Friday, 11 February 2011

Border dispute keeps Thai businesses away

via CAAI

Friday, 11 February 2011 15:01 Steve Finch

RECENT fighting on the border between Cambodia and Thailand has had a minimal impact on the country’s economic interests in a direct, measurable way. But the fallout comes from the fear factor generated as a result of the clashes, a much more difficult outcome to assess.

Speaking on the sidelines of a press conference on Wednesday confirming that a Thai trade fair would go ahead in Phnom Penh next week despite the fighting, representatives of companies including Thai Airways and Siam Cement Group said they had experienced little or no adverse effects.

Thailand’s national carrier has seen only 100 cancellations on outbound flights to Bangkok for this month as a direct result of fighting, said Narinthorn Purnagupta, Thai Airways general manager in Cambodia, which represents just 1 percent of traffic.

Inbound flights had seen even fewer cancellations, he added, just 40 so far.

Siam Cement Group (Cambodia) Managing Director Patham Sirikul said the company’s joint venture Kampot Cement had not seen any impact. SCG imports construction materials mostly through the Poipet border crossing which has remained open throughout.

A few cancelled holidays by Thai tourists does not represent a major dent to business ties between Cambodia and Thailand, but tensions translate into a lack of economic development in the border area around Preah Vihear and a lack of enthusiasm among Thai investors who may have otherwise considered Cambodia.

“The first thing is the feeling of their security,” Jiranun Wongmongkol, Thailand’s commercial counselor in Cambodia, said of the main impact on Thai investors here.

In August last year B-Quik, a Thai vehicle service chain, announced it planned to delay opening its first outlets in Phnom Penh until the end of this year because the company’s senior management were concerned about the attitude of Cambodians towards Thais in the wake of border clashes.

Whether or not other Thai companies have decided against expansion into Cambodia for the same reason is difficult to gauge, but clearly the current tense climate does not bode well for investment.

Cambodia’s trade with Thailand climbed 54 percent last year to US$2.6 billion, a sign that the Preah Vihear dispute has hardly had an impact, but clearly other countries in the region such as Vietnam and China have much better business relationships with the Kingdom than Thailand.

From Cambodia’s perspective this is unfortunate. As the second-largest economy in Southeast Asia, Thailand as a neighbour of Cambodia should be much more involved in the domestic economy than it is at the moment.

The reason behind this stuttering economic relationship is obvious. Reluctance in doing business derives directly from tensions at Preah Vihear.

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