Once bustling and full of energy, Poipet, the largest and busiest border crossing between Cambodia and Thailand, has now fallen into a deep slumber, reflecting the current state of economic relations between the countries. But it is a rather unsettled sleep, marked by the closed border, disrupted supply chains, shuttered hotels, vacant restaurants, empty markets, and lost profits.
The border dispute between Cambodia and Thailand, which erupted briefly into open conflict in late July, led to the closure of border crossings between the two countries in June. This has resulted in an abrupt halt in bilateral trade, which totaled $10.45 billion in 2024. Neither nation relies heavily on these bilateral trade flows, but the reliance is greater on the Cambodian side. Trade with Thailand accounts for 8 percent of its foreign trade, most of it made up of imports, while for Thailand, Cambodia’s share does not exceed 2 percent. Although these trade losses might not appear catastrophic at the macro-level, they could have – indeed, are already having – devastating consequences at the micro-level.
In certain sectors of the Cambodian economy, the Thai market plays a substantially more important role. Thailand’s dominance was particularly evident when looking at supermarket shelves, where it accounted for 45 percent of essential goods imports and 27 percent of food products. Conversely, the Cambodian market was also significant for Thailand, representing, for instance, nearly 20 percent of beverage exports. The disruption of trade has led to Thailand’s replacement by other players, which has been further fueled by the desire among Cambodian consumers to boycott Thai products. In the current situation, retailers will also suffer losses as they are forced to lower prices on Thai goods due to declining consumer demand. This creates additional pressure on their profitability.
In addition to this, Thailand supplied 30 percent of Cambodia’s imports of vehicles and parts thereof, along with 10 percent of its imports of electronics. These sectors had previously experienced rapid growth due to intra-industry trade, indicating increasing integration. However, the conflict has now caused supply delays for companies such as Honda, which has facilities on both sides of the border. This exposes the vulnerability of global value chains to political conflicts and undermines the subregion’s attractiveness as an investment destination.
In the agricultural sector, a lack of domestic processing capacity has forced Cambodian farmers to export their products, making Thailand the closest and most logistically convenient market for the north-west provinces. Since the outbreak of the conflict, Vietnamese buyers have replaced Thai ones. However, leveraging their monopolistic position, they now offer prices 20-30 percent lower than those offered by their Thai counterparts, according to this author’s field research. Reconfiguration of agricultural supply chains has thus led to further concentration of the Vietnamese market and an increase in Cambodia’s dependence on its eastern neighbor. In 2024, 63 percent of Cambodia’s agricultural exports went to Vietnam, a figure that has now presumably increased further.
Already controlling 50 percent of Cambodia’s import market for fertilizer, Vietnamese brands have capitalized on the shortage and price surge resulting from the disruption of fertilizer supplies from Thailand, which previously accounted for 25 percent of the market.
Price reductions and rising input costs could undermine financial stability in rural areas where the majority of the population is employed in agriculture, including 63.7 percent in Banteay Meanchey province and 76.9 percent in Oddar Meanchey province, according to provincial statistics. While the average household debt-to-income ratio in Banteay Meanchey, Oddar Meanchey, and Preah Vihear provinces remains moderate at 45-50 percent, a decline in incomes may severely aggravate farmers’ debt burdens and push many households into the risky debt category. The situation is exacerbated by the fact that a number of households depend on remittances from migrant workers.
Meanwhile, the border crisis has prompted many Cambodian migrant workers to return home from Thailand, in many cases without even notifying their employers. Thailand was a key destination for labor migration from Cambodia, accounting for 93 percent of the country’s migrant flow, or around 1.2 million people. Through Poipet alone, 786,899 migrant workers returned to the country between July 24 and August 31, according to Cambodian immigration authorities, and more have likely returned since.
As a result, Thailand has faced rising costs due to labor shortages, while Cambodia has experienced increased unemployment and a sharp decline in remittances, which in 2024 totaled $2.8 billion, or 6.1 percent of GDP. Given that field studies indicate migrants often transfer money in cash through friends and relatives, this figure could be even higher. The expansion of the labor supply in the Cambodian market amounted to 8 percent, which will exert strong downward pressure on wages and disposable income.
Traditionally, agriculture has acted as a shock absorber for the Cambodian economy during crises, absorbing the released labor force. However, under current conditions, its buffer capacity is limited as profitability in agriculture is declining. Add to this the fact that in the four border provinces, approximately 200,000 people were resettled into camps when the conflict broke out in July, and have been left without income. While receiving assistance from the government, many remain unwilling to return home and to productive agricultural activities until the situation normalizes.
While Poipet is crowded with returning migrants, tourists are no longer to be seen there. After COVID-19, Thailand became the largest source of foreign tourist arrivals for Cambodia, and also served as a significant conduit for other foreign tourists. Thai tour operators had built a business selling tours to Angkor in Bangkok, Pattaya, and other Thai resorts. These tours formed a critical and stable revenue stream within the regional tourism value chain, making their sudden halt a significant loss for both sides. As a result, Cambodia has experienced a sharp decline in visitor numbers, with arrivals dropping by almost 40 percent year-on-year in July 2025. This has resulted in low hotel and restaurant occupancy, which is creating a spill-over effect on related sectors.
The military clashes also damaged Preah Vihear temple, which, under peaceful conditions, has provided a modest but regular income for local Cambodian communities. In 2024, the UNESCO-listed temple, which has been disputed between Thailand and Cambodia since the 1950s, attracted 91,103 visitors, according to the local statistical office, generating tens of thousands of dollars in revenue. The adjacent area includes five souvenir shops, one flower kiosk, two snack stalls, and four cafes. The average monthly revenue is approximately $1,000 per souvenir shop, $150 per snack stall, and $1,350 per café, this author learned during recent fieldwork.
At the same time, the border crisis has created potential opportunities. Previously, the development of certain industries was hindered due to intense competition from Thai goods. The conflict has forced Cambodia to diversify its range of imports, search for new markets and, finally, develop the local agricultural processing industry. However, the question of whether Cambodia will be able to effectively capitalize on these opportunities remains open. As for Thailand, it risks losing its role in the “battlefields into marketplaces” paradigm and may face an irreversibly altered economic reality, in which its market share and influence in Cambodia is eroded permanently.