Thai-Cambodia border clash threatens 181 billion baht economic loss as ceasefire holds

The Star

5 days ago

BANGKOK: A fragile ceasefire between Thai and Cambodian forces has brought temporary relief to border tensions, but economists warn that prolonged conflict could cost both nations up to 181.7 billion baht over three months whilst displacing hundreds of thousands of workers.
The five-day border skirmish from 24-28 July ended with a ceasefire agreement taking effect at midnight on 28 July, yet sporadic violations continue to undermine the truce.
Cambodian forces have reportedly continued firing into Thai territory at multiple points, prompting Bangkok to lodge formal protests with Asean, the United States, and China as ceasefire witnesses.
Deputy Prime Minister and Finance Minister Pichai Chunhavajira revealed that the government is still assessing the economic fallout, with initial estimates suggesting the conflict has already cost Thailand approximately 10 billion baht during the brief escalation period.
Economic vulnerability exposed
The financial implications extend far beyond immediate military costs.
Associate Professor Dr Aat Pisanwanich, an international economics expert, has modelled three potential scenarios following the ceasefire, warning of an 80% probability that fighting could resume.
"The ceasefire agreement represents a Thai victory in initiating bilateral negotiations rather than relying solely on international court intervention," Dr Aat stated, though he cautioned that underlying territorial disputes remain unresolved.
Should tensions persist for one month, both economies would suffer combined losses of 60.6 billion baht.
A two-month conflict would double this figure to 121.1 billion baht, whilst a three-month standoff could reach 181.7 billion baht in total economic damage.
Cross-border trade under threat
The conflict's epicentre along key border crossings in Sa Kaeo and Trat provinces has paralysed vital trade arteries.
Sorathep Rojpotjanaruch, chairman of the Restaurant Business Association, warned that a three-month disruption could eliminate 40-50 billion baht in border exports immediately.
"If the crisis extends beyond six to ten months, export losses could reach hundreds of billions of baht," he cautioned. "Beyond one year, we risk permanently losing our export infrastructure as Cambodia seeks alternative suppliers from Laos, Vietnam, or China."
The uncertainty has already triggered concerns about supply chain diversification, with Cambodian buyers potentially sourcing goods from competitors who can deliver via maritime routes.
Tourism sector braces for impact
Thailand's crucial tourism industry faces substantial headwinds, with the Thai Travel Agents Association (ATTA) projecting significant visitor shortfalls depending on conflict duration.
Adith Chairattananon, ATTA's secretary-general, outlined three scenarios: if normalcy returns within one month, Thailand could still achieve its target of 34.5-35 million foreign visitors this year.
However, a three-month disruption would reduce arrivals to 33-34 million, whilst a six-month crisis could severely impact next year's peak season, affecting European and American markets during the crucial winter period.
Labour market disruptions
The conflict threatens to displace over 250,000 Cambodian workers currently employed in Thailand's manufacturing sector, particularly in frozen food processing, poultry, and seafood industries.
Whilst most workers have remained at their posts, prolonged tensions could trigger mass departures, exacerbating Thailand's existing labour shortages.
Nationalist sentiment clouds trade relations
Rungphech Chitanuvat from Informa Markets expressed concern that rising Cambodian nationalism could influence consumer purchasing decisions, potentially reducing demand for Thai consumer goods in Cambodia's retail market.
"Thailand exports significant consumer products to Cambodia," Rungphech noted. "While long-term investment impacts may be limited due to the border location of conflicts, we're monitoring how nationalist sentiment might affect trade relationships."
Path forward remains uncertain
Thai-Cambodia Business Council chairman Voratat Tantimongkolsuk emphasised the urgent need for transparent border demarcation negotiations.
The territorial dispute centres on conflicting map scales - Thailand uses 1:50,000 whilst Cambodia employs 1:200,000 - creating ambiguity over precise boundaries.
While Cambodia pushes for International Court of Justice arbitration, Thailand favours bilateral negotiations. The private sector continues monitoring developments closely, hoping for swift normalisation and renewed dialogue addressing underlying territorial issues.
The conflict underscores the economic interdependence between the neighbouring nations, with business leaders calling for comprehensive resolution mechanisms to prevent future disruptions to the substantial annual bilateral trade relationship. - The Nation/ANN