Thailand is starting to look at the financial implications of investing in a highly controversial project such as the planned Xayaburi dam.

Kraisak Choonahavan, a former Thai senator, has warned that banks and companies heavily involved in Vietnam could be hit by a business backlash. “Thai stakeholders have plenty at risk,” he said. “The four banks all have expansion plans in Vietnam. They must withdraw from the dam or face the growing displeasure of the Vietnamese government.”

Bangkok Bank, Kasikorn Bank, Krungthai Bank and Siam Commercial Bank, the main lenders in Xayaburi, face difficult decisions investing in the Xayaburi dam project. PTT, a major energy company and one of the biggest corporations in Thailand, is also heavily involved, holding a 25 per cent stake in the proposed hydroelectric power plant.

“They are all now facing tough decisions: Stop Xayaburi now,” he said in Thai daily newspaper The Nation. “They can either suspend their syndicated loans or persuade the Thai government to cancel the power purchase agreement or face growing displeasure from the Vietnamese government.

The Thai stakeholders have plenty at risk. The four banks have expansion plans in Vietnam while PTT is in an advanced stage of planning a Vietnamese refinery project.

” Thai companies pumped more than $6bn into Vietnam up to June last year, according to Yulchon and LS Horizon’s guide to direct foreign investment in the country. Major Thai investors included SCG, Thai Plastic and Chemicals, Siam Pulp and Paper, Thai Kraft Paper Industry and PTT.