Thailand's hotel and restaurant businesses, which employ millions of alien workers, are in a spin over the new labour law endorsed on June 23.
The controversial crackdown has forced scores of restaurants to close their doors, and many travel and bus companies to stop hiring illegal workers, many of whom handle tourist luggage.
Thai Restaurant Association (TRA) president Taniwan Koonmongkol said more than 250,000 illegal workers have returned to their home countries since the implementation of the act. Millions, however, are still in the country, since their grace periods have yet to expire.
The government has given business operators six months to certify or recertify their foreign worker's permissions and job titles. Business owners who do not comply will be fined 400,000 baht per illegal worker.
The labour shortage has forced small food shops, and food carts to close, said Mrs Taniwan. Small shops still in operation have suffered a 30% drop in sales on average. Big food chains and financially robust companies, however, have not been affected.
There are more than 100,000 registered restaurants in Thailand, she said. These restaurants hire about 300,000 alien workers, mostly from Myanmar (60% of the total), Laos, Vietnam and Cambodia.
However, an increasing number of Filipinos are entering the country to work at luxury restaurants, hotels and language schools. Most of them have proper working permits.
"Many foreign workers will return to Thailand after they realise they can keep working until their grace period expires at the end of the year," Mrs Taniwan said.
The food business contributes 1.1 trillion baht into the economy. Tourist consumption accounts for 600 billion baht.
The TRA estimates that there are some 3 million registered foreign workers in Thailand out of a total 10 million foreign workers. Most of them work in the manufacturing, fishing and farming sectors.
Non-registered hotels run the largest risk. Thai Hotels Association (THA) president Supawan Tanomkieatipume said the crackdown will probably have little impact on registered hotels, since they only hire certified workers.
"Registered hotel operators prefer to employ local people. Only 5% of their staff is from overseas, and they all have work permits," Mrs Supawan said.
There are more than 18,000 hotels in Thailand, but only 8,000 of these have operating licences. These leaves more than 10,000 hotels with a combined 400,000 rooms operating illegally, said the THA.
There are more than 300 illegal hotels in Bangkok, said Mrs Supawan. This includes properties like serviced apartments, guest houses, condominiums, houses and other private properties that provide accommodations for tourists.
Only 20 illegal hotels had been charged since 2014, even though the THA provided a list of properties that violate the law to the police. Each operator was fined between 3,000-10,000 baht. Many have been charged multiple times, but continue to operate under different names.
Non-registered hotels, tourist accommodations and small independent hotels are required to consult with the Interior Ministry's Department of Provincial Administration (DPA) -- the unit that approves hotel licences, she said.
The TRA suggested that in the long term, business owners, especially restaurants, can avoid the foreign labour programme by issuing work permits, and group medical insurance to their staff.
"Many illegal immigrants will return in search of higher wages in Thailand. The number of registered workers will also increase in step," Mrs Taniwan said.
Restaurants would do well to keep their margins high, especially in the tourist sector. Higher profit promotes higher wages, and lower turnover rates.
The government should regulate street food quality and up its crackdown on illegal workers.
Authorities have ignored the problem of illegal labour in street food shops for far too long, Mrs Taniwan said.
"Thailand is an open country, it allows illegal workers stay. Poor law enforcement is the root of our problem," she said.
Thai Labour Minister Sirichai Dithakul recently met Myanmar Labour Minister U Thein Swe to discuss cooperation on the labour problem.
Gen Sirichai asked his Myanmar counterpart to certify or recertify workers within the next six months, before allowing them to return to Thailand. On its part, Myanmar asked Thai officials to keep them informed about the new labour act.
The crackdown on foreign labour is also hitting the transport industry. Many tour companies now lack both registered and non-registered foreign workers, said Wasuchet Sophonsatien, president of the Thai Transportation Operators Association.
"The government should help operators keep moving tourism forward," Mr Wasuchet said.
Labour shortage has forced small food shops like this to close. SUNAN LORSOMSAP