Cross-border investments: Thailand and Cambodia, between economic ambitions and regional turmoil

The economic dynamism between Cambodia and Thailand has long been a regional showcase for ASEAN, marking an era of integration, growing trade and productive complementarity. Over the years, Thailand has established itself as a major investor in Cambodia, while Cambodian companies, although smaller in volume, are also seeking to establish a presence in their neighbour. However, in the summer of 2025, this dialogue of prosperity is becoming fragile against a backdrop of border tensions, affecting the business climate and the growth of bilateral investment flows.

Thai investment in Cambodia: figures, sectors and trends

Although China remains the leading foreign investor in Cambodia (56.2% of FDI flows in the first quarter of 2025 alone), Thailand ranks among the top ten countries in terms of foreign direct investment, making a significant contribution to a variety of sectors such as manufacturing, agribusiness, hospitality, wholesale and retail trade, transport and energy.

Over the past six years, Cambodia has attracted a total of USD 48.4 billion in foreign direct investment from all sources. Thailand's share, although significant in terms of jobs and technology transfers, remains lower than that of its Asian competitors, representing a few hundred million dollars cumulatively over the period — the exact amount for 2025 is subject to fluctuations and estimates depending on the source and classification (approved projects, actual investments, joint ventures, etc.). etc.).

Among the inflows recorded in early 2025, Thailand is regularly cited behind China, South Korea, Singapore, Japan and Vietnam.

Thai projects in Cambodia mainly focus on the food industry, construction, logistics and regional value chain extensions. Special economic zones, particularly in Poipet and Sihanoukville, are home to a significant number of Thai companies, which appreciate the availability of Cambodian labour and tax incentives.

Cambodian investment in Thailand: modest momentum

Conversely, the Cambodian presence among foreign direct investors in Thailand remains limited. Cambodian investment flows – in agri-food, real estate and certain tourism services – are only marginal compared to the overall scale of FDI received by Thailand, which approached THB 115.3 billion (more than USD 3 billion) in the first quarter of 2025, all partners combined.

Official data indicates that Thailand mainly attracts capital from major Asian and Western powers, with China, Singapore, Japan and the United States at the forefront. Cambodian companies, which are generally smaller in size, are currently focusing on small cross-border operations or shared investments in projects located on the border, but do not feature in the top 10 foreign investors in Thailand.

A turbulent context: border tensions and uncertainty

The story of economic rapprochement cannot hide a more complex reality in 2025. Tensions have risen along the border, leading to temporary closures, economic sanctions and a return of mistrust among investors. These tensions have caused a sharp decline in cross-border trade – estimated at nearly 67 billion baht (approximately 1.85 billion USD) in the first four months of 2025 – as well as a slowdown in bilateral investment talks and the suspension of several infrastructure initiatives.

Thousands of Cambodian workers have had to return home, investments in logistics, hotel and industrial infrastructure have been frozen, and Thai companies operating in Cambodia are cautiously monitoring developments. Traditionally stable FDI flows could therefore contract in the second half of the year or even temporarily shift to other regional markets.

Bilateral trade, jobs and prospects

Despite the tensions, the political will is clear to achieve, as soon as stabilisation allows, a trade volume of USD 15 billion, a target set in early 2023 by the two prime ministers. The border represents a unique economic ecosystem: Thailand remains Cambodia's fourth largest trading partner and employs more than 2 million Cambodian workers, illustrating the deep interdependence of the two economies.

The evolution of investment flows will depend on the restoration of political dialogue and border stability. If the climate calms down, the integration momentum should resume, as entrepreneurs on both sides are keen to continue diversifying and expanding their activities.

Three pillars remain unchanged: Cambodia's young population and competitive labour costs for Thailand, Thailand's logistical and industrial power as a model for Cambodia's rise, and finally, the prospect of an integrated region under the auspices of ASEAN and RCEP.

Today, the exact amount of cross-investment is hampered by a lack of transparency and economic volatility: the latest figures published highlight Thailand's solid commitment to Cambodia, amounting to several hundred million dollars, while Cambodia's reciprocal investment, which remains limited, is part of a process of gradual integration and regional learning. The political context and diplomacy at the moment will be decisive in determining whether these flows will resume their upward trend or remain at a standstill pending a new dialogue of trust