Cambodia's border conflict with Thailand poses growing economic risks, analyst warns
The piece, titled 'Economic consequences of Cambodia's border conflict with Thailand', was published on the Khmer Times website on Monday (Aug 18).
The analysis recalls the May 28 clash in the Emerald Triangle, where Cambodian and Thai soldiers confronted each other, leaving one Cambodian soldier dead and sharply escalating tensions.
In the aftermath, border crossings were shut, Cambodia banned Thai imports of fruits, vegetables, telecoms, and energy, and both sides traded accusations over the causes of the clash.
Kosalthanan's assessment highlights four key areas of economic impact: trade, tourism, displaced families, and migrant workers.
Cambodia's import bans target goods where it already enjoys comparative advantage, such as fruits and vegetables.
In the first seven months of 2025, Cambodia exported US$1.45 billion of fruits and vegetables, while only importing US$9.6 million from Thailand, making substitution feasible.
Energy imports such as diesel and LPG were also banned, with Singapore and Vietnam expected to fill the gap.
However, vulnerabilities remain. Cambodia imported US$41 million of fertilisers from Thailand in 2024, and exported US$130 million in cassava — mostly raw — to Thailand in the first seven months of 2025.
With land transport restricted, cassava exports risk steep declines unless domestic processing expands to serve China and other markets.
Tourism has suffered the steepest decline. Thailand was Cambodia's largest tourist source in 2024, sending 2.15 million visitors (32% of total arrivals). But after the border clash, July ticket sales at Angkor Wat from Thai nationals plunged 92.3% year-on-year.
The perception of risk, particularly given Angkor Wat's proximity to the border (161 km), has deterred not only Thai but also other international travellers.
In 2024, tourism supported around 510,000 direct jobs. Vendors, restaurants, and hospitality workers now face severe income losses.
The fighting has displaced an estimated 120,000 people in border provinces, disrupting farming, destroying crops and livestock, and halting businesses. Their lost income impedes debt repayment, raising the risk of defaults.
The National Bank of Cambodia, together with 12 commercial banks, has launched temporary debt relief for soldiers, displaced families, and dependents, but these are stopgap measures.
As of May, 1.2 million Cambodian migrant workers were employed in Thailand, remitting at least US$1 billion in 2024. Should relations deteriorate, many could be forced home, cutting household remittances sharply and adding to debt stress. Cambodia currently has only 100,000 job openings, far below the capacity needed to absorb a large returning workforce.
Kosalthanan recommended measures including:
>Developing alternative logistics for domestic fruits and vegetables.
>Investing in cassava processing to export to China.
>Promoting alternative tourism destinations such as Sihanoukville and eco-tourism.
>Monitoring debt health of displaced families and offering grants and agricultural inputs.
>Reskilling returnees and expanding labour-intensive sectors like construction and manufacturing.
He also stressed the need to pursue diplomacy and Asean mechanisms to maintain peace, with international observers helping ensure fairness.
While Cambodia's reliance on Thai imports in banned categories is limited, the tourism sector, displaced families, and remittance flows face acute pressure. Without a comprehensive mitigation plan, the socio-economic fallout will deepen.
'Both countries must commit to diplomacy and constructive dialogue to uphold the ceasefire, restore peace, and reopen trade. In the end, armed conflict serves no one's interests but only causes economic loss and human suffering on all sides,' Kosalthanan concluded. - The Nation/ANN
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