ANALYSTS this week have rightly focused on the political damage that followed Thaksin Shinawatra’s controversial appointment as economic advisor to Prime Minister Hun Sen in October. Ironically though, the resulting economic fallout was in many ways equally severe.
Council for the Development of Cambodia data showed that approved investments from Thailand shrank from US$178 million in the first half of 2009, to just $2 million in the first six months of this year.
During the same period Cambodia’s exports to Thailand plummeted 50 percent, according to media reports, a decline far worse than recorded with any of the Kingdom’s other main trading partners, a fact that Cambodian officials themselves have acknowledged.
Perhaps even worse was the climate of fear that Thaksin’s appointment and the subsequent deterioration in relations between Phnom Penh and Bangkok created among existing and prospective Thai investors in Cambodia. How many Thai firms have delayed entry into the Kingdom as a result?
Cambodian Air Traffic Services, a local subsidiary of Thai company Samart Corp Plc, bore the brunt when employee Sivarak Chutipong was briefly jailed for supplying details of Thaksin’s itinerary to the Thai Embassy, but other major Thai investors privately bemoaned the effect this piece of political theatre was having on business in the Kingdom. Thai Airways even suggested it may have been the subject of a deliberate boycott by Cambodian government officials at the start of the year.
Meanwhile, Thaksin was offering senior trade and finance officials in Phnom Penh the kind of economic instruction they had no doubt already heard years ago as undergraduates. The Cambodian government was not paying formally for the former Thai prime minister’s expertise, but indirectly the economic price was climbing.
Following Thaksin’s resignation, Cambodian government officials have stated that Thaksin offered advice on how to deal with the global financial crisis, agriculture, tourism and foreign investment, but none could provide evidence of tangible economic benefits.
The lack of communication between the two governments prompted by Thaksin’s appointment also prevented resolution of key bilateral issues. Cambodia and Thailand have for years failed to resolve overlapping claims to an offshore area in the Gulf of Thailand. These talks have moved nowhere, and, indeed, a resolution during the past nine months seemed as remote as ever.
If relations now improve, as seems likely, the much more possible resumption of discussions on this issue could result in economic gains in the longer term – the aim is to share profits from energy production in the area.
Although Cambodian officials say that Thaksin’s resignation was voluntary due to other overseas business commitments, this seems highly unlikely.
However, if Thaksin did indeed suggest that he resign it would have ranked as the single best piece of advice of his destructive tenure.