Intra-ASEAN migration and trade – Scope for regional governance of unskilled migrants

By Evelyn S. Devadason, Professor at the Faculty of Economics & Administration, University of Malaya, and Vice-President of the Malaysian Economic Association,

Intra-ASEAN labour mobility has increased dramatically from 1.3 million in 1990 to 6.8 million in 2019, and accounted for 31.3% of the region’s global labour mobility Economic disparities among the ASEAN Member States (AMS) in terms of job opportunities and wage differentials attracted the growing number of migrant workers from the region to meet industry needs, especially for low skilled and manual jobs.

Hence, 74.8% of the ASEAN migrant stock in the region was employed as plant/ machine operators and assemblers and in other elementary occupations. The ASEAN unskilled migrants are also attracted to neighbouring countries due to the geographical (border economies) and cultural (common language) proximities.

The major migrant-sending countries of the ASEAN region are Myanmar, followed by Indonesia, Malaysia, Lao and Cambodia.  Myanmar migrants to ASEAN represented 17.6% of its own total global migrant stock in 1990 before increasing to 32.5%  in 2019, and thereby emerging as the top ASEAN migrant-sending country to the region. Alternatively, Thailand (51.2%), Malaysia (28.1%; Malaysia is both a labour sending and receiving country) and Singapore (16.4%) are migrant-receiving countries, accounting for a combined 96.7% of total migrant stock in ASEAN in 2019.

In the case of trade, the region represented 24.2% and 21.5% of ASEAN’s global exports and imports in 2019, respectively. Extra-regional trade therefore continues to remain more important for ASEAN relative to intraregional trade. That said, Singapore, followed by Malaysia and Thailand dominate intraregional trade. Conversely, the trade of Lao PDR and Myanmar is relatively more reliant on the regional market.

Two stylised facts are observed from the combined patterns of intraregional migration and trade.

First, the major recipients of ASEAN migrants are also the major trading nations within the region.

Second, the patterns of intra-ASEAN unskilled mobility have changed with the expansion of Greater Mekong Subregion (GMS) labour, namely from Cambodia, Lao PDR and Myanmar to Thailand. This contrasts with the intraregional trade patterns that did not see any dramatic shifts over time.

Despite the importance of both trade and labour flows to ASEAN, migrants are found to have a non-significant impact on trade. This is because unskilled migrants are less integrated into the labour markets of the regional host countries as they are of the temporary and nonfamily migration channel.

The ineffective trade-inducing impacts of migrants in ASEAN is also attributed to the sizeable unskilled migrant community that has already been established in the region over the years. Due to the continued reliance on unskilled migrants by the major receiving countries in the region, migrants have become a perpetual feature of those economies.

Yet, the policy focus has been on intra-ASEAN migration and intra-ASEAN trade, without considering the direct connections between the two. This neglect, in turn, reflects public policies in ASEAN that often work in silos and do not consider the interrelations between migration and trade policies.

Migration policies in ASEAN (unlike trade policies) are primarily handled at the national level, with limited cooperation achieved through bilateral labour agreements and memorandum of understanding (MoUs). Within the individual ASEAN countries, the migration policies have also been somewhat reactive.

The key question then is – Should trade policies factor in immigration to ensure it supports trade? The answer to this question has important policy implications.

Despite the ineffective migration-trade links in the region, the role of migration should not be underestimated.  There should be an increased focus on migration in trade policies to ensure that immigration is used as an effective instrument to enhance intraregional trade.

For that, the controversial debate over whether to be liberal or less liberal in migration policies in AMS should be abandoned. Instead, the focus should be on the management of the dominant labour flows, the unskilled, to meet tangible labour needs across economic sectors.

As labour market integration is not an option, better managed temporary schemes are instead needed to ensure significant positive impacts of the unskilled for trade.

In moving forward with formulating policies that directly encourage the mobility of the high skilled, ASEAN should not restrict nor neglect the unskilled migration channel. What is needed is policy coordination to balance the interests of unskilled migrants’ countries of origin and destination. This is even of more relevance to ASEAN since there is a distinct divide between labour sending (source) and labour receiving (destination) countries.

ASEAN should therefore work towards connecting migration and trade policy. It is timely for ASEAN to consider other alternatives, such as mobility provisions in trade negotiations where reciprocity works to ensure that impediments to migration do not contrast with the pro-trade stance of AMS.

The reality is that unskilled migration will continue to remain an important part of ASEAN integration!

Evelyn S. Devadason, Professor at the Faculty of Economics & Administration, University of Malaya, and Vice-President of the Malaysian Economic Association