Introducing additional perplexity or confusion to the situation
Tensions between Thailand and Cambodia continue to escalate with no signs of a resolution in sight. The recent military clash at a disputed border led to the tragic death of a Cambodian soldier, sparking tit-for-tat actions from both countries. As a result, Thailand has closed its borders with all seven provinces sharing a border with Cambodia, allowing only essential travel and trade.
Some Thai enterprises view Cambodia as a second home but are already monitoring the situation closely. While they plan to continue investments, they may reconsider their strategies if tensions persist. Sompop Manarungsan, president of Panyapiwat Institute of Management, voiced concerns over the potential economic impact of the border issue.
Thailand's extensive exposure to international trade, coupled with global geopolitical conflicts, means that hindrances to border trade could have detrimental effects on the economy. Additionally, Thailand maintains a trade surplus with Cambodia, Laos, Myanmar, and Vietnam. Around a million Cambodian workers are employed in Thailand, but if they decide to return, they could potentially be replaced by laborers from other neighboring countries such as Myanmar, Laos, and Vietnam.
Yunyong Thaicharoen, chief economist at Siam Commercial Bank's Economic Intelligence Unit, believes that while the ongoing tensions will affect border trade and tourism, the scale of the impact could be minimal. However, sentiment among tourists from other countries might be affected if the situation escalates or lingers for a long time.
The conflict may continue and could escalate at any time, adversely affecting Thailand's GDP. The healthcare sector may face minimal risks, as most Cambodian patients in Thai hospitals travel by air and have high purchasing power. However, the impact on the construction sector is more significant, as it comprises the largest share of Cambodian workers in Thailand.
Some Thai telecom operators stand to lose a small amount in monthly revenue due to Cambodia's disconnection of their network links, but they plan to establish new connections with telecom operators in other neighboring countries, such as Laos.
The return of Cambodian workers to their homeland is expected to have minimal impact on Thailand's residential property sector. Most construction workers in this segment are from Myanmar, and the market is cooling. However, developers in areas closer to the Cambodian border may need to prepare contingency plans if a large-scale exodus occurs.
These actions by Cambodia come amidst reports of threats made by extremist groups in Thailand calling for a halt in electricity and internet services to Cambodia. The Thailand-Cambodia Joint Boundary Commission previously discussed the 800-kilometer border and aimed to ease tensions, but the conflict may persist. Thailand is scheduled to host the next JBC meeting in September 2025, and Cambodia has requested the International Court of Justice rule on four disputed border areas.
The consequences of the border dispute extend beyond the borders of these two countries, affecting not only trade and tourism but also broader geopolitical relations. The Thai government and businesses must be prepared for a range of possible outcomes and adapt their strategies accordingly.
- In the context of this escalating conflict, Thai businesses operating in and investing in Cambodia are carefully monitoring the situation, as they are considering adjusting their strategies if tensions persist, which could have implications for finance and general-news.
- There's an ongoing perception in the Thailand business community that the ongoing tensions between the two countries could have significant repercussions, as hindrances to border trade may affect Thailand's economy and its trade relations with Cambodia, other neighboring countries, and the global business community, adding a political dimension to the growing issue.
