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Injecting dose of reality to Asia’s rising economic prowess

Updated On: Apr 14, 2006

For all the optimism about Asia’s rise and emerging economic prowess, many problems remain to be resolved, such as labour issues, basic infrastructural needs, and rising economic nationalism. Sometimes the euphoria of growth masked the many challenges that need to be addressed urgently. Ifzal Ali, the chief economist of the Asian Development Bank (ADB) describes it this way: “With nearly half its workforce underemployed or unemployed, the development debate in Asia is shifting from obsessive concerns over rapid economic growth to creating 'productive' employment.” A recent ADB study on labour markets, to be released in a week’s time, will post an estimate that around 500 million will be underemployed or unemployed in a workforce of 1.75 billion by the end of 2025 (AFX–Asia, April 11). The challenge for the coming decade is to create about 750 million “productive and decent jobs” to maintain social and political stability and economic growth in the region. The United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) held a ministerial level roundtable dialogue in Jakarta on April 11 to discuss regional cooperation in development of infrastructure. The UNESCAP statement reported a current imbalance between the supply and demand for funds for infrastructure development programs in the region, and whose efficient implementation is vital for the opening of Asia-Pacific access to global trade and investment flow. More attention, according to UNESCAP, needs to be paid to the investment flow to the infrastructural sector. Besides new free trade and energy deals, China and Indonesia have also found economic nationalism knocking on their doors. Indonesia is, in the main, still reeling from the anti-imperialist sentiments since US Secretary of State Condoleezza Rice’s visit last month, and coinciding with public unrest over the Pertamina-Exxon Mobil deal and PT Freeport’s practices. The China Daily Business Weekly on April 10 reported that a “broad coalition of officials and businessmen has voiced concern that massive sales of China's assets [such as stakes in Chinese state-owned banks to foreign banks could lead to foreign monopolies in key sectors.” The change in domestic sentiment, unprecedented in recent months, was in large part a result of growing US and European resistance to low-cost Chinese exports. Labour problems are currently plaguing Vietnam and Indonesia as the states walk the fine line of seeking integration with the global economy and managing public welfare. Vietnam has been experiencing three months of worker strikes in the tens of thousands affecting more than 100 plants, the worst in post-war Vietnam. The workers are demanding adjustment to minimum wage (still based on the 1999 exchange rate), addressing employer violations of the Labour Code, and the right to form independent unions. In response, the government had ordered foreign companies to raise the minimum wage by 40 per cent to US$55 a month in February this year – hitherto unrevised since 1999 – but such a move has prompted wide protest from the latter, and dealt a blow to the foreign investment climate in the country. To prevent the problem from escalating further, the Deputy Chairman of the HCM City People’s Committee, Nguyen Thien Nhan, has revealed new plans to reduce labour disputes, such as raising the percentage of grassroots labour unions in place at foreign-invested enterprises (FIEs) from 35 per cent to 80 per cent by the end of the year. Free courses in Foreign Investment Law and the Labour Code and training courses will be offered to improve the education and skill levels of the labourers. Indonesia also experienced weeks of worker protests in many cities across the country when the government moves to revise Law No. 13/2003 on manpower, to appeal to foreign investors’ demands, but which will drastically lower severance packages. Thousands of workers from the National Trade Union (SPN) recently threatened to stage a nation-wide strike on May 1, 2006, International Labor Day. This new development came about in spite of the President’s decision to shelf a revised version of the manpower law that was originally to be submitted to the parliament for deliberation. Doubts were raised with regards to how much workers interests would be represented in the tripartite forum comprising government, employers and workers representatives tasked to formulate new amendments to the manpower law. Since April 11 however, the tension saw some reprieve with business community and labour union support for the government’s new plan to insure dismissed workers through state-owned insurance firm PT Jamsostek. Sources: Workers throng Jakarta streets to protest manpower law revision (Antara, 5 April 2006) E Java legislature backs workers' refusal of labour law revision (Antara, 5 April 2006) HCM City plans to reduce labour disputes (Vietnam News Services, 8 April 2006) Asia-Pacific infrastructure needs greater attention (Antara, 8 April 2006) Viet labour strikes scare foreign investors (AFP, 10 April 2006) Asia needs to move from rapid economic growth to creating good jobs – ADB (AFX – Asia, 11 April 2006) Thousands of workers again rally outside Merdeka Palace (Antara, 12 April 2006) Scheme for fired workers welcomed (The Jakarta Post, 12 April 2006) Tactical retreat on labour Bill prudent; But it may be not enough to stop political temperature from rising (The Business Times Singapore, 12 April 2006) China faces backlash over asset sales to foreigners (AFP [reproduced in the Straits Times], 12 April 2006) SPN threatens to stage nation-wide strike on May 1 (Antara, 12 April 2006)