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Subject: Thai papers on 15.8.95
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          Burma uses cheap labour as major magnet for investors

Bangkok Post\Indochina\15.8.1995
Nussara Sawatsawang

BURMA'S POOL of cheap but highly qualified labour is being
pitched as a strong incentive for foreign investors.

Some foreigners are willing to battle primitive aspects of
investing in Burma in exchange for access to the most inexpensive
workers in the region.

Cedar Manufacturing of Bangkok, one of Thailand's leading
knitwear businesses, is so impressed that it is considering
closure of its Thai manufacturing bases soon and relocating them
in Burma.

Within one day of advertising, the company managed to
recruit 800 Burmese workers out of 3,000 applicants. These
workers for the company's Rangoon factory receive monthly wages
of 2,500-3,000 kyats, or about 600 baht.

"It is she cheapest labor in the region compared with, for
example, workers in Indonesia who earn 1,250 baht a month and 750
baht in Cambodia and Vietnam," managing director David Can said.

This is why the company chose Burma for its first foreign branch.

Although cheap by the regional wage standards, the pay a Burmese
will receive from Cedar Manufacturing is much higher than the
minimum wage of 150 baht per month enforced by the Burmese
government, according to Can.

Cedar Manufacturing hopes its decision to enter in Burma can
solve difficulties it has encountered in the last two years in
its Bangkok and Nakhon Ratchasima factories.

Thais don't like sweating in factories any more, even though the
company tries to keep them by paying skilled workers a
comparatively attractive rate of 250-300 baht a day.

"They prefer working in convenient and comfortable places like
air conditioned department stores," Can said.

Laos faces a labor shortage, according to Can. Investors in
Vietnam complain about difficulties in "building loyalty among
workers". Political stability remains a big question mark in
Cambodia. But Burmese are disciplined and able to communicate in

Thai-owned Myanmar Cedar Manufacturing was officially established
last month on six rai in Thin Gun Gyun township, suburban
Rangoon. The company pays 1.5 million baht a month to rent, an
old government factory for 30 X years.

It is among 13 foreign garment-makers investing in Rangoon. Nine
of them are from Hong Kong and three from South Korea, including
conglomerate  Daewoo.

The company's 50-million-baht project is exempt from tax for the
first three years of operations and imports of raw materials for
manufacturing are free of duty. These incentives are allowed
under Burma's Foreign Investment Law. 

The company imports raw materials, yarn and cotton, form Hong
Kong, Taiwan, China, Indonesia and Thailand.

Chan estimates that investing in Burma reduces production costs
to one sixth the level in Thailand in terms of wages. In
Thailand, labour costs 300 baht per dozen knitwear items, as
against 50 baht for the same amount in Burma.

Myanmar Cedar Manufacturing plans to increase its Burmese
workforce to 1,500 early next year when all machinery is
installed and workers are well-trained. It aims to produce 50,000
garments a month and double that capacity by the end of the year.

Chan said he expected that within two years the company's
production base would almost totally be relocated to Rangoon,
leaving the factories in Thailand to handle products at the
higher end of the market.

"The fewer the number of orders, the less overtime will be paid.
The workforce here (Thailand) will therefore be gradually and
naturally reduced."
Chan has already told his European customers of the company's
activities in Burma. Germany, France and Britain account for more
than half the firm"s orders.

"Most of them are positive and willing to import the products
from Burma," he said.
Because of the country's status as least-developed, garments from
Burma are subject to lower tariffs than those from the countries.
No import quota restrictions are imposed.

However, Chan warns newcomers that doing business in Burma is not
all rosy.

Unlike the company's European business partners, potential
American importers are very hard to persuade to accept Burmese
brands. Burma's political situation is the main cause.

Although the release of Burmese pro-democracy leader Aung San Suu
Kyi is a good sign, American companies remain apprehensive about
the influence of pressure groups critical of Burma's human rights

Liz Claiborne, Macy's and Levi Strauss are among companies that
shelved business plans in Burma because of shareholder pressure
and consumer boycotts.

Unrealistic foreign exchange rates pose yet another headache.
According to a Rangoon-based Hong Kong businessman, Burma's only
advantage is cheap labour. Export costs run at 20 times the rate
anywhere else.

The market's exchange rate is 110-120 kyat to $1 against the
official rate of six kyat.

Most companies get around this problem by shipping their finished
products to Hong Kong S for final touches and quality control
before re-exporting them to third markets. Cedar Manufacturing
uses letters of credit for expense accounts in Burma, so that
profits stay in Thailand instead of having to go through the
currency conversion rigmarole in Burma.

Still, the company has to overcome a whole range of other
problems, from power supply to poor 4 port facilities and

The Burmese government mon-opolises shipping. Therefor there is
no choice but to pad whatever prices it names.

For example, Myanmar Five Star Line charges 37,500 baht per- 
container for the Bangkok-Ran I goon route. At the same time, a
container from Bangkok to Hong Kong, a longer route, can be had
for 12,500 baht through private shipping line.

In sum, the pros and cons of the whole package have to be
balanced, according to Chan. "We have to balance the advantages
and disadvantages and take a long-term view".


Mayoral links
Bnagkok Post\Indochina\15.8.1995

RANGOON Mayor U Ko Lay led delegation on an official Visit t
Vietnam at the invitation of Hanoi Mayor Hang Van Nghien

     While in the capital, the Burmese team toured a number of
industrial and agricultural sites and paid courtesy call on
Hanoi's party chief Pham The Duyet, before heading for Ho Chi
Minh City.

Compiled from Agency Franc Press, Paxaxon and Vientiane Mai,
Associated Press, press leases from the Japanese and Canadian
embassies in Hanoi, Vietnam News Agency. 


Suu Kyi meeting
Bangkok Post\Indochina\15.8.1995

UN Assistant Secretary-General Alvaro De Soto, the special envoy
from UN Secretary-General Bo tros Boutros-Ghali will meet pr
democracy leader Aung San Suu Kyi and military leaders during h
August 13-19 visit to Burma.

Daniel Janicot, assistant director-general of UNESCO, also
visited Suu Kyi at her home in Rangoon in the third week of July.

De Soto met Khin Nyunt, co-leader of the military government, and
Ohn Gyaw, the Foreign Minister, in February during a visit to
Burma to study the country's human rights situation.

Typed by Researched Department of ABSDF ABSDF [MTZ]