Business

Thailand-Cambodia Business challenged by Border conflict

Thai businesses tend to face with fiercer rivalry from competitors trying to seize the market share in Cambodia, which is very attractive to investors due to its cheap land and labor costs, fertile natural resources and improving logistic system. The Thai business opportunities in Cambodia in the long-term inevitably will be harmed if the border conflict persists.

Published

10 years ago

May 9, 2011

Sarun Saelee

As the Thai-Cambodian border skirmishes have erupted intermittently, critics warned that Thailand might lose the market share in many kinds of goods in Cambodia to its ASEAN partner like Vietnam because of the prolonged tension along the Thai-Cambodian border.

Kasikorn Research Center (KResearch) cautioned that the saga of the Thai-Cambodian border conflict might tarnish confidence of Thai exporters and investors operating their businesses with Cambodia.

Although the situation in general is relatively positive, concerns are looming that Thailand might lose the market share, both in terms of trade and investment in Cambodia to investors from neighboring Vietnam as the mutual relationship between those two countries has been healthy.

The Thai business opportunities in Cambodia in the long-term inevitably will be harmed if the border conflict persists.

The market share of Thai goods in Cambodia has been reducing while the market share of Vietnamese goods tends to increase following the Thai-Cambodian border clashes since 2008. In addition, investment value of Thai businesses in Cambodia has been decreasing, opposite investment from other ASEAN nations. Vietnam now is taking the lead in Cambodia while China is playing more roles in investment in the ASEAN region.

Cambodia relies on imports by about 70% of its Gross Domestic Products (GDPs) and import value tends to increase from 1.424 million US dollars in 2000 to 5.390 million US dollars in 2009. Major imported goods are from Thailand, Vietnam, China and Singapore.

Thailand thus far has been enjoying a trade surplus with Cambodia, and the figure in the first quarter this year was expanding well at about 36%. Thai exports to Cambodia rose by 31% while imports from Cambodia surged 135.7%; however, Thai exports to Cambodia in March grew at a slower rate. The border clashes would be blamed if the figure keeps plummeting.

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