Trade fears over conflict

via CAAI

Border clashes may hit tourism, investment

Published: 8/02/2011

Businesspeople are worried the border clashes between Thailand and Cambodia in Si Sa Ket province will hurt trade and investment sentiment as well as dim the tourism recovery.

At a pass at Khlong Yai in Trat province, the number of traders from both Thailand and Cambodia dropped by half yesterday. Notably, not a single tourist applied to cross the border to Koh Kong. JAKKRIT WAEKARYHONG

Kongkrit Hiranyakit, chairman of the Tourism Council of Thailand (TCT), said the clashes between Thai and Cambodian troops are making a number of tourists stay away from nearby areas. He expects they will have a long-term impact on Thai tourism as the country may lose the opportunity to be a tourism hub when the Asean Economic Community integration takes place in 2015.

"The ongoing clashes can make other Asean member nations turn their attention from Thailand to other countries. Our rivals like Malaysia and Singapore may take this opportunity to promote themselves," he said.

Border clashes could mean other neighbouring countries like Laos and Burma may not trust Thailand, and Thai investors may be reluctant to invest in these countries, he added.

As for short-term impact, the number of Thai visitors to Cambodia will drop. Also foreign tourists who stop over in Thailand before travelling to Angkor Wat will decrease, with Japanese and Koreans likely stopping over in Vietnam instead. This is tens of thousands of tourists annually, he noted.

Niyom Waiyaratchpanich, chairman of the Thai Chamber of Commerce committee on neighbouring countries, urged the government to quickly quash the conflict as a prolonged flare-up may lead to losses in trading value of up to 1 billion baht.

Bilateral trade has gradually declined from 59 billion baht in 2008 to 50 billion baht in 2009 and 2010, with estimates this year of 45 billion baht.

Commerce Minister Porntiva Nakasai said the closure of four checkpoints in the past four days has docked trading value by about 100 million baht.

Deputy Commerce Minister Alongkorn Ponlaboot said border trade between Thailand and Cambodia accounted for 80% of bilateral trade for the countries last year. More than half of the total exports to Cambodia were shipped through checkpoints in Sa Kaew province.

Mr Alongkorn believed the trade decline would not exceed 5% of total border trade, but that assumes no prolonged fighting.

So far, the ministry has not received any complaints from Thai investors working on construction and infrastructure projects in Cambodia, but Thailand already suspended the export of bandages and medical supplies to the neighbouring country.

The latest government assessment showed the economic impact was limited to border trade, sparing investment sentiment.

"But after a new round of fighting yesterday morning, the government has to evaluate whether to go ahead with a planned Thai trade fair in Phnom Penh from Feb 17-20 as private operators are concerned about their safety," he said.

The Department of Export Promotion said 90% of 61 entrepreneurs registered for the trade fair wanted to postpone the event.

The Board of Investment of Thailand reports since Cambodia allowed foreign investment in 1994, there have been 1,628 project investments by Thai businessmen through 2008, worth about US$8.1 billion of investment capital. The latest figures released by the Cambodia Investment Board reported that 101 investment projects from Thailand were approved in 2008 involving $260 million.

The garment industry had 38 projects worth $48.7 million, followed by tourism with 20 projects worth over $100 million. Agro-industry and energy were also big sectors.

Payungsak Chartsutthipol, chairman of the Federation of Thai Industries, said a committee should be set up to jointly solve the problem without military force.

"We think [the two countries] will be able to sort out the problems without a prolonged fight," he said.