A Change of Guard

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Saturday 18 October 2008

Fears Thai-Cambodian border dispute to hit business ties

Thai soldiers at a road block

PHNOM PENH (AFP) — A tense border spat that left two soldiers dead this week threatens burgeoning economic ties between Cambodia and Thailand, business leaders and government officials fear.

Shortly after gunfights broke out between troops from the two countries on Wednesday, businessmen were among the several hundred Thais who fled the Cambodian capital Phnom Penh for home, risking booming trade and investment.

"The conflict needs to be resolved urgently. If it continues or expands further, it will bring a huge (economic) loss to both sides," Niyom Wairatpanij, chairman of Thailand's Chamber of Commerce in Bangkok, told AFP.

"People from both countries are already afraid to conduct their business near the borders. Thai businessmen are concerned," Niyom said.

The chamber was lowering trade growth targets for this year between the two nations by 8.0 billion baht (233.5 million dollars) to 52 billion baht, he said, in the wake of the dispute which shows few signs of a quick resolution.

The standoff flared in July after Cambodia's ancient Preah Vihear temple was awarded World Heritage status by the UN cultural body UNESCO, angering some Thai nationalists who claim ownership of the site.

The situation quickly escalated into a military confrontation, with up to 1,000 Cambodian and Thai troops facing off for six weeks, although both sides in August agreed to reduce troop numbers in the main disputed area.

Tensions boiled over after Monday's talks aimed at cooling the standoff failed.

In the first eight months of this year, Thailand exported 47.04 billion baht worth of goods to its neighbour -- mostly sugar, fuel, metals, auto parts, and other industrial goods -- which was nearly equal to total trade between the two countries in 2007, the Thailand's Foreign Trade Department says.

Cambodian exports to Thailand which include fruits, vegetables, steel and clothing were worth over 61 million dollars in the first eight months this year -- already nearly 1.2 million dollars more than exports for all of last year.

But the Cambodian government said the hostilities had already started to affect investment.

"Many Thai big investors fear that if anything wrong happened they would find it hard to withdraw their shares or collect payment," said Mao Thora, secretary of state at Cambodia's commerce ministry.

"Only small or medium-sized (Thai) enterprises are still continuing their business in Cambodia."

Cambodia also stands to suffer a loss of tourism revenue as Thais shy away from visiting ancient temples and border casinos.

The Bangkok Post newspaper reported Friday that after this week's clash Thai gamblers are taking their business to casinos in Myanmar.

Although relations between Thailand and Cambodia have been amicable for decades, Thais have good reason to be nervous as the border dispute has heightened nationalism on both sides.

The Thai embassy and some dozen other Thai businesses in Phnom Penh were looted and burned in the 2003 anti-Thai riots after false reports that a Thai actress insulted Cambodia.

After this week's fighting, Cambodian police were posted in front of the Thai embassy and undercover agents were assigned to protect Thai interests in the country, said Cambodian interior spokesman Khieu Sopheak.

"We have had the experience that a sensitive issue like this can stir people's nationalism," Khieu Sopheak said.

"We protect all Thai businessmen and citizens in Cambodia in case our people get furious and do something wrong that would not benefit either side."

Sawai Tangtanapon, vice president of CP Cambodia Co Ltd, which uses imports from Thailand, said if the dispute escalated and the border was closed, both countries would be worse off.

"We are good neighbours and have a lot of mutual businesses, so both sides should sit and talk," Sawai said.

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