The ongoing closure of the Thailand-Cambodia border checkpoints is inflicting a severe economic toll on Thailand, with daily export revenues plummeting by approximately 800 million baht. Dr.Aat Pisanwanich Director of Center for International Trade Studies (CITS) of UTCC, warns that the situation is likely to be protracted and could escalate, significantly undermining investor confidence. He urges the Thai government to reassess its negotiation strategies and prepare plans for assisting and evacuating Thai citizens.
The escalating tensions along the Thai-Cambodian border, which have led to the cessation of trade activities, are having profound economic repercussions. In an exclusive interview, Dr.Aat provided an initial assessment, stating that a complete border closure would result in a loss of approximately 800 million baht per day in export revenues for Thailand.
“The impact is felt by both sides,” Dr.Aat stated. “For Thailand, it’s a direct loss of export revenue, affecting Thai businesses heavily reliant on the Cambodian market, especially the Aranyaprathet-Poipet crossing, which accounts for as much as 60% of total border trade value.”
Cambodia’s Resilience: China and Vietnam as Alternatives
While Cambodia is facing a shortage of essential goods, including food, consumer products, construction materials, fuel, and automotive parts, leading to inflation and higher prices, Dr.Aat pointed out that Cambodia’s firm stance and apparent lack of concern stem from its current market dynamics. Thai goods hold the second-largest market share in Cambodia (around 30%), while China dominates with a significant 50% share. Additionally, low-cost products from Vietnam offer another viable alternative, allowing Cambodia to shift its imports to these two countries.
Thailand’s Leverage: Agricultural Imports and Cambodian Farmers’ Vulnerability
Despite Thailand’s disadvantage in market alternatives, Dr.Aat highlighted that Thailand still holds a key bargaining chip: the suspension of agricultural imports from Cambodia. Specifically, two main products—cassava and Kaew Kamin mangoes—are primarily purchased by Thailand. A halt in these imports would directly impact Cambodian farmers, ultimately exerting immense pressure on the Cambodian government.
Prolonged Crisis Expected: Urgent Call for Thai Citizen Evacuation Plans
Dr.Aat emphasized that the situation is highly likely to be prolonged, given the clear refusal of high-ranking Cambodian leaders to negotiate and the potential for social and political issues to be used to incite nationalism.
“The most concerning aspect is the safety of Thai citizens in Cambodia. I believe the government should consider preparing emergency plans, or even evacuation plans, for Thai businesspeople and citizens to return home, as the situation is fragile and could lead to violent incidents like those in the past.”
Investor Confidence Shaken: Bleak Economic Outlook for Thailand in 2025
The most severe long-term impact, according to Dr.Aat is the erosion of confidence. He believes that the Cambodian side’s direct attacks on Thai leaders via social media have an undeniable adverse effect on Thailand’s image and trustworthiness.
“Foreign investors considering relocating their production bases will likely overlook Thailand and turn to Vietnam, Laos, or Myanmar instead, viewing Thailand as having border stability risks.”
Dr.Aat predicts that this factor will lead to Thailand’s economic growth in 2025 being the lowest among ASEAN countries, possibly falling below 1.8%, and even lower than Myanmar’s, which he considers a highly concerning situation.
Strategic Recommendations
Dr.Aat proposed several recommendations for both the public and private sectors:
For the Thai Government:
- Paradigm Shift: The government must transition from a reactive to a proactive strategic approach, communicating officially and cohesively, rather than engaging in social media rebuttals.
- Utilize International Platforms: Engage international allies and provide accurate information about the true situation, including issues related to “grey capital” in Cambodia, to exert pressure on the global stage.
- Restore Trust: The most crucial element is to regain the trust and confidence of the public and investors in the government and national leadership.
For the Private Sector:
- Re-evaluate Risks: The Cambodian market currently carries very high risks and is unattractive for new investments.
- Seek New Markets: Thai entrepreneurs are advised to explore and expand into other neighboring countries like Laos, Vietnam, and Myanmar, which currently offer greater stability.
- Assist Affected Parties: The government must implement urgent measures to alleviate the impact on Thai businesses, especially SMEs, directly affected by the border closure.
