Southern Asia Region

Country review

Bangladesh: A very poor country which gained its independence after a war with its former ruling Pakistan to the west. It suffers from having a high proportion of waterlogged agricultural land and hostile borders with both India and Myanmar. The economy largely depends on being a centre for low-cost clothing production, with many sweat shops and much child labour. It has also, in recent years, become an unsafe place for expatriate personnel.

Bhutan: A remote Buddhist kingdom that has a strong commitment to preservation of the natural environment. The principal labour law is the Labour and Employment Act of Bhutan (2007). All employers with 5+ employees must establish internal workplace rules and workers with 6 months or more service are entitled to paid sick leave accruing at a rate of 5 days per year of service. An employee qualifies for paid annual leave in their first year of service and may only begin to take it in their second year. Social security is largely provided through a provident fund scheme, funded equally at a rate of 5% by employer and employee.

India: Numerically the largest democratic Republic in the World and the third largest by overall spending power (PPP parity).

The country has huge wealth gaps between a new “tech” elite plus large high caste landowners and the rest of population. It is a federal country consisting of 29 states, plus other territories. Its economy has grown consistently at a high rate for over 20 years and 55% of its GDP is accounted for by the service sector. Labour law is generally very detailed and operates at both a federal and state level. The state operates a significant role in approving labour contracts and the dismissal of workers. However, employees are subject to a general “no work, no pay” rule.

Largely because of tight labour regulation, the majority of Indian workers remain in the informal economy. The informal sector also includes many companies with 20+ workers – due mainly to the Employees’ Provident Fund (EPF) Scheme where contributions are obligatory for lower paid workers (even though employers pay far less into the scheme than employees).

Indonesia: This largely Islamic state is densely populated and a high proportion of the population suffer from extreme poverty. It is the world’s biggest island country, covering over 13,000 separate land areas surrounded by sea.

Indonesia is one of the twenty largest economies in the world and the largest in SE Asia. The services sector is well developed – accounting for 43% of GDP – although agriculture continues to employ over one third of the working population. It has a universal national healthcare system introduced in 2014, although state spending on health remains fairly low. The law offers considerable job protection to workers, but many labour laws effectively only apply to local nationals. Foreign workers are subject principally to Law No. 13 of 2003 on Manpower (Labour Law) and a number of specific regulations – one of which specifies jobs that cannot be held by foreign workers.

Malaysia: This former UK economy, once known as a major rubber and tin producer, has a highly diversified economy. Its land area is 330803 sq kms (including Sarawak and Sabah) and it has a population of 32M. Although ethnic Chinese make up 25% of the population they account for the vast majority of business entrepreneurs. The majority (61%) of the population are largely natives who practice islam. Major exports now include semiconductors and IT devices and there is a thriving services sector. The country has over 3 million migrant workers and a high proportion of the population of Sabah (which has the country’s leading port) are illegal migrants, mainly from other area of Borneo.

Maldives: A group of islands in the middle of the Indian Ocean known principally as a luxury holiday destination. However, this country of 26 atolls has been seeking since the late 1980s to diversify its economy and attract more manufacturing investment. It has a high GDP per head relative to other countries in South Asia. Investors should beware, however, that expatriates may be affected by the law banning the open expression of all non-Islamic religions, including the practice of atheism.

Myanmar (Formerly Burma): A largely Buddhist country with a highly religiously intolerant native population. Once a military dictatorship, but still effectively ruled by the army via a formerly deposed president who remains largely a figurehead. Workers in factories are subject to an 8-hour day and 44-hour week (unless the process is continuous – when the weekly limit rises to 48 hours). All additional hours (up to 20 a week) must be paid at a rate of double time. Paid sick leave exists for workers with 6 months or more service and in receipt of a doctor’s certificate and this extends to 30 days per year.

Nepal: A poor country under the shadow of the Himalayan mountains. A revised Labour Act dates from 2017 and allows many kinds of employment relationships, including fixed-term and casual contracts. Outsourcing is subject to a government licence, but may be obtained within 6 months from the start of a business. Normal working time for all businesses is 8 hours a day and 48 per week – but overtime hours can extend that by up to 24 per week.

Singapore: A leading and well-ordered international business centre that is subject to numerous strict regulations applying to every form of human activity.

It was founded as a UK trading post in the early nineteenth century and later became part of the British Raj. Today it is the world’s third largest financial centre, a major business and transport hub serving the whole of Asia and contains a largely English-speaking community. Although it is a parliamentary democracy, there is little press freedom and freedom of all expression is strictly limited. Although briefly part of a joint entity with neighbouring Malaysia it has functioned independently since 1965. The country operates a form of “common law”, but there is no jury system and punishments include such acts as caning and capital punishment. Labour law tightly controls working hours and overtime – with a maximum 8-hour day and 44-hour week.

Sri Lanka (Formerly Ceylon): Also formerly a UK colony (until 1948), this large island state has become a democratic Republic with a population today of over 21M. There has been a long-standing cultural division between the Sinhalese majority and the Tamil minority in the north of the island. Civil conflict continues, in spite of a policy of reconciliation being followed by the national government.

In recent times the rapid increase in national debt has led the country to near bankruptcy – and has necessitated IMF intervention. Sri Lanka has one of the highest literacy rates of any developing country and its basic nine-year state education is free. Because of its position in relation to India and major sea lanes this is a fairly rapidly developing country – particular under China’s “belt and road” policy. Labour law sets a limit of an 8-hour day or 45-hour week and the payment of overtime premia (up to 12 hours a week) is necessary after these hours. However, such restrictions do not apply to salespersons, supervisors or managers.

Greatest advantages: Low-cost labour, large domestic markets, English language capability (principally in India and Singapore). Good shipping logistics (Malaysia and Sri Lanka). Access to major capital markets (Singapore).

Greatest disadvantages: Widespread poverty and huge differences in wealth distribution, weak or non-existent welfare systems, Poor business environment in India (WB rating 100), Nepal (105), Maldives (136), Myanmar (171), Bangladesh (177).

Proportion of global land area: 4.1%
Proportion of global population: 25.8%
Annual rate of population increase: 1.5% (Malaysia)
Life expectancy: Men 66.9 years Women 69.9 years (India)
Working population in the informal economy: 35% +
GSI Modern slavery (Forced Labour) 1.4% (India)
Unemployment rate: 3.5% (India)
GDP/capita PPP (current) $6092 (India) $10764 (Indonesia)
Female labour participation rate: 50.8% (Indonesia) 35.9% (Sri Lanka)
Male labour participation rate: 81.8% (Indonesia), 77.3% (Malaysia)

World Bank rating (doing business): 2/190 (Singapore), 177/190 Bangladesh
FedEE overall employment potential rating: 7/10
FedEE regulatory rating: 5/10

Minimum wage rates (selected states)
– Bangladesh: 5,300 taka a month (January 1st 2014. Garment workers subject to revision under new Board.

– Indonesia: IDR 3.65 million a month in Jakarta (Wf1.1.2018)
– Singapore: $1,200 a month from July 2018 (rate local workers must be paid before employing foreign workers.
– Malaysia: RM1,000 a month (Peninsula Malaysia) 2016