While headlines highlight border skirmishes and political rhetoric, the true impact of the Thai-Cambodian clash runs deeper — within the complex web of regional trade, taxation policy, supply chains, and foreign investor confidence. While the headlines focus on the border skirmishes and political rhetoric, the true impact of the Thai-Cambodian clash lies deeper within the intricate web of regional trade, taxation policy, supply chains, and foreign investor confidence. As of July 24, 2025, what began as a localized military engagement has swiftly evolved into a transnational economic risk affecting not only border communities but the entire Eastern Economic Corridor (EEC), ASEAN logistics networks, and Thailand’s export-import architecture. Border Bombs, Broken Borders Logistics at Risk The immediate economic casualty is cross-border trade. The Thai-Cambodian border sees an average of 16 billion baht in bilateral trade per month, with Surin, Sa Kaeo, and Ubon Ratchathani acting as key logistics nodes for agricultural commodities, construction materials, and consumer goods. As of now: All checkpoints have been closed indefinitely, disrupting overland cargo shipments. Thai SMEs relying on raw materials (e.g., timber, cassava, garments from Cambodia) now face delayed production. Cambodian exporters of low-cost labor-intensive goods especially to Thai border processing zones are cut off. This disruption may cause a 2–3% quarterly contraction in border-dependent industries if tensions continue past August. Tax Revenue and Customs Fallout Thailand’s Customs Department collects substantial excise and import duties from overland trade with Cambodia mainly on fuel, alcohol, processed food, and machinery. With cross-border movement halted, an estimated loss of 1.2–1.5 billion baht per month in customs revenue is projected. VAT refund delays are expected to increase for exporters operating under AFTA and bilateral trade agreements, affecting liquidity of Thai traders. Special Economic Zones (SEZs) along the border, granted incentives under BOI and IEAT regulations, face operational paralysis and possible downgrade in investment attractiveness. Investor Confidence and Capital Flight The Stock Exchange of Thailand (SET) experienced a minor dip on the morning of July 24, particularly in logistics, retail, and regional banking sectors. But the real risk is foreign direct investment (FDI) Cambodia has increasingly been part of Thailand’s “China+1” strategy, where Thai firms establish low-cost factories in Cambodia to serve as subcontracting arms. Multinationals, especially in textiles and electronics, are now reconsidering Cambodian operations, while risk-averse capital may pivot to Vietnam or Indonesia. Thailand’s Eastern Economic Corridor (EEC), which banks on regional connectivity and multimodal logistics, now faces reputational risks as a “frontline logistics hub.” Tariff and Trade Policy Implications Beyond physical disruption, the conflict undermines trust in long-term tariff cooperation under ASEAN Trade in Goods Agreement (ATIGA) and Cambodia-Thailand Bilateral Framework. Cambodian authorities are likely to impose retaliatory import restrictions or delay cargo clearance of Thai goods. Thai exporters of construction materials, processed food, and household items may lose market share to Vietnamese and Chinese competitors in Phnom Penh and Siem Reap. Longer term, trade facilitation policies such as “National Single Window” integration and preferential duty waivers may be paused or revised. Conclusion: Short-Term Volatility, Long-Term Realignment While central banks and finance ministries may downplay the macro impact, the Thai-Cambodian conflict exposes the fragility of regional trade interdependence without robust conflict buffers. If the situation escalates beyond two weeks, Thailand risks: Losing ground as a preferred hub for regional value chains. A downgrade in ease-of-doing-business metrics, particularly for border-related sectors. Postponement or redirection of FDI flows, especially from Japanese and Korean firms. In a world where “geopolitical risk” is now embedded into financial modeling, the lesson is clear: bombs may explode at the borders, but the real damage detonates in spreadsheets, tax ledgers, and investor dashboards. Victor Wong (Peerasan Wongsri) Victor Law Pattaya/Finance & Tax Expert Email: <[email protected]> Tel. 062-8795414