Diplomacy set to pay dividend in Cambodia

Thailand seeks lead role in investment

Published: 6/09/2010

via CAAI

Thailand hopes to regain its leadership in foreign investment in Cambodia over the next five years now that the two countries have resumed diplomatic ties after months of strained relations.

Thai investment in Cambodia has fallen dramatically over the past seven years.

The relationship between the two soured notably in 2003 when the Thai embassy and some Thai businesses were heavily damaged by rioters in Phnom Penh. They had been reacting to fabricated reports quoting a Thai actress as saying that Angkor Wat belonged to Thailand.

Relations subsequently improved but became strained again last year as the two countries feuded over the Preah Vihear temple, leading to their ambassadors being recalled. Both envoys last month returned to their jobs, and Premier Abhisit Vejjajiva and Prime Minister Hun Sen are expected to hold talks later this month.

Thailand's investments based on approvals by the Cambodia Investment Board totalled only five projects worth US$15.5 million last year. The country ranked sixth in project numbers and third in project value, behind China ( $42.3 million) and Vietnam ($24.7 million).

Over the past 16 years, Thai investments in Cambodia totalled 81 projects worth $362.35 million. Most were in hotels, agro-industry, wood processing, food processing, telecoms, medical services, electricity, mining, garments and shoes.

Deputy Commerce Minister Alongkorn Ponlaboot said Thailand had potential to resume its leadership in foreign investment in Cambodia, if it can capitalise on the potential of National Road No. 5 as the land transport gateway to Vietnam and China.

The 407-kilometre highway connects Phnom Penh with Aranyaprathet in the Thai border province of Sa Kaeo. From Phnom Penh the road links to the Moc Bai-Bavet border crossing with Vietnam.

Mr Alongkorn and a group of Thai businesspeople recently travelled the road through Cambodia to Vietnam to explore the potential.

He said the Thai government planned to set up a special economic zone in Ban Pa Rai in Aranyaprathet to promote ties with Cambodia. It would offer comprehensive import-export services, distribution centres, customer services and an industrial estate covering about 1,000 rai.

The zone would be linked with Cambodia's Poipet O'Neang Special Economic Zone which occupies 2,000 rai opposite Ban Pa Rai.

Mr Alongkorn said the zone would be proposed to economic ministers and the cabinet in the new two weeks.

The special economic zone would be the second with a neighbouring country after the one that straddles Mae Sot district in Tak and Myawaddy in Burma. A special economic zone gives entrepreneurs more investment flexibility through such things as relaxed labour rules.

Thailand is currently the fifth largest trading partner of Cambodia behind the United States, Vietnam, China and Hong Kong. Bilateral trade between the two countries totalled $492.8 million last year, $477.2 million of which came from Thai exports.