Proceedings of European Business Research Conference
Sheraton Roma, Rome, Italy, 5 - 6 September 2013, ISBN: 978-1-922069-29-0
Opinion of SMEs towards Labor Mobility under AEC
Mission: A Case in Mukdahan Province
Opal Suwunnamek, Poramate Asawaruangpipopand Suneeporn
Suwanmaneepong***
The volume of border trade in Mukdahan province, Thailand, has
played the significant role compared with other provinces along the
Thai-Laos border, as its location is on the East-West Economic
Corridor (EWEC) linking among Myanmar, Thailand, Laos, and
Vietnam. The Economic liberalization in ASEAN may be the
opportunity or the threat for Thai SMEs. In addition, the point of their
readiness for AEC is also in question. This paper attempts to explore
SME business characteristics and their opinion towards labor skill,
labor mobility, the effect to their business, and opinion for Thailand.
Descriptive analysis was applied. A hundred enterprises in Muang
district, Mukdahan province, were interviewed by questionnaire in
2012. The result showed that the surveyed businesses in the province
were mainly small, performing services such as consumer goods
retailing. The operation was lower than 5 years, with hardly found any
certificates from the government. Wage rate was around 100-400 baht
a day, while the payment was not different between Thai and foreign
workers. Preferrable characteristics of labor was good human
relations, demanded skills were technical skill, language in the AEC,
cultural skill, and English skill. More than 50 percent knew about free
labor mobility via TV. Expected foreign workers were from Laos,
Vietnam, and Myanmar, respectively. The strong points of Thailand
and Thai worker were efficient labor mobility control, cheaper wage
compared with the developed nations, and technical skill. The weak
points were such as lack of English skill, higher wage compared with
those of the neighboring countries, and the control of career standard
for the foreign workers in Thailand. Although free labor mobility can
increase business chance, the negative effect might be considered.
1. Introduction
Mukdahan province is located in the southern part of Northeast Thailand. From the
quiet place along the Mekong River, at present, it has been connected to be the new
economic area since the openness of the Second Thai-Laos Friendship Bridge in
January 2007. It has a potential for being the economic zone as it is on the route of

Opal Suwunnamek, Ph.D. , Administration and Management College,
King Mongkut’s Institute of Technology Ladkrabang, Thailand. Email: opal_s@yahoo.com ,
ksopal@kmitl.ac.th

Mr. Poramate Asawaruangpipop, Administration and Management College,
King Mongkut’s Institute of Technology Ladkrabang. Thailand. Email: poramatea@yahoo.com
***
Suneeporn Suwanmaneepong, Ph.D. National Science and Technology Development Agency,
Thailand. Email: ksuneeporn@gmail.com
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Proceedings of European Business Research Conference
Sheraton Roma, Rome, Italy, 5 - 6 September 2013, ISBN: 978-1-922069-29-0
East-West Economic Corridor (EWEC) which covering 4 countries, namely, Myanmar,
Thailand, Lao PDR, and Vietnam, linking the east side of Thailand to Savannakhet
province, Lao PDR, and to central Vietnam. The flow of trade can be extended to
China, by this route, as well.
This province is on the Gateway to South China Sea, by Route No. 9, taking about
520 km. Meanwhile, it is an entry point to Andaman Sea in the west of Thailand,
passing KhonKaen, Phisanulok, and Tak provinces to Mewadee province in Myanmar,
taking about 930 km.
The share of border trade volume passing to Mukdahan was about 25%, while the
biggest was the trade to Nongkhai, 48% of the total trade volume along northeast
Thailand border. As informed by Mukdahan Customs, the trade volumein 2012 was
28,677.19million baht. This percentage was 12.45% increased from 2011. Major
exports were Diesel gasoline, vehicles and parts, machines, while major imports were
copper and products (69.76%), lumber (7.28%), and vegetables (3.74%)(Thailand
Department of Foreign Trade, 2013).
SMEs in Thailand have played an important role in supporting big manufacturing
enterprises, generating careers and income to many households. Due to the surveyed
result in 2010from 55 provinces over Thailand, the Office of Small and Medium
Enterprises Promotion (OSMEP) reported that SMEs in the Northeast region was the
second biggest next to SMEs in the Central Thailand. Most of businesses were in
trading, services, and manufacturing, respectively. From the total 188,030 enterprises,
SMEs in Mukdahan province were about 1,383 enterprises, of which 97.83% were
small (Office of Small and Medium Enterprises Promotion, 2012).
Regional integration in ASEAN to be ASEAN Economic Community (AEC) in 2015,
towards creating a single market and production base, will be a driving factor to attract
companies from home and foreign countries in this ASEAN region. However, to let
Thailand more competitive and to have efficient and profitable business possibilities
for companies operating in Thailand, free movement of production factors, especially
labor, have to be realistically of interest from the concerned institutions. In particular, it
is necessary for SMEs to develop their human resources to be ready for both
competition and cooperation in their businesses these days.
This paper, therefore, is aimed to examine SME business characteristics and their
opinion toward labor mobility, and to evaluate the strength, weakness, opportunity,
and threat of Thailand in relation to labor mobility and the impact to SMEs.It is
expected that some measures or guidelines can be made, and leadsto the economic
promotionand international collaboration in the region.
2. Literature Review
There are many studies focusing on labor mobility and regional integration. Human
capital is essential for economic growth, competitive advantage, human development
and quality of life. Huselid, Jackson, & Schuler (1997), as well as MacDuffie (1995),
also analyzed that there were the linkage between human capital development and
the performance of the organization. Especially Becker (1993), he insisted that
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Proceedings of European Business Research Conference
Sheraton Roma, Rome, Italy, 5 - 6 September 2013, ISBN: 978-1-922069-29-0
education and training are the most important investment in human capital. The
migration of human capital can be from attractive pull factors from advanced nations,
in order to get job opportunities in certain sectors of the labor market along with the
hope of a better life (ECLAC, 2005).The formation of human capital can be from
education, training and talent transference (Psacharopoulos, 1985; Useem, 1993)
which had to be unavoidably supported by government, public policy, employing and
learning organizations.
With regional integration, enterprises can reduce their costs to meet more
competitiveness.
According to the economic integration in this region, there are cases of Thailand,
informing the value of East West Economic Corridor (EWEC) by the view of concerned
stakeholders. Apichatvullop and Phucharoensilp (2007) reported on 3 groups of
stakeholders, local organization, private businesses and the local residents. They all
agreed that this Project promoted tourism in the region. The local organizations
expected policies related to EWEC would support their tasks. The view from private
businesses and local residents, however, were more concerned on environmental
degradation and social problem in the community. These stakeholders had to
strengthen their capabilities to cope with this change.Jaroenwanit and Chaisrisuth
(2011) analyzed the economic impact of EWEC on SMEs in KhonKaen and Kalasin
provinces. It was found that the impacts were an increase of competitors, increase of
trading partners, and growing provincial economy. Negative impacts were such as the
influx of “Made in China” products which had lower production costs. Lack of
understanding about EWEC among Thai SMEs was also the problem.
3. The Methodology and Model
This paper focused on 100 SME enterpreneurs in Muang and DonTan districts,
Mukdahan province, as they are closed to the Lao border. The sampling method was
Non-probability sampling. Proposive sampling was selected in order to get
collaboration from the interviewees.
Questionnaire was constructed and tested. Elements of questionnaire consisted of 3
parts and descriptive statistics was conducted. They comprised:
Part 1 – divided into 2 sub-parts:
1.1 SME characteristics. This informed address, types, forms of
business, year established, number of working capital, portion of
shareholders, portion of sales and service in the country or in foreign
countries, destination if exports, and availability of company
standards. Nominal scale and ordinal scale were applied for the
questions in this part.
1.2 SME employment. This informed total employment numbers,
availability of foreign workersand their nationality, minimum wage a
day between Thai worker and foreign worker, workercharacteristics to
be suitable for SME business,worker skill to meet SME requirement,
and the problems confronting.Nominal scale, ordinal scale and ratio
scale were applied for the questions in this part.
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Proceedings of European Business Research Conference
Sheraton Roma, Rome, Italy, 5 - 6 September 2013, ISBN: 978-1-922069-29-0
Part 2–SME perception and understanding about free labor mobility. Nominal
scale was applied for most questions in this part
Part 3 –SME opinion towards the effect from free labor mobility due to AEC
agreement. Opinion questions in this part were ranged from the least important to the
most important. Likert scale was applied. Open-ended questions were determined as
well.
4. The Findings
4.1 SME Characteristics and Employment
4.1.1 SME Characteristics
It was found that SMEs in the surveyed area were in 3 typed of businesses, services,
trading, and manufacturing. About 53% of the respondents were on retailing, while
32% in services in forms of restaurants and tourism, and the least 3% in
manufacturing. More than 69% of the surveyed enterprises performed the business in
personal form, while 28% were in corporate form, which most were in company form.
The year establishment was less than 5 years, accounting for 42%, when the next
31% were around 6-10 years. 52% of the respondents had not more than 1 million
baht (US$32,258) of registered capital. It was noticed that there were 38% of the
samples that did not bring their businesses to register officially. 99% were Thai
ownership.
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Proceedings of European Business Research Conference
Sheraton Roma, Rome, Italy, 5 - 6 September 2013, ISBN: 978-1-922069-29-0
Table 1 SME Characteristics
Frequency
(enterprise)
Percentage
Services
32
32
Trading
65
65
Manufacturing
3
3
Personal form
69
69
Corporate form
31
31
- Company
28
28
- Partnership
-
-
- Others (community enterprises)
3
3
12
12
84
84
Less than 5 years
42
42
6-10 years
31
31
11-15 years
18
18
16-20 years
5
5
More than 20 years
4
4
Not more than 1 million baht
52
52
1-5 million baht
More than 5 million baht but not over 50
million baht
8
8
2
2
Do not Register
38
38
Thai
99
99
Foreigner
1
1
100
100
Types of business
Status of the enterprise
Branches of the enterprises
Have
Have not
Year establishment
Registered capital
Shareholders portion
Total
Source: From the survey
The major portion of trading and services were focused on domestic market (84%),
while 16% exported to Lao PDR, Vietnam, and China.
According to the standard or license given from the state or the third party, it was
found that there were only 9 enterprises received the standard such as ISO standard,
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Proceedings of European Business Research Conference
Sheraton Roma, Rome, Italy, 5 - 6 September 2013, ISBN: 978-1-922069-29-0
cleanliness standard, tourism business standard, and “Or-Yor” (food standard from
Thailand’s Food and Drug Administration) .
4.1.2 SME Employment
According to the survey, most of them (86%) employed 1-5 full-time staffs. 99% hired
foreign workers. All were Lao. Minimum wage they paid at the lowest level was 100
baht a day, while the highest was 400 baht a day. 32% of the surveyed enterprises
paid 200 baht a day while 20% paid 300 baht a day. Most of them, 83%, made no
difference of minimum wage between Thai workers and foreign workers. However,
there were 17% made different. With this group, 12 enterprises made 50 baht
(US$1.61) higher, 3 enterprises made 100 baht (US$3.22) higher, and 2 enterprises
made 150-160 baht (US$4.84-5.16) higher for Thai worker than foreign worker.
Table 2 The Difference between Wage of Thai and Foreign Workers
Frequency
(enterprise)
Percentage
No different
83
83
Different
17
17
Total
100
100
50 baht a day
12
12
100 baht a day
3
3
150 baht a day
1
1
160 baht a day
Source: From the survey
1
1
Wage between Thai and foreign workers
The wage difference
The reasons why there were different between the wage for the Thai and the foreign
workers were because 1) knowledge and ability of the Thai is higher, 2) Thai worker
performed better than the foreign worker, 3) foreign worker had lower education
degree compared to the position, 4) Thailand had higher living cost that needed to pay
more, and 5) most of foreign workers stayed together with the entrepreneurs that
needed not to pay more.
Due to the worker’s characteristics that was suitable for the business, it was found that
friendly-type of worker was chosen. The others were female, vocational school
graduated, having experiences or training, and having years of age in the working life.
The preferable age was 18 years of age, and the next was 20 years of age.
Due to worker skill requested by those businesses, 32 enterprises indicated that it was
not necessary to have skill, while 68 enterprises agreed upon skilful workers. The
most preferable skill was technical skill for work, while language skill of the countries in
AEC, cross cultural skill, computer skill and English skill were respectively indicated.
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Proceedings of European Business Research Conference
Sheraton Roma, Rome, Italy, 5 - 6 September 2013, ISBN: 978-1-922069-29-0
4.2 SME Perception and Understanding on Free Labor Mobility
To the survey, 61 enterprises knew about free labor mobility under AEC in 2015, while
39 enterprises did not know. Sources of information were from TV, official documents,
news, and trade association documents, respectively. However, it was found that they
did not understand about this matter, sharing about 59 %, while 41% showed “rather
understand” to “absolutely understand”.
Upon their opinion the foreign workers that were expected to come to work in
Thailand, they agreed that the Lao, Vietnamese, and Burmese would, respectively, do.
Table 3 Opinion on Mobility of Foreign Workers to Thailand
Ranking of foreign workers to Thailand
Country
Frequency
(enterprise)
%
1
Lao PDR
30
30
2
Vietnam
27
27
3
Myanmar
23
23
4
Others
20
20
On the contrary, the mobility of Thai workers to ASEAN countries was mentioned on
Singapore, Malaysia and Vietnam. In addition, the opinion from 48 enterprises focused
on other countries not in AEC, especially countries in the Middle East, due to higher
returns.
Table 4 Opinion for Thai Workers to Foreign Countries
Ranking of Thai workers to foreign countries
Country
Frequency
(enterprise)
%
1
Singapore
20
20
2
Malaysia
18
18
3
Vietnam
14
14
4
Others
48
48
In addition, factors determining mobility of workers were the expectation of better
returns (25%), foreign experiences (23%), learning of new technology and innovation
from foreign countries (21%), socio-economic of the expected country (18%), and
insufficient vacant position in the country (13%).
4.3 Opinions of Free Labor Mobility towards Their Business Performance
According to the samples, 35 enterprises indicated that they might get both positive
and negative effects from this issue, 25 enterprises were optimistic due to lower cost
of production and more foreign customers, 22 enterprises were pessimistic as the
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Proceedings of European Business Research Conference
Sheraton Roma, Rome, Italy, 5 - 6 September 2013, ISBN: 978-1-922069-29-0
more competition in Thai labor market and wage problem, and 18 enterprises found no
change.
Table 5 Opinion towards Their Business Performance
Expected effect
Get benefit
Frequency
(enterprise)
25
Get negative effect
22
Get both positive and
negative effects
35
Get no change
18
Reasons
- to hire more Lao workers
- to get cheaper wage from foreign
workers
- to get more customers
- may get more profit
- hard to manage upon the different
of wages between Thai and
foreign workers
- high competition from foreign
workers to get jobs in Thailand
- more severe business competition
- wage problem
- the openess of trade chance
- may get some negative but can
make business profitable.
- to get more workers
- no problem of workers
- performs in small scale that may
not get much effect,
- Thai workers mainly.
Source: From the survey
As for the improvement of their business to be ready for free labor mobility, it was
found that their opinion on the process of service or the production to meet standards
is necessary. The next was to better the welfare, and to do more training to increase
worker’s efficiency.
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Proceedings of European Business Research Conference
Sheraton Roma, Rome, Italy, 5 - 6 September 2013, ISBN: 978-1-922069-29-0
Table 6 Opinions towards Their Business Improvement towards Free Labor
Mobility
items

X
SD
2.81
1.293
3.15
1.351
3. increase wage
3.01
1.243
4.improve welfare
3.25
1.184
5. invest in lower wage countries
2.96
1.271
6.improve process in
services/production
Source: From the survey
3.37
1.269
1. reduce employment and invest
in new machines
2. more training to increase
worker’s efficiency.
4.4 Opinions towards Strengths, Weaknesses, Opportunities, and Threats of
Thailand
Upon the survey of the strength of Thailand, when AEC is active, overall they agreed
upon this matter. In particular, they said Thailand has cheaper wage compared with
the developed nations, Thai SMEs used technology in the process that can be easily
adjusted themselves, Thai labors had skill and capable for competition, and Thailand
has efficient worker control measures, respectively.
Table 7 Opinion towards the Strength of Thailand
items
1. Thailand has cheaper wage
compared with the developed
nations
2. Thai SMEs used technology in
the process
3. Thai labors had skill and capable
for competition
4. Thailand has efficient worker
control measures

X
SD
3.29
0.591
3.13
0.506
3.07
0.432
3.00
0.778
Upon the survey of the weakness of Thailand, when AEC is active, overall they agreed
upon this matter. In particular, they said Thai workers lacked of English capability,
most of Thai SME did not know the free mobility form AEC agreement, and the wage
was
higher
than
the
neighboring
nations,
respectively.
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Proceedings of European Business Research Conference
Sheraton Roma, Rome, Italy, 5 - 6 September 2013, ISBN: 978-1-922069-29-0
Table 8 Opinion towards the Weakness of Thailand
items

X
SD
3.19
0.506
3.18
0.539
3.13
0.580
3.10
0.644
5. lack of PR on AEC
3.05
0.730
6.lack of control on career standard
for foreign workers
Source: From the survey
3.02
0.738
1. Thai workers lacked of English
capability
2. most of Thai SME did not know
the free mobility form AEC
agreement
3. higher wage than the
neighboring nations
4.lack of continuous training to
Thai workers
From the survey of the opportunity of Thailand, when AEC is active, overall they
agreed upon this matter. In particular, they agreed that the free mobility would lead to
more competition, that might lead to lower wage, more chance for Thai workers to
improve English from co-working, and the adjustment of Thai worker to fit the more
competition, respectively.
Table 9 Opinion towards the Opportunity of Thailand
items
1. free mobility would lead to more
competition, and might lead to
lower wage overall
2. more chance for Thai workers to
improve English from co-working
3. the adjustment of Thai worker to
fit the more competition
4. the chance for entrepreneurs to
do more training to improve
worker’s skill

X
SD
3.19
0.631
3.13
0.464
3.11
0.424
3.08
0.367
Upon the survey of the threat of Thailand, when AEC is active, overall they agreed
upon this matter. In particular, they agreed upon the competition from the foreign
workers that had similar skill, but cheaper wage, the negative effect to the life quality in
the nation, and higher operation expenses in the nation due to lack of workers.
However, they did slightly not agreed upon the lack of competition due to weak
English capability.
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Proceedings of European Business Research Conference
Sheraton Roma, Rome, Italy, 5 - 6 September 2013, ISBN: 978-1-922069-29-0
Table 10 Opinion towards the Threat of Thailand
items
1. the competition from the foreign
workers that had similar skill, but
cheaper wage
2. the negative effect to the life
quality in the nation
3. higher operation expenses in the
nation due to lack of workers.
4. the lack of competition due to
weak English capability

X
SD
3.08
0.563
3.05
0.687
3.01
0.595
2.95
0.592
5. Summary and Conclusions
The case study of Mukdahan indicated that, most of the enterprises were small,
focusing on services and trading business, hiring about 1-5 full time workers. The
major portion of trading and services were focused on domestic market, while a few
portion exported to Lao PDR, Vietnam, and China.
According to the standard or license given from the state or the third party, it was
found that there were only 9 enterprises received the standard such as ISO standard,
cleanliness standard, tourism business standard, and “Or-Yor” (food standard from
Thailand’s Food and Drug Administration).
There are different between the wage of Thai and foreign workers, especially Lao
worker. The reasons were because 1) knowledge and ability of the Thai is higher, 2)
Thai worker performed better than the foreign worker, 3) foreign worker had lower
education degree compared to the position, 4) Thailand had higher living cost that
needed to pay more, and 5) most of foreign workers stayed together with the
entrepreneurs that needed not to pay more. Preferrable worker’s characteristics were
mainly on friendly-type, technical skill, languages of countries in AEC, computer, and
English skill. They were agreed upon the effect from free mobility of labor that have
both positive and negative. In addition, they have positive opinion towards the
adjustment of Thailand towards the free mobility under AEC agreement. Labor wage in
Thailand is comparatively low compared with the developed nations. Moreover, it
seems that Thai workers have flexibility and capability for learning, the chance for Thai
workers to improve English from co-working, and the adjustment of Thai worker to fit
the more competition indicated strength and opportunity. Howver, there is unavoidable
that the severe competition on jobs may be occurred.
In order for SMEs to be ready for competition, and to be ready to attract more skilled
workers, while preventing their labor shortage, welfare improvement, training to
increase worker’s efficiency, and improvement in service or production process have
to be considered. Moreover, the suggestion to the Government to help SMEs improve
themselves in relation to free labor mobility are 1) the control of foreign workers, 2)
strict regulation especially to the law-breaker, and 3) to promote suitable labor
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Proceedings of European Business Research Conference
Sheraton Roma, Rome, Italy, 5 - 6 September 2013, ISBN: 978-1-922069-29-0
employment to match proper job position. However, the negative impact, especially in
social issue that affects safety and life quality should also be considered.
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