Increasing violence on the Thai-Cambodia border could impact trade and force local companies to source their materials from elsewhere

Photo by: Tracey Shelton

The Thai-Cambodian border crossing at Poipet. Border checkpoints have remained open, even as fighting escalates near Preah Vihear temple.

70%

Increase in Thai exports to

Cambodia this year

With strong economic growth in Cambodia, trade from Thailand has increased. Border closures would force many local companies to look elsewhere for materials.

WITH violence erupting on the Thai-Cambodia border, Thai investors warned that the dispute could affect bilateral trade, tourism and investment between the two countries.

Thai and Cambodian soldiers exchanged small arms and rocket fire on Wednesday in a clash that killed at least two Cambodian soldiers and wounded several Cambodian and Thai troops, according to government officials and AFP.

The Thai government has also stated that it will assist Thais wanting to flee Cambodia.

But even with the fighting, the border between the two countries has remained open.

"If the border closes, business between the two countries would suffer as Cambodia imports many of its consumer products from Thailand," said Sawai Tangtanapon, vice president of CP Cambodia Co Ltd, on Wednesday. CP is an agricultural products company.

She added that the border conflict might not affect CP as much as other businesses because many of their materials come from Vietnam, India and Malaysia.

Sawai said continued negotiations between the two countries were the best way to prevent further violence and the disruption of vital economic links.

One of Thailand's top political analysts said he expects the dispute to have a limited short-term economic impact.

"The border checkpoints remain open and cross-border trade shouldn't be affected, but tourism and infrastructure projects could be affected. Cambodia receives a lot of its construction materials and raw materials for garments from Thailand," said Panitan Wattanayagorn, associate professor at the Department of International Relations at Chulalongkorn University.

"The two sides should be careful - they should stop posturing and playing blinking games," he said.

Narongchai Akrasanee, executive chairman of the Export-Import Bank of Thailand, stressed the priority of maintaining business partnerships over political disputes about land.

"We should separate the dispute about Preah Vihear temple from business. Cooperation between Thailand and Cambodia could generate huge benefits on both sides," he told the Bangkok Post.

Kong Bunly, the trade director for Banteay Meanchey province, said cross-border trade with Thailand has remained largely unaffected by the dispute over territory around Preah Vihear, but that Thai tourists have stopped crossing into Cambodia.

Thai companies have substantial investments in Cambodia, including PTT, ThaiBev  and Siam Cement Group.

More than 100 other small and medium-sized enterprises also operate in Cambodia.

Thai products have come to dominate the Kingdom's commodities market as consumers have yet to sour on trade with their neighbour, but government officials acknowledge that imports have slowed in recent weeks.

We should separate the dispute about preah vihear from business.

"Imports of Thai goods have declined lately because many Thai businesspeople fear they will not be able to collect payment from Cambodian wholesellers should the situation on the border deteriorate," said Mao Thora, secretary of state at the Ministry of Commerce.

He added that Cambodian workers continue to traverse the border each day and that he expected the government would make extra efforts to resolve the border dispute peacefully.

Fears of fighting

An employee at the Thai Plastic Company who asked not to be identified said she is concerned that any armed confrontation between the two countries could affect her company.

"I'm really worried about this because Cambodian people could stop buying Thai products if fighting breaks out," she told the Post.

"This crisis absolutely impacts Thai business in Cambodia and Cambodian employees employed by Thai companies," she said, adding that her manager had already returned to Thailand because of the border crisis.

An official at the Thai Business Council of Cambodia said it has more than 70 Thai business members operating in Cambodia, and the Council expects the governments of both countries to work toward a peaceful resolution.

On Tuesday at the fourth annual Asia Economic Forum in Phnom Penh, Prime Minister Hun Sen called for continued cooperation between Thailand and Cambodia despite recent territorial disputes.

"We won't let the border dispute become an obstacle for continued cooperation," he told the forum.

ADDITIONAL REPORTING BY GEORGE MCLEOD AND AFP