Where does the wealth come from ?

by **Peterplay** » December 17, 2011, 6:39 pm

Today I drove through the countryside east of the line Khonkaen-Udon. Where 12 years ago I saw buffalo’s plowing and people loading the sugarcane lorries, now it’s all mechanized, almost, you still have the odd one out using buffalo’s to plough the land.
Everywhere tv’s, cellphones, motosai’s, everywhere pretty expensive pickups and sedans, even in the smallest of villages. Houses are renovated, gardens are maintained well, in short, an amazing change from 12 years ago.

I know the growth’s percentage has been high in Thailand, I believe even here in Isaan. I see that children now work in big cities and send money home. But that can’t account for all the money that apparently is around.
And sure, a lot still don’t have a good life, but Isaan now doesn’t strike me as a poor rural area anymore.

My question is : where does all the money come from nowadays. Is growing rice, sugarcane, thai potatoes or rubber (yes maybe, but only a few have rubber trees) become so profitable ?
There are big shops generating money, but only a few people profit from that.
Is there a lot of industry ? I know sugar. But for the rest ?

Anybody knows more than I do ? (yes I know, the answer is : sure) Do I need glasses ?

by **rick** » December 17, 2011, 8:22 pm

Mortgage your land. Live now, pay later.

by **Peterplay** » December 17, 2011, 8:47 pm

Not everybody in Isaan is stupid

by **parrot** » December 17, 2011, 9:03 pm

A few quick thoughts:
6 years ago, a kilo of processed rubber was fetching 20 baht a kilo.....last I asked a few weeks ago, it's in the 100+ baht per kilo range.

15 years ago, there were hardly any rubber trees in the Udon area. Today, I'd guess there are many thousands of rai of rubber trees.

Likewise, eucalyptus grows all over Isaan......it doesn't draw big money, but it's not as dependent on weather as rice to succeed.

All those big stores downtown are employing many hundreds of clerks, stockers, janitors, etc. The workers aren't earning that much, but it's money none-the-less. A neighborhood kid works at a 7-11 in town.....earns less than 300 baht per day for long night shifts. He's a happy camper....makes enough to buy a new motorcycle and get out with his friends a few nights a month. Much more so than if he was living typical village life for a 20year old 15 years ago.

All those thousands of new homes/businesses that have been built over the past 15 years have employed a lot of laborers in the construction business.

No two ways about it, there's a boatload of more foreigners in Udon than 15 years ago.....and foreigners spend a lot of money building homes, buying cars, opening restaurants/bars/businesses. Go to Global on any day of the week and you're sure to see a handful or two of foreigners buying things. Likewise for shopping carts full of groceries in Lotus. 15 years ago, if you wanted ham, you had to buy it (frozen) at the tiny Udon Supermarket.....today, you've got probably 20 choices for fresh ham. Go to Nongwahsaw on any day of the week, 25km outside of Udon, and you're sure to see a smörgåsbord of foreigners in/about the town......from a multitude of countries.....most with homes, vehicles, families.....and all spending a fair share of money. The grocery store in that small town now carries a fair amount of expat necessities like peanut butter, cereal, farmhouse bread, etc....25km outside of Udon!

Not to mention all the infrastructure improvements over the years......4-lane roads abound, most all village roads now paved, water piping in most all villages (albeit iffy at times), improved electricity services, mobile phone towers all over, a rejuvenated Nongprajak and Tungsrimuang park, the many recently built city municipality centers (one burned out and soon to be renovated), the soon-to-be completed sports center, a billion baht in flood control (not yet tested), many hundreds of millions of baht generated locally during the last years of Luang Ta Maha Bua, a fair amount of investment in providing security/whatever for a member of the royal family who works locally and for another who visited Luang Ta Maha Bua on a frequent basis, more and more Laotians and NGOs working in Laos who come to Udon to spend money and seek medical care, a new (and quite nice) airport and a boatload of more flights today than 10 years ago (including to/from Phuket/Chiangmai), a few new golf ranges, .......I'm sure there's much more......
And yet, Udon still has a few dozen samlors plying the streets!

by **tigerryan** » December 17, 2011, 9:49 pm

Peter I can't drive anywhere and not wonder the same. How can this all work? If you have a few days on your hands grab a copy of the "Wealth of Nations" by Adam Smith it was the most popular book of 1776 and a must read for all economics students. The examples he uses are easy to relate to rural Thailand and when your finished reading the book lights start going off.
If I had to work in a rice field all day I would leverage my ass to the hilt in the hope of not doing it anymore.

by **Laan Yaa Mo** » December 18, 2011, 2:17 am

The wealth comes from a rising middle class in the mid-to-late 1980s associated with more opportunities in all sectors of the economy, more chances for Thais, not just Chinese, to attend elite universities, and so on.

by **dbriggins** » December 18, 2011, 2:58 am

It's called "capitalism"

by **Kevro** » December 18, 2011, 5:56 am

Hi,

Having first visited my wife's family's village over 15 years ago and now looking at the same village now and seeing the massive improvement from the. is quite amazing. Houses all over the region being renovated, new cars, drinking beer instead of Lao Khow. Its something that can be accounted for quite easily in this village (Well 80% anyway). Its rubber, rubber, and rubber. Everybody seems to have some rubber trees and even if you don't then you can work for someone who has and still get around 40% of the monthly takings for you efforts.

My wife was talking to one of her cousins one day and from 13 rai he was making 100k per month when the prices were high.

Every month the rubber company (More than one company visit at different times also) visits to buy and collect the rubber and every man and his 3 dogs from miles around are there with a new car loaded up with many kilo's of the stuff. Before the Japanese tsunami the price was getting up towards 200 baht a kilo. making each pack of rubber (9 flat sheets with the 10th wrapped around) worth around 4300 baht approximately and some people would have in excess of a 100 packs. Even a guy just coming in with a modest amount, say 5 packs could get over 20,000 a month. The price however has halved from its highs and at one stage back to 37 baht per kilo. It currently sits at 88 baht per kilo. Every month the company turns up with 3 x 20 tonne trucks, 1 with a trailer and they leave full and sometimes they need some locals to help with transporting the surplus. Working on 70 tonnes as a guestimate times 88 baht per kilo and I get around 6.1 million per month coming into the village and surrounding areas EVERY month. Using the higher prices range and its closer to 14 million per month.

Anyone however who was buying there new car based on finance and an income from rubber price of near 200 baht a kilo might be a little financially stressed however at the lower prices.

Kevro

PS they get 2 months off every year when they can't collect rubber to go on overseas holidays now.

by **parrot** » December 18, 2011, 10:23 am

I took a bike ride through my 1 street village this morning.....the village industry consists of rice farming, grass thatch weaving, mom & pop stores/soup stands, two privately run water companies, sugar cane, a rocket factory, one guy runs a roofing company, another an motorcycle ice-cream outfit, etc. In the past year 7 new houses (modest, but nice nonetheless) went up. Today, there are another 6 in various stages of construction. The village isn't booming, but it's growing steadily over the years.

by **Kevro** » December 18, 2011, 11:31 am

Hi again,

Just got back from our Rubber farm and re-read the post I made in the dark this morning. All over the place with that one as I was in a hurry to get to farm before it gets to hot. Apologies for that but you probably get the gist of what I was on about.

Kevro

by **trubrit** » December 18, 2011, 11:45 am

I notice no one has mentioned the increasing tendency for working oversea, both male and female. In my village the three largest houses have all been financed from overseas earnings. The local farmer is now the proud owner of a John Deere tractor, not cheap even in UK, bought with money his younger brother sends home from America. He is also building a new house on his land for the brothers wife and kids .According to a local bank manager the foreign currency brought in by us expats is only a fraction of the total .A lot of the local girls now don't want to know a Farang if he want's to live here, only those prepared to take them to their home countries. That's where the money is not scraping by on a pension in Udon .

by **Peterplay** » December 18, 2011, 12:27 pm

Shops, restaurants, houses being done up, buying goods are all a consequence from primary income, not a source.

And income here is from production (agricultural, hardly industrial as far as I know), overseas income (small amount), farangs (insignificant) and subsidies (infrastructure, housing).

So I must assume that agricultural production and subsidies are the main driving factors behind the improvement of living standards.
But that baffles me, yesterday I hardly saw – in the area mentioned, big rubber plantations. And I can’t see how rice and sugarcane is generating all this money.

Are there, as in Europe or the USA, any figures about how the economy functions here ?
I browsed the internet, but most articles were relating to the old Isaan, not to the Isaan from 2011.

The only article I found interesting was
http://www.nationmultimedia.com/home/St ... 82779.html

I am primarily referring to rural Isaan, not to the urban developments. But I realize that the two cannot be completely separated.

by **parrot** » December 18, 2011, 12:49 pm

"I notice no one has mentioned the increasing tendency for working oversea, both male and female."

I think the big money to be made overseas was in the 90's (or before that) before all these manpower businesses got into the act. Udon is renowned for scamming people in overseas work contracts. This past year, manpower organizations sent over 5000 people to pick blueberries, when the norm is around 3500. Many of those people came from the Udon area. To make matters worse, this was a bad year for blueberries in Sweden. As I understand it, the only people who lose in these situations are the workers themselves, not the manpower units.
When we first moved here in the mid 90's, we knew quite a few people who had worked in Saudi, Libya, that part of the world. Back then, they were making big money. About half of the people we knew saved quite a bit, bought land, houses, and were set for life. The other half gambled their money while overseas and came back empty handed.
Unfortunately, a few bad mangoes spoiled the future for about 30,000 Thais by stealing a prince's royal jewels. Since the early 2000's, the manpower organizations have required large upfront payments (usually in land papers) as collateral......if the worker ends up coming home early (homesick, ill, fired, or quit), the worker loses his land.

We knew of a few Thai women, in their 30's and 40's, who have met up with foreigners over internet dating sites. In one case, a woman is receiving regular monthly payments from a man in Canada. Nothing wrong with that.....but it's money she'd be without were it not for the internet.

by **parrot** » December 18, 2011, 1:12 pm

"The only article I found interesting was
http://www.nationmultimedia.com/home/St ... 82779.html"

Lest anyone wonder why the people in Isaan vote for the people they vote for. Somkid's one of the smarter folks in government (Distinguished Professor Dr.Somkid Jatusripitak, Ph.D. in marketing from the Kellogg School of Management at Northwestern University. MBA in Finance from NIDA Business School, National Institute of Development Administration (NIDA) Bachelor's Degree from the Faculty of Economics, Thammasat University in 1972.........no Khaosan fake certificates) but his motives will be questioned because he has ties with Thaksin. His interests in promoting development in Isaan will play into the hearts and minds of the people who voted Pheu Thai.

If the potash mine ever takes off, and if rail connections in the area are improved, I'd expect monumental changes in the area..........lots of big IFs, but things do seem to be headed in that general direction. The recent flooding of industrial sites in the central region may give added impetus to developing the Isaan region.

by TJ » December 18, 2011, 10:56 pm

Laan Yaa Mo wrote:The wealth comes from a rising middle class in the mid-to-late 1980s associated with more opportunities in all sectors of the economy, more chances for Thais, not just Chinese, to attend elite universities, and so on.

The rising middle class is more the symptom than the source of thailand's wealth. The massive infusion of money from abroad in the eighties provided the capital for growing the Thai economy.

During the eighteenth and nineteenth centuries the U.S. was able to rapidly grow its wealth because of loans from the British and other foreign investors. Capital is the seed for growing wealth.

I once read the Haiti and Singapore were economically about the same just after WWII. The investments of capital in Singapore's businesses and industries created an enormous difference between the two.

The establishment of available capital and the efficiencies of division of labor create wealth. Where would China be if Taiwan and a great many other countries had not hugely invested in China's businesses?

As we know the general formula for the poor to become financally secure is hard work and frugality.

The big question now is why the global economies are facing a depression. My opinion is that it has been caused by a century of war against capitalism.

Who is online