Thais hope rhetoric will cool before business climate sours, writes Umesh Pandey

Posted by Cambodian News

August 9, 2008

With border tensions with Cambodia rising, Thai companies that have operations in the neighbouring country are wondering whether nationalistic rhetoric could threaten the closer economic relations the two countries are trying to create.

Cambodia, which only 13 months ago was pitching incentives and opportunities to Thai investors, is now a place where investors may be fearful of participating.

The Preah Vihear temple dispute, initially perceived as an election campaign rallying cry by the ruling Cambodian People’s Party (CPP), has not died down. Now the dispute has spread to involve the Ta Moan Thom temple, located in Si Sa Ket near the border.

Tensions in Cambodia are not new. Everyone recalls the hostilities that resulted in major damage to Thai businesses and the Royal Thai Embassy in Phnom Penh in 2003 after Cambodian media erroneously quoted a Thai actress as saying Angkor Wat belonged to Thailand.

Last year, the government of Cambodia assembled an audience of more than 200 investors and declared that nationalistic issues would not be a factor in the future.

“Let’s put the past behind us and build the future. That was a political issue and we took responsibility (by paying compensation for the burning of the embassy),” was the response at the time of Kong Vibol, first secretary of state for the government of Cambodia.

“Now we provide a guarantee to Thai investors in order to make them more confident.”

Cambodia, he said at the time, was among the freest countries in the region and had set itself firmly on the development path, offering a free hand to foreign investors to set up businesses. They cannot own land but can lease it for 99 years. As well, he said, Cambodia had no foreign-exchange controls on current-account transactions.

However, the temple issue has opened old wounds, and with calls already for boycotts of Thai products, Thai businessmen are feeling the heat, although publicly they do not want to admit it.

“Yes, investing in Cambodia is risky and we knew that before we even decided to put our money in the country the first time around,” said one major investor who asked that neither he nor his company be named.

“All I want to say is if the country wants to see funds flow into the country, it will have to avoid look at ways to avoid creating a situation where investors start to fear,” he said.

Thai investors present in Cambodia include leading conglomerates Siam Cement Plc, Charoen Pokphand Group, Thai Beverage, PTT, Mitr Phol, Khon Kaen Sugar Mills Plc and more than 100 small and medium-sized companies.

Siam Cement, which only recently opened its cement plant in Cambodia.

Source: The Bangkok Post