Sun, Jan 25, 2009 - Page 9 News List

As Asia’s exports fall, jobless rates are on the rise


At a three-story factory in Karawang that used to make television remote controls, most of the fluorescent lights have been turned off. The hallways are nearly silent, and three-quarters of the workers have been laid off.

A pencil factory down the road closed last September, laying off 100 workers. Another nearby factory that turned out carved and painted wooden window frames shut down and laid off 800 workers. And two Toyota factories, one here in Karawang and another in a nearby city, have not renewed the contracts of 277 temporary workers.

“In our 11 years here, this is the worst situation with so many layoffs — not even in 1998 was it this bad,” said Abraham Sauate, the manager of the television remote factory, comparing today with the Asian financial crisis in 1997 and 1998. “The problem now is we don’t know where to go, and we don’t know how long it will last.”

China and Japan draw the most attention, but the global slump in manufacturing is spreading across Asia. Industrial production is dropping in South Korea at the fastest pace since record keeping began in 1975. Taiwanese exports dived 40 percent last month compared with a year earlier. And ports from Indonesia to Thailand are handling ever fewer shipping containers.

“There’s not a country in the region that is not slowing sharply or in outright recession,” said Stephen Roach, the chairman of Morgan Stanley Asia.

During the last crisis, investors took their money out of country after country. Asian leaders thought they had found a solution — increases in exports to the West, particularly of electronics. But that dependence on exports fed this crisis. Now US and European buyers are pulling their import orders from country after country. And while governments have short-term economic stimulus plans, long-term answers seem more elusive.

Hard times in factory towns are especially troubling in Asia, where countries depend on manufacturing for a far greater share of economic output than Western countries do, as much as 40 percent in the case of China and other big exporters.

That is triple the current 13 percent in the US, and much higher even than the US peak of 28 percent in 1953.

While all of Asia is suffering, some economies are feeling the effects of the global downturn less than others.

Many of these countries are latecomers to the world market. They have even lower wages than China and were just starting to benefit from the arrival of businesses seeking to avoid a rapid increase in wages and other costs in China from 2003 through last summer.

For example, Bangladesh’s exports are dominated by the sale of low-cost garments to mass-market retailers like Wal-Mart that have fared well as consumers have begun shifting toward thriftier purchases. Garment workers in Bangladesh still earn US$40 to US$50 a month, barely half the minimum wage in export-oriented coastal cities in China.

Economic difficulties in the West “will have an impact on Bangladesh in terms of our growth rate, but I’m not concerned it will eat into our share” of the global garment market, said Mustafizur Rahman, the executive director of the Center for Policy Dialogue, a nonpartisan research group in Dhaka that specializes in trade and other economic issues.

The numbers bear that out. While overall US imports dropped 12 percent in November compared with a year earlier, imports rose from Bangladesh and from Vietnam. Each country shipped more knit apparel to the US, and Vietnam also shipped more furniture.

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