Potential layoffs of Cambodian workers could potentially impact the Thai construction and fruit industries.
Updated Article:
Title: Escalating Tensions Between Thailand and Cambodia Pose Risks for Construction and Fruit Sectors
Stresses along the Thai-Cambodian border linger following a skirmish between soldiers from both countries in Ubon Ratchathani province on May 28, 2025. This spat has blossomed into a broader dispute with far-reaching implications for foreign relations and border issues.
Cambodia has moved to bring the matter before the International Court of Justice (ICJ), asserting territorial disagreements remain unresolved. Thailand, however, has declined international adjudication, preferring to tackle the issue by means of the Joint Boundary Commission (JBC).
The JBC convened in Phnom Penh on June 14-15, yet no definitive solution emerged. Thailand's Foreign Ministry spokesperson Nikorn-dej Balankura commented both sides had put forth efforts to bridge differences, and expresses optimism that diplomatic dialogue will help soothe tensions.
On June 14, Cambodian Senate President Hun Sen used social media to encourage Cambodian migrant workers in Thailand to return home on a voluntary basis before Thai authorities resort to forced deportations. He mentioned that the Cambodian government would accept all nationals irrespective of their immigration status.
Thailand's Ministry of Labour states that approximately 500,000 Cambodian nationals are employed within the country. These workers are grouped as follows:
- Workers under Cabinet Resolutions (Sept 24, 2024, and Feb 4, 2025): 40,942 workers have received work permits, 154,607 are still processing applications
- Undocumented workers registered under the Sept 24, 2024 resolution: 110,771 individuals
- Cross-border or seasonal workers: 24,220 individuals
- Workers under the Thailand-Cambodia MOU framework: 184,810 individuals
A representative from the Thai Chamber of Commerce has highlighted concerns within the private sector, urging both governments to swiftly resolve this dispute through diplomatic means. Prolonged uncertainty could harm both countries, given their mutual reliance on each other for trade and investment.
The source added that Cambodia's call for its workers to return home could disrupt Thailand's construction sector, which employs a substantial number of Cambodian workers. However, this gap may be temporarily filled by workers from neighboring countries.
It is important to note that the departure of Cambodian workers would have a significant financial impact on them. Escalating tension could lead to additional repercussions, such as a back-and-forth game of retaliatory measures that would hinder or sabotage JBC negotiations.
Concerning trade boycotts circulating in Cambodia, the impact has thus far been negligible. Remarkably, consumers' choices seem to be driven by product quality, but if Cambodia were to institute a ban, imports from China or Vietnam might increase.
Ukris Wongthongsalee, President of the Chanthaburi Chamber of Commerce, has expressed worry about the provincial agricultural sector, particularly fruit cultivation. He underscored the crucial role Cambodian labor plays in the harvesting, sorting, and packaging process. The temporary or permanent closure of crucial border checkpoints like Ban Laem and Ban Phakkad could bring about economic losses surpassing one billion baht during the closure period.
In essence, Cambodia’s labor recall could have significant and interconnected negative effects on Thailand's construction and fruit sectors. The ripple effect across trade and bilateral economic relations may hinder progress if not resolved promptly.
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Key Insights:
- Potential Economic Consequences for the Construction Sector: labor shortages, wage increases, project delays, and the need for quick recruitment adjustments or government intervention to address cross-border workforce agreements.
- Main Economic Implications for the Fruit Sector: lost income opportunities for farmers due to labor shortages, increased fruit spoilage and decreased quality, and challenges in cross-border trade.
- The broader economic impact includes remittances loss, retaliatory measures leading to trade complications, and consumer and market effects potentially shifting towards Chinese or Vietnam products.
- Tensions between Thailand and Cambodia could pose risks for the international finance industry, as the dispute could discourage foreign investments in both countries' business sectors, such as construction and agriculture.
- The escalating tensions could have serious health implications, especially for Thai industries that heavily rely on Cambodian migrant workers, such as the construction sector, where a labor shortage could lead to increased wages and project delays.
- The broader international economy may be affected by the ongoing political disagreement, as Thailand's reliance on Cambodia for trade could lead to product shortages and increased costs, potentially encouraging consumers to shift towards importing goods from China or Vietnam.
- The impact of the standoff between the two countries extends beyond their shared border, as the disruption to the general-news landscape, such as cyber-attacks and security breaches, could negatively affect overall economic stability and international relations.
