Fire and smoke rise after what the Thai army says was the Royal Thai Army's drone operation causing damages on Cambodian military's arms depot, in an area given as Phu Ma Kuea Hill near Preah Vihear Province, Cambodia, in this screengrab from a handout video released on July 25, 2025. - Thai Army/Handout via Reuters
BANGKOK: Thailand’s acting leader warned that the armed military conflict with neighbouring Cambodia could "potentially develop into a war” as troops used rockets and artillery to shell targets along their contested border for a second day.
Acting Prime Minister Phumtham Wechayachai told reporters on Friday (July 25) that the severity of the clashes was escalating, endangering civilian lives, and Thailand was committed to defending its territory and sovereignty.
"This situation could potentially develop into a war. At present, it is still considered an armed clash involving heavy weaponry,” Phumtham said.
Thailand’s government has put the latest death toll from the deadliest clashes in more than a decade at 14, including a soldier, with more than three dozen people injured. One Cambodian civilian was killed and five others injured in the clashes, Agence France-Presse reported, citing a provincial administration official.
The Thai army said Cambodian forces "conducted sustained bombardment” using heavy weapons, field artillery and rockets through Friday morning, and that it responded appropriately and advised civilians to avoid the conflict zones.
Cambodia’s defence ministry confirmed shelling overnight and claimed to control the site of two disputed temples and another area, according to the Khmer Times. It separately reported 40 workers are trapped at Preah Vihear temple, one of the points of conflict.
The flareup in clashes on Thursday, which included Thai airstrikes on Cambodian military bases using F-16 fighter jets and Phnom Penh’s attack on civilian areas in Thailand, followed a months-long border standoff that also pushed Thailand’s ruling coalition to the brink of collapse.
The baht fell 0.2 per cent to 32.34 per dollar, in line with regional peers, while the benchmark stock index was little changed after dropping as much as 0.6 per cent.
The neighbours share a long history of border tensions, though relations have remained largely stable since a deadly 2011 conflict that left dozens dead. The last major flare-up centred on the Preah Vihear temple, a longstanding flashpoint dating back to the French colonial era.
Much of the current dispute stems from maps drawn on differing interpretations of early 20th-century Franco-Siamese treaties, which defined the border between Thailand and Cambodia, then part of French Indochina.
A prolonged military conflict would add to multiple economic challenges for both nations, including the US threat to impose stiff tariffs. Unlike neighbouring Indonesia, the Philippines, and Vietnam - which have secured trade agreements with the Trump administration - export-reliant Thailand has yet to reach a deal.
Given the risks to Thailand’s local economy and tourism, a vital contributor to the economy, Bangkok may have more reasons to end the conflict as soon as possible, said Trinh Nguyen, Natixis senior economist for emerging Asia.
"We expect de-escalation to take place after aggressive actions,” Trinh said. "External risks are rising and Thailand cannot afford to derail already weak tourism and soft growth.”
Cambodia’s economic growth was already expected to slow, according to a July 17 report by Maybank Securities Pte., which noted the country’s dependence on the US is the highest in Asean, at 38 per cent of nominal exports or 21 per cent of GDP.
The country also has more than half a million workers in Thailand, according to official estimates, though Maybank said undocumented migrants could push that number closer to 1.2 million people. Officials in Thailand’s Chanthaburi and Trat provinces said some 2,000 Cambodian migrant workers have gathered at a checkpoint to return home.
Thai exports to Cambodia totaled US$5.1 billion in the first half of 2025, including jewelry, oil and sugar, with US$732 million of imports, mostly fruit and vegetables, according to the Thai Commerce Ministry.
The clashes have adversely affected economic confidence and disrupted trade and investment between the two countries, the Thai Chamber of Commerce said in a statement on Thursday.
Thailand said it has evacuated more than 130,000 civilians from conflict zones. Cambodia has closed 260 schools in the province of Oddar Meanchey, the centre of the conflict, the Khmer Times reported.
The fighting has drawn condemnation from world leaders, with the US saying it is gravely concerned.
"The United States urges an immediate cessation of hostilities, protection of civilians, and a peaceful resolution of the conflict,” State Department deputy spokesman Tommy Pigott told reporters in Washington on Thursday.
While Thailand has ruled out bilateral talks and signaled no immediate plan to cease the military actions, a drawn-out conflict poses fresh challenges to leader Paetongtarn Shinawatra, who had already been suspended as prime minister for her handling of the border dispute. Her Pheu Thai-led coalition has been on the brink after the defection of a key party last month left it with a slender majority.
Thai nationalist groups, who had initially planned an anti-government rally for Sunday, have pushed it back to Aug. 2. Posts supporting the Thai army and air force are trending on X and Facebook in Thailand. - Bloomberg
