Economic Program Revitalizing Thailand’s Countryside

Poverty is a birthmark for the people of Thailand’s northeastern provinces, where a bicycle suggests middle-class status and jobs outside the sugar cane fields are few. For most, Bangkok is the honey pot and migrating there is a rite of passage into adulthood.

One of every six Thais works in the metropolitan Bangkok area, which is said to produce half the country’s gross domestic product. Wages in the capital are 12 times higher than here in Chakkarat. The vast majority of the nation’s factories are within Bangkok’s city limits.

“Whole villages have emptied and gone to Bangkok,” said Vasana Toomnahad, 25, who worked on a garment assembly line in the capital for four years. “Even though you can’t really save any money in Bangkok because living costs a lot more than in the country, if you wanted a job, until recently anyway, that’s where you had to go.”

But the just-ended Asian economic crisis has forced Thailand to rethink its economic policies. Because the crisis devastated the cities but hardly touched the countryside, and dealt the harshest blow to big companies and not mom-and-pop businesses, Thailand is placing renewed emphasis on decentralizing industry and promoting small enterprises.

To decentralize industry, Thailand is relying on an innovative program that weds poor villages and large corporations in a partnership that brings machines to the people. The showcase of the Thai Business Initiative in Rural Development (TBIRD) is the Nike Village here in Nakhon Ratchasima province, where the U.S. footwear manufacturer has “adopted” four villages and a school and created 500 jobs by opening a stitching factory that in the past most likely would have been located in the Bangkok area.

From the main road, the Nike Village looks more like a recreational park than an industrial zone. The grounds are landscaped and flush with bougainvillea, coconut palms and mango trees. The three assembly line plants that hum with Brother sewing machines are bright, airy, clean and tucked out of sight, just beyond a catfish pond. There’s a pond-side kiosk and shaded picnic grounds for workers to eat lunch. Turnover at the year-old factory runs at only 2% a year.

“Some months I can save 500 baht [less than $14] now, something I could never do in Bangkok,” said Prakong Thangaratere, 33, who worked for 10 years as a nanny in the capital, about 155 miles southwest of here. “But the most important thing is that I am back in my village. This is home. I never wanted to leave in the first place.”

Pailin Poonsri, 25, and her mother and two sisters used to earn combined wages of $560 a year as sugar cane cutters, with Poonsri earning only half-wage because of a disability from childhood polio.

“I was surprised Nike didn’t reject me when I applied for a job,” she said. “But they told me they welcomed qualified people who had finished grade 6, even if they were handicapped. I’ve never heard of anything like that before.”

In her new job, Pailin expects to earn more in a year than her whole family did annually in the fields. In addition, under the Nike-supported TBIRD program, she and her family will be eligible for low-interest loans if they want to start a small business and will receive training in matters that deal with ecology, improved farming techniques, health, democracy and personal finance management.

In return for its annual, tax-deductible $200,000 subsidy from TBIRD, Nike gets access to a stable, reliable work force--the list of applicants seeking jobs at the Chakkarat factory has reached 3,000--and saves money because the minimum wage here is $4 a day, about $1 less than in Bangkok.

Nike also gets the chance to polish a corporate image tarnished by its acceptance of substandard working conditions in its Southeast Asian plants in years past. Some labor rights advocates have acknowledged that the company has upgraded its work environment since 1998.

The TBIRD program is valuable, one Thai official noted, because it is sustainable.

“Most programs start with a fancy ribbon-cutting ceremony; then you come back in three months and there’s nothing there,” said Manu Leopairote, permanent secretary of Thailand’s Ministry of Industry. “But TBIRD teaches people to be self-sufficient, to farm better, to develop business skills, as well as offering steady work. We hope to get it in all the provinces.”

TBIRD is the creation of Thailand’s most prominent philanthropist, Mechai Viravaidya, who heads the country’s largest nonprofit agency, the Population and Community Development Assn. The association buys land and builds factories for projects such as Nike Village, then solicits corporate sponsors to lease the facilities. The 100 or so companies supporting TBIRD projects include Lucent Technologies Inc., Philip Morris Cos., Exxon Mobil Corp. and Bristol-Myers Squibb Co.

“Villages remain poor because people lack four basic business skills essential to economic security: how to organize, produce, market, finance,” Mechai said. “So when we started TBIRD, we asked, ‘Who do we get to participate in this?’ Not government. It has no business skills at all. But how about big corporations? They already possess the four skills villages need to sustain themselves. Let them be the teachers.”

Throughout the four villages Nike has “adopted,” new cottage industries are flourishing. Of the low-interest loans Nike has made--usually for $200 or less--to 96 villagers, not a single monthly payment is behind schedule. Many loans have been repaid in full early.

Tanad Ramaruk turned his $120 loan into Nike Mobile Ice Cream, which he makes himself and sells from the sidecar of his motorcycle. Loi Sawangjit, who wears a Nike T-shirt, opened a successful mini-mart and sleeps in the back of her open-air shop. Samneang Moontongland started a small farm raising chickens, which she serenades with music from an old stereo. “When you take away their stress, they lay more eggs,” she noted.

Poom Sawangjit has already repaid her $75 loan. On a good day, she sells about $11 worth of noodles from her pushcart, earning a profit of about $4. “I never dreamed I’d ever make so much money,” she said, adding that business is so good she might expand. Her plan is to franchise the business with a couple more pushcarts, which she will lease to friends.