the end of 2015, ASEAN achieved a significant milestone in the region’s growing political, economic, and cultural integration. As set out in 2007’s ASEAN Economic Blueprint, the AEC seeks to “transform ASEAN into a region with free movement of goods, services, investment, skilled labour, and freer flow of capital.” While considerable progress has been made in liberalizing and normalizing the region’s standards in most of these areas, establishing the free movement of skilled labor lags appreciably behind.
Although ASEAN has clearly stated its goal to promote skilled labor mobility, current policies not only trail the European Union, where freedom of movement is essentially unencumbered, but also less ambitious regional trade agreements such as the North America Free Trade Agreement (NAFTA) and the Caribbean Community (CARICOM). The lack of a cohesive regional framework, nationalist and protectionist policies, and middling political will impede ASEAN’s skilled labor mobility. However, employers can still take advantage of policies that facilitate the hiring of skilled workers in certain sectors to address the frequent skilled labor shortages found within ASEAN countries.
By Dezan Shira & Associates
Editor: Ellena Brunetti
Personal Income taxation in Malaysia is laid out in general terms under the Income Tax Act of 1967. While this is the principal piece of legislation covering taxation in Malaysia, further legislation has since been introduced in order to supplement and clarify existing policy.
Enacted on an annual basis, the Malaysian budget is one of the most readily available tools to governing authorities with respect to the alteration of existing taxation policy taxation – allowing for yearly clarification of the income tax regimes’ application.
By: Mareike Entzian
It is important to evaluate current minimum wages across ASEAN every couple of years, as they often fluctuate heavily and impact productivity, profits and ultimately investor decisions. With recent shifts towards a “China Plus” strategy within APAC at large, examining minimum wages across ASEAN is an increasingly useful strategy. Although wages alone will not determine the utility of given markets, minimum wage trends provide valuable insight on whether a country is likely to be a sourcing, production, or sales market for a given product. Trends show sustained inflationary pressures on wages within the region as ASEAN-5 members make an effort to bolster middle class growth and transition their economies away from traditionally export led growth.