April 27, 2011

[Thai] Business community seeks quick fix to clashes



Border trade so far affected only slightly

Businesspeople are calling for a quick resolution to border disputes with Cambodia, warning that continued clashes will hurt border trade and bilateral investment sentiment.

"Authorities need to be cautious concerning relations, because if they keep fighting, it will be difficult to negotiate," said Thanit Sorat, vice-chairman of the Federation of Thai Industries (FTI).

Mr Thanit suggests businesses play a role in restoring the relationship between the two countries, as outside discussions can be arranged easily.

FTI chairman Payungsak Chartsutthipol said he believed the issue could be settled soon and the government was unlikely to take a tougher stance on the relationship between the two countries.

However, Foreign Minister Kasit Piromya said on Monday that Thailand needed to revise its relationship with Cambodia since the latter was showing no intention to negotiate.

"Investors have not yet complained about this issue, and it is still business as usual. I am not concerned, as I am confident that it is still within the boundaries of negotiation," said Mr Payungsak.

He said it was still acceptable even if the government temporarily closed some border points in the disputed area, but closing all border points with Cambodia was inappropriate since it would worsen the conflict.

The comments were made on the sidelines of a meeting of the FTI, the Thai Chamber of Commerce and the Thai Bankers' Association to set up a Thailand-Cambodia business council to drive trade between the two countries.

Thailand already has a number of business councils with many countries, such as Burma, Laos, India, the European Union and the Philippines.

According to the Commerce Ministry, border trade between Thailand and Cambodia last year totalled 55.41 billion baht, up 22.1% from a year earlier, with Thai exports making 51.11 billion baht and imports 4.29 billion, up 72.3%.

Despite sporadic border disputes, Thai-Cambodian border trade keeps rising, up 14.3% between January and March to 16.1 billion baht, including 14.54 billion baht in Thai exports, up 8.9%.

Major exports from Thailand include automobiles, motorcycles, sugar, fabrics and textiles, and cosmetics, while imports are mainly agricultural products, minerals and wood. Thailand also exports fruits and vegetables, food and sugar to Vietnam through Cambodia.

Border trade with Cambodia takes place mainly through Sa Kaeo and Trat provinces, representing up to 90% of the total between the neighbours.

Apart from border trade, Thailand last year invested 31 million baht through the Cambodia Investment Board, where it ranked 15th. Taiwan, China, Korea, Hong Kong, Vietnam and Malaysia were the top investors in the country.

From 1994 to 2009, Thailand invested in 81 projects in Cambodia totalling $226.59 million or 7.02 billion baht. Nine projects are hotels worth 4.29 billion baht, followed by investments in the agricultural industry worth 4.35 billion, and garment and textile ventures worth 221 million.

"Thai-Cambodian border trade currently represents only 7.1% of total border trade between Thailand and neighbouring countries, while the trade values in the conflict areas in Surin and Si Sa Ket make up 0.2% of total border trade, " said Commerce Minister Porntiva Nakasai. "Border trade is therefore unlikely to be affected if the clashes are limited only to the two provinces."

Prasarn Trairatvorakul, the governor of the Bank of Thailand, said the clashes would affect human security rather than the economy.

"The impact on the economy will not be significant if the clashes do not escalate. But they affect people's safety more. The two sides should seek an end to the problem. There is no easy resolution for a border dispute, but all sides would not want the problem to escalate," he said.

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