Border Closure Strains Cambodia-Thailand Trade, Pressures Japanese Firms to Rethink Supply Chains

Phnom Penh, Cambodia (Sept. 20, 2025) — The closure of the Cambodia-Thailand border has disrupted the supply of raw materials for Japanese companies operating in both countries, prompting calls for Cambodia to strengthen its domestic infrastructure and review investment laws to attract more foreign investors.

Ky Sereyvath, an economic specialist at the Royal Academy of Cambodia, told KPT English that Japanese firms are currently transporting raw materials by air to Thailand, then continuing by road to Poipet, Cambodia.

“The border closure has increased fixed costs for both countries, as air transport is significantly more expensive,” Sereyvath said. “After processing, the products are sent back to Toyota’s plant in Thailand for assembly.”

He added that Japanese companies should consider investing more directly in raw materials and infrastructure within Cambodia to reduce reliance on cross-border transport.

Toyota’s operations in Cambodia play a key role in minimizing the need to shuttle raw materials between the two countries. Sereyvath said the current situation presents an opportunity for Cambodia to improve its investment climate, including laws related to taxation, customs, and production.

Pen Sovicheat, spokesperson for the Ministry of Commerce, told KPT English that while certain goods—such as vegetables, fruits, electronics, oil, and gas—remain restricted, trade between Cambodia and Thailand continues through alternative routes. Thailand has redirected shipments via sea and through the Laos border.

The Thai Chamber of Commerce recently urged its government to negotiate with Cambodia to reopen the border, warning that the unilateral closure is affecting both sides, particularly Thai exports to the Cambodian market. The chamber said the disruption poses a challenge for multinational car manufacturers in Thailand, whose supply chains rely on Cambodian inputs.

According to the General Department of Customs and Excise, bilateral trade between Cambodia and Thailand totaled $2.66 billion from January to August 2025, a 4.6% decrease compared to the same period last year. Cambodia’s exports to Thailand fell 6.4% to approximately $535 million, while imports from Thailand dropped 4.1% to $2.12 billion.