Thursday, 16 October 2008

Businesses wary in Cambodia

Bangkok Post
Thursday October 16, 2008

Thais urged to leave as border clash erupts

Thai businesses have put their Cambodian operations on full alert after troops of both countries exchanged gunfire and rocket fire along the border near the disputed Preah Vihear temple, leaving at least one soldier dead.

Foreign Minister Sompong Amornvivat yesterday urged Thai nationals in Cambodia to leave at once, and said the military had an evacuation plan if needed.

Leading companies including Siam Cement, Siam Commercial Bank and the CP Group have put their Cambodian offices on high alert in case tensions worsen.

Pramon Sutivong, the chairman of the Thai Chamber of Commerce, said many businesses have already ordered their staff to leave the country.

He said tourism and the border trade would likely be affected by the conflict, adding to the already poor sentiment in the country.

"It's too early to talk about the impact from the incident. It all depends on whether the violence intensifies and tensions are prolonged," Mr Pramon said.

The International Court of Justice awarded jurisdiction of the temple to Cambodia in 1962, but disputes flared anew earlier this year over land near the ruins.

Santi Vilassakdanont, the chairman of the Federation of Thai Industries, said it was contacting member companies for updates on the situation.

He expressed hope for a quick and peaceful resolution, noting that past incidents, while affecting border trade, rarely affected Thai businesses operating deeper in Cambodia.

"I hope the Foreign Ministry will be able to negotiate and solve the conflict. Bilateral conflicts are not new, they've been going on forever. I think we can find a compromise," Mr Santi said.

The last serious incident between the two countries came in 2003, when Cambodian rioters burned the Thai embassy and businesses in Phnom Penh. They were outraged by comments erroneously attributed to a Thai actress that the Angkor ruins belonged to Thailand.

Siam Cement, the country's largest industrial conglomerate, yesterday evacuated all 20 of its Thai executives from the country.

"Our staff's safety comes first. We booked plane tickets for all Thai staff as soon as we heard about the situation," said Matana Leongnarktongdee, SCG corporate communication director.

SCG has $130 million worth of business interests in the country, including Kampot Cement Co, located 148 km southwest of Phnom Penh and producing one million tonnes of cement per year. The group's Cementhai SCT (Cambodia) trading firm sells CPAC concrete products in the capital.

The Thai telecom company Samart Corp tightened security in Cambodia and put its staff on alert for evacuation.

Samart president Watchai Vilailuck said Cambodian authorities themselves had raised the threat level to between yellow and red, indicating the seriousness of the situation. Cambodia maintains a three-level warning scale for foreign investors, with red being the most serious.

Samart operates three joint ventures in Cambodia: Cambodia Air Traffic, which oversees air traffic control in the country; Kampot Power Plant, a power supplier to SCG's cement plant; and a museum.

Mr Watchai said Samart employed 10 Thai executives in Cambodia.

"Business is still normal, but we are monitoring the situation closely. We're ready to move in if the situation gets worse," he said.

A CP Group spokesman said the agribusiness giant had yet to withdraw its 27 Thai staff but asked them to stay in touch with the embassy in Phnom Penh.

Siam Commercial Bank also said operations at its four branches in the country remained normal.

"Our branches were open as normal, although business transactions were down," said Ongorn Abhakorn Na Ayuthaya, an SCB executive vice-president. The bank has branches in Phnom Penh, Battambang, Siem Reap and Sihanoukville under the name Cambodian Commercial Bank.

Thai officials and businessmen said that while most business ventures were unlikely to be disrupted, small businesses and traders along the border would certainly suffer.

According to the Foreign Trade Department, Thai exports to Cambodia totalled 33 billion baht for the year to August, up 58.7% from the same period last year. Imports were up 157% to 2.06 billion baht.

Key Thai exports to Cambodia include fuel oil, sugar, motorcycles, automobiles and machines, while imports include maize, iron, aluminium poles and copper. Thailand ranks third among Cambodia's trading partners, after Vietnam and China, and is also the third-largest foreign investor in the country after Korea and Japan.

But official trade statistics do not capture an additional 30 billion baht in border trade each year.

Niyom Waiyaratchapanich, the chairman of the Thai Chamber of Commerce committee on neighbouring country trade promotion, called on all parties to end the conflict quickly.

"If it is prolonged and intensifies with a nationalistic tone, then Thai businesses in Cambodia will be seriously affected," he said.

Mr Niyom said that given the tensions, bilateral trade was expected to miss the target of 60 billion baht for the year.

"Thai investment projects will probably be most affected. We think contract farming projects by Thai companies will likely be delayed by the conflict."

The CP Group had earlier announced plans to support a two-million-rai contract farming programme for maize. Smaller companies also have contract farming agreements for maize, cassava and soybeans with Cambodian farmers.

"We's afraid that [Cambodian farmers] won't be able to bring in their crops to the country," Mr Niyom said.

Executives of Thai Airways and Bangkok Airways said flights between the two countries were operating normally.

"At the moment, our flight operations remain unchanged and our records show no sign of a drop in passengers with 70% of seats filled," said Krittaphon Chantalitanon, THAI's director for Thailand, Indochina and Burma.

THAI operates two flights a day between Bangkok and Phnom Penh. Bangkok Airways has two daily flights between the two capitals and five flights between Bangkok and Siem Reap.

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