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The Scandal of Foreign Labor in Asia

Exploitation, corporate greed, authoritarian hangovers characterize too many labor relationships throughout Asia, but it may be changing The draconian action taken by the Singapore government against striking bus drivers a week ago, expelling 29 of them and charging another five, is emblematic of the treatment foreign labor can expect in most of Asia’s countries, not just the island republic. Another was charged with inciting by posting comments on a Chinese social network site and was jailed for six months after pleading guilty.Some 171 Chinese national bus drivers employed by the Singapore government-controlled transit company SMRT walked off their jobs, claiming they were underpaid relative to other foreign workers doing the same job and forced to live in poorly sanitized barracks, in what has been called the first strike in Singapore since 1986.

The dispute had its origins in a new work contract imposed on the workers in July, which raised the weekly wage of drivers by S$25 but at the same time it also raised the hours of work.

The recalculated ratio of pay to wages actually cut the rate per hour.The SMRT case is no surprise for those who know how the foreign labor industry works in the island republic and in fact across much of Southeast Asia.

The dispute is indicative of a much larger chronic problem.

The pay and conditions of foreign workers throughout the region have been poor to say the least.To date, foreign worker supply has generally been plentiful and workers are seen as a resource where the maximum should be extracted out of them for the minimum expenditure possible.

This is extremely common within local companies. Many stories abound of harsh treatment, poor management, abuse, and generally poor working conditions.Most foreign workers have already paid agents up to US$10,000, mostly borrowed for the privilege of working abroad.

There are many cases of workers being cheated out of their salaries by greedy and unscrupulous employers. Just within the last few days the Indonesian embassy in Kuala Lumpur warned its nationals not to work as maids in Malaysia due to the abuses many have endured over the years with very few rights of recourse.In fact under Malaysian immigration law, any misuse of workers outside of their visa conditions renders the workers liable, rather than the employers.

There are cases where foreign workers have been jailed and caned over employer misdeeds.The trauma facing many foreign workers starts not with the employers but with recruitment agents who extract as much as they can before the workers ever leave their home countries. Many deposits are taken from villagers in northeastern Thailand, Laos and Cambodia with the promise of foreign work that never comes. Some agents even issue false documents, as happened in Nepal a few years ago where a recruitment agent sent workers to Malaysia on false visas.

The culprits couldn’t be caught and prosecuted as they were “operating outside the jurisdiction of Malaysian authorities.” However the workers themselves were arrested for possessing forged visas. Very few of these recruiting agents are ever prosecuted.The recruitment business is so lucrative and generally outside the taxation system that it has attracted officers of government agencies and even members of parliament. Just recently labor activist Abdul Aziz Ismail accused the Malaysian Attorney-General’s chambers of colluding with the Bangladesh High Commission in aiding foreign labor recruitment agencies.In addition a former minister, Mohd Radzi Sheikh Ahmad and a sitting MP, is listed in Companies Commission of Malaysia (CCM) records as a company director of SNT Universal Corporation Sdn. Bhd., which has been accused of exploiting Bangladeshi workers.

The former inspector-general of the Royal Malaysian Police Force has also criticized the way the government handles foreign labor as little more than human trafficking.This brings up the next issue of old authoritarian hangovers in the practices and processes of handling foreign workers. Foreign workers travelling to Malaysia, Singapore and now Thailand specifically come to work for an employer on a short term basis and return home after a specific contracted period.Until very recently, most workers were poorly educated and subservient to their employers, just wanting to make as much money as possible and return home. Foreign labor was seen as a necessity of nation building, particularly when the Asian economies were rapidly growing with construction and manufacturing. Foreign labor also took up the jobs that locals didn’t want and thus performed a specific service, enabling national growth and development.Governments have viewed foreign workers as cheap labor in their country for the greater good.

This can be seen in the neo-Confucian nature of the Singapore government in doing things for the greater good while forsaking individual rights. Foreign workers are at the bottom of a feudal pecking order, the lowest in society to do what others don’t want to do. Consequently governments have given them very few rights, as there until recently has been little pressure to do so.In Thailand, where there are an estimated 2 million-plus foreign workers, mainly unskilled workers from Burma and Cambodia, some provincial officials will not even allow them to celebrate certain cultural activities.The embassies of supplier countries seem to be involved in the supply chain and the issue has not been highlighted to human rights forums internationally, although Phil Robertson, Deputy Asia Director of Human Rights Watch, criticizes Singapore for defying basic human rights for criminalizing migrant workers actions by taking industrial action. He adds that Singapore discriminates between different races when it comes to workers pay and conditions. Foreign workers have few, if any reasonable legal rights in any of the countries within the region, and often suffer the penalties dished out from mistakes their employers and recruiters make.The demographics of the workers themselves are changing. Foreign workers today are much more educated than their counterparts of just a few years ago.

They are more likely to come from farther afield than traditional sources like Indonesia and Thailand. And as with the Chinese bus drivers in Singapore, they are capable of using technology – the ubiquitous Internet – to warn their peers both in the host country and at home, and are becoming more aggressive about their rights than before, as domestic helpers in Hong Kong have led the way with demonstrations, caucuses and lawsuits.It is unknown whether Filipina maids, who have been in Hong Kong for decades, are the harbingers of change. But it may be that somewhere down the road a more professional approach will be required on the part of employing companies, which must realize that their bargaining power over foreign workers will weaken. Malaysia and Singapore have already lost attractiveness as places to work.Foreign labor practices are an embarrassment to the region.

They show that many local firms still have immature management, particularly in the HR area and have a long way to go until they can claim to be run as well as those in developed countries, making a mockery of any CSR in the region and if not attended to soon could become a deep impediment to the region’s competitive advantage in international trade.The foreign worker issue shows the world the ugly side of Asia as a region of deep exploitation. Yet the foreign recruitment agencies have been of great advantage to governments.

This issue is rarely brought up at international forums, and all parties seem to prefer to sweep these injustices under the carpet. Southeast Asian governments are very hesitant to regulate and control the sector.The SMRT strike has brought these matters into the public arena. Further cases of worker exploitation surfacing in the press can be expected to affect the reputations of governments, officials, and firms involved in these rackets. Southeast Asian governments and employers must learn that nothing is forever and move from the 19th to the 21st century.   Rights:Copyright © 2005 – 2012 Asia Sentinel.

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Posted in Business, Companies, Economics, Indonesia, National, Tech, Travel0 Comments

The New Barons of Bordeaux

CAMPIAN, BORDEAUX: Deep in the Bordeaux countryside, Chateau du Grand Moueys is a sprawling 170-hectare expanse of vineyards and forest. At its center, a neo-gothic castle with turrets and crenellated walls, bring to mind a medieval world of knights and romance. Seated within the chateau’s genteelly dilapidated dining room, the estate’s new owner, 49-year-old Chinese entrepreneur Zhang Jin Shan, chomps forlornly, on a croissant and contemplates how to revive the vineyard. Globalization has created new challenges for the French wine industry. Once secure in their supremacy, French vineyards now must compete with less expensive New World wines, at a time of declining demand from austerity-parched developed markets. I ask Zhang how he’s been enjoying the local French food. “Hai xing,” he replies with a shrug, using a Chinese phrase that signifies faintest approval. “I’ve got used to it.” Aline Moineau, the chateau’s longstanding manager, purses her lips tightly. Zhang doesn’t appear to notice and perks up talking about a luxurious 50-seat Chinese restaurant, the piece-de-resistance of the high-end hotel and spa that he plans for the premises. A clash of culture is obvious, feeding into larger resentments across Europe at China’s rising clout. I ask if a French restaurant would make more sense in a chateau? “No,” he answers emphatically. “In France there are many French restaurants, but very few Chinese ones.

The guests in my hotel will mostly be Chinese, and the fact that they can find good food here will be attractive for them.” “But perhaps they would want to try French food?” interjects Moineau. “Please, let Mr. Zhang talk with the journalist first, and ask your questions later,” snaps Sophie, the Chinese woman who serves as Zhang’s French interpreter.

The clash of culture is obvious, one that feeds into larger resentments across Europe at China’s rising clout and investments in the economically floundering continent. On the one hand, Europe welcomes Chinese riding to the rescue of distressed assets, but investors are focused on making profits. Inevitably Chinese consumers are influencing trends in taste, a development that’s not always to the liking of locals. Chinese investments in Europe are still small but growing at a heightened pace. In 2011 the Chinese invested $10 billion in the crisis-hit region, triple the amount of a year earlier, according to a study by economic consultancy Rhodium Group and the Chinese bank CICC. Chinese investors have been buying car companies, solar-panel producers and chemical plants among other acquisitions, prompting the European Council on Foreign Relations, a think tank, to publish a report titled “The Scramble for Europe,” drawing parallels between the European colonization of Africa in the 19th century and China’s current activity in Europe. While such declarations may be overblown, rocketing figures for wine consumption in the Chinese mainland, combined with the reputation enjoyed by Bordeaux wines have made owning a vineyard, or two, an increasingly attractive proposition. China is not a traditional wine-drinking nation. Still, in 2011 it surpassed the United Kingdom to become the fifth largest consumer of wine by volume, according to the International Wine and Spirits Research group.

The mainland’s wine market has experienced more than 20 percent growth every year since 2006, and around 20 percent of Bordeaux’s exports are now destined for China. China, not traditional wine-drinking nation, surpassed the UK to become fifth largest consumer of wine. Purchases by Chinese in Bordeaux began in 2008, when a trading company from Qingdao bought Chateau Latour Laguens, a 30-hectare vineyard. By 2011, more prestigious estates like Chateau Laulan Ducos, classified as a Cru Bourgeois, began passing into Chinese hands. Another significant acquisition in 2011 was the €10 million deal whereby COFCO, a state-owned oil and food giant, became owner of Chateau Viaud. During the Bordeaux en primeur tastings in 2011, when thousands of wine professionals from across the world travelled to the region to assess the year’s offerings, the estates offered vintage reports in three languages – French, English and Chinese. Bordeaux winemakers also recently published a recipe book pairing wines with Chinese dishes, suggesting, for example, a Saint-Emillon for pig’s feet. When Zhang bought Chateau du Grand Moueys earlier this year, it had been languishing on the market for five years.

The previous owners, the aristocratic Bomer family from Germany, had been hard pressed to find takers for the Chateau’s €12 million price tag. Although the final price is undisclosed, Zhang’s French staff say he paid a “fair price.” Karine Lemaitre, Chateau du Grand Moueys’ oenologue in charge of wine production, is excited about the possibilities of Zhang’s investment. But although Lemaitre is eager to experiment, she recognizes the challenges of foreign ownership – the biggest being the inability to communicate directly with Zhang.

The only French he can muster is a barely recognizable, if enthusiastic,  “oui!” Much is lost in translation, the local staff complain about the linguistic abilities of his translator and, as a result, decisions are delayed.  Zhang may be a newcomer to the world of French wines, but is not new to beverages. As head of the Ningxiahong group, he’s China’s emperor of goji berry drinks. Goji, a small red berry, has a long history of medicinal uses in China. Ningxiahong produces 30 million bottles of goji alcohol annually. Like many Chinese entrepreneurs of his generation, he’s a self-made man. He was born in 1963, a few years before the start of the Cultural Revolution, in an obscure town in one of China’s poorest provinces, Ningxia. His mother tilled the fields, while his father worked with the local railways. Chinese acquisitions of French vineyards have thus far been small or middling estates. Zhang didn’t attend university. Instead, armed with a technical diploma he landed an accounting job with a state-owned enterprise in 1983. By 1996 he’d made the leap to running a baijiu factory and making the popular Chinese spirit. In 2000, he bought Ningxiahong, a company active in real estate, printing, catering and travel, in addition to the goji business. Zhang has witnessed the opportunities that come with change. He’s dismissive about the wine produced at Chateau du Grand Moueys: The quality is mediocre, the packaging “low class.” A Paris-based designer has been pressed into service to redesign the bottles, adding red corks and gold lettering. Lemaitre, the oenologue, notes that similar redesigns are underway at other estates owned by Chinese in the region: “There is some kind of bandwagon effect. Everyone wants a certain kind of packaging and has the same plans. Buy a vineyard with a nice chateau, divert all the wine produced to China, and set up a hotel on the estate.” Chinese acquisitions of French vineyards have thus far been small or middling estates.

The mighty Grand Cru, the most prestigious of wine classifications, has eluded investors from the mainland.

To put the investments in perspective, only an estimated 20 estates out of about 9000 in Bordeaux are in Chinese hands. But Zhang dreams big and has plans to acquire a Grand Cru label “like Chateau Lafite” within the next decade. “When I was a child, I couldn’t even dream of going to a city like Beijing,” he chuckles. He waves his hand at the chateau’s airy interiors. “All this,” he says, “It makes me feel like a prince.” It’s not yet clear how profitable these Chinese investments will be, going forward.

Regardless, red and gold bottling, luxury Chinese restaurants in the countryside, and millions of bottles of French wine consumed by Chinese people as they dig into a supper of chicken feet a la mode, are bound to transform the hallowed French landscape of Bordeaux as much as its trading fortunes.  

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Standoff in the South China Sea

Carlyle A.

ThayerCANBERRA: The term “rocky relations” took on new meaning after Chinese civilian maritime enforcement ships confronted a Philippines Navy frigate in a standoff over a disputed shoal in the South China Sea.

The Scarborough Shoal is marked by five rocks, the tallest of which projects 3 meters above water at high tide.

The surrounding fishing grounds and, more importantly, the legal principles determining ownership and right of exploitation are at issue.   How the dispute is resolved holds broader implications for the region wary of a rising China. South China Sea islands and reefs have been a bone of contention between China and its neighbors for decades. Scarborough Shoal – a triangular-shaped chain of reefs and rocks, enclosing an area of 150 square kilometers – emerged as a new flashpoint in April.

The shoal, approximately 200 kilometers west of Subic Bay, is north of the Spratly Islands, contested between China and Vietnam.

The standoff began 8 April when a Philippine reconnaissance aircraft spotted five Chinese fishing vessels in the lagoon.

The Philippine Navy dispatched a frigate to investigate the Chinese vessels and two days later discovered giant clams, coral and sharks, species protected under Philippines law and the Convention on International Trade in Endangered Species of Wild Flora and Fauna.

Two China Marine Surveillance ships soon arrived, interposing themselves between the frigate and the fishing vessels. China and the Philippines formally protested the other’s actions. Both China and the Philippines claim that Scarborough Shoal is an integral part of their national territory. In an effort to lower tensions, the Philippines withdrew the navy frigate, replacing it with a Coast Guard cutter.

The cutter was joined by a Bureau of Fisheries and Aquatic Resources vessel. China reinforced its presence by dispatching its newest Fishery Law Enforcement Command ship, Yuzheng 310.

The standoff continues today. Both China and the Philippines claim that Scarborough Shoal is an integral part of their national territory. China refers to Scarborough Shoal as Huangyan Island, claiming “indisputable sovereignty” over the island and adjacent waters on the basis of historical discovery. Under the UN Convention on Law of the Sea, UNCLOS, an island is defined as a naturally formed feature that can support human habitation or has an economic function, and entitled to a 200-nautical-mile Exclusive Economic Zone, or EEZ. If a feature does not meet these criteria, it’s classified as a rock, entitled to 12 nautical-miles of territorial waters, but not an exclusive economic zone. China’s claim relates to sovereignty over territory and sovereign rights in waters generated from this territory. If Scarborough Shoal met the legal requirement for an island, it would generate the 200-nautical-mile zone. Failing to meet this requirement, each of the five rocks would be entitled to 12 nautical-miles of territorial waters The Philippines refers to Scarborough Shoal as Panatag Shoal, arguing that if falls within its 200- nautical-mile EEZ.

The claim rests on sovereign rights to the resources within the EEZ and continental shelf. UNCLOS lacks authority to decide on sovereignty disputes over land features such as islands and rocks.

The law applies only in cases of disputes arising from maritime jurisdiction. China and the Philippines could resolve the dispute through bilateral negotiations or could agree to arbitration by an international tribunal such as the International Court of Justice. China argues that the dispute should be settled bilaterally; the Philippines wants the dispute to go before the International Tribunal on Law of the Sea, established by UNCLOS. Both sides use political posturing to accompany bilateral diplomacy to advance their claims.

The Philippines has adopted a three-pronged strategy – legal, political and diplomatic – threatening to take the dispute unilaterally to the international tribunal; seeking support from fellow members of the Association of Southeast Asian Nations and the international community; and continuing negotiations with China. China resorts to a variety of measures to pressure the Philippines: Responding to minor anti-China protests in Manila and elsewhere around the world, China issued a travel advisory leading to cancellation of 80 scheduled Chinese tour groups and charter flights to the Philippines; temporarily halted imports of Filipino bananas on a pretext of infestation; and orchestrated a hostile press campaign. In 2011 the Philippines exported $60 million worth of bananas to China, its third largest banana export market. Losses of banana exports in May were estimated at around $34 million. China is the source of the fourth largest number of tourists to the Philippines.

The average Chinese tourist stays for three days, spending $200 per day. In May, 1,500 Chinese tourists cancelled visits to the Philippines resulting in a loss of nearly $1 million to the tourist industry. China also announced imposition of a unilateral fishing ban in the South China Sea covering the area that includes the shoal, warning that action would be taken against foreign fishing vessels that violate the ban, with the ostensible purpose of protecting fishing stocks during the spawning season.

The Philippines countered by refusing to recognize the validity of the Chinese ban, but issued its own fishing ban covering the shoal. Many observers viewed the reciprocal fishing bans as a positive sign, offering a way to deescalate tensions.

These expectations were short lived. In late May China dispatched three additional civilian enforcement vessels to Scarborough Shoal accompanied by 10 Chinese fishing boats according to Philippine sources. China admitted that 20 fishing boats were at the shoal.

The Philippines claimed that, when dinghies operating from the fishing boats were added up, China had nearly 100 vessels at the shoal. Chinese civilian authorities took no steps to prevent these craft from fishing while China’s ban remained in force. UNCLOS lacks authority to decide on sovereignty disputes over land features such as islands and rocks. Security implications of the standoff could not be missed. In the midst of the standoff, the Philippines and the United States conducted their annual Balikatan military exercise. One phase involved Filipino and US forces conducting counterterrorism raids on an oilrig in waters off the west coast of Palawan Island facing the South China Sea. China charged that US support for the Philippines only emboldened Manila to act rashly and called on the US to rein in its ally.

To underscore its determination in pursuing area claims, China announced in May that its first locally produced deep water mega oil-drilling rig would commence operations in the South China Sea, leading to protests in the Philippines. In fact, the oil rig is off the mouth of the Pearl River, south of Hong Kong, well within China’s EEZ, where it will likely remain for years.

The Philippines may have overplayed its hand with misguided expectations of receiving support from fellow ASEAN members and its US alliance. Some ASEAN members and even Filipino activists have expressed misgivings about how Manila confronted Beijing. In the words of one Filipino senator, the Philippines found itself an orphan. Both sides stumbled into this confrontation, taking immediate actions that precluded quick diplomatic resolution. Subsequent posturing only served to entrench antagonistic positions, fueling domestic nationalism on both sides.

The United States must calibrate its response and avoid getting dragged into a territorial dispute with China not of its own making. At the same time, the US must prevent its Mutual Defense Treaty with the Philippines from being devalued through lack of perceived support for an ally. China’s actions – refusing to make diplomatic concessions, deploying civilian enforcement ships and using economic sanctions – serve as an object lesson to other regional states about potential costs of confronting China over territorial disputes in the South China Sea.

The standoff also reminds Washington about the need for careful diplomacy that reassures allies without entangling itself in a distant conflict. 

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One step closer for Thailand-Vientiane railway service

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