Bangkok: The Federation of Thai Industries (FTI) has highlighted the negative impact of the ongoing Thai-Cambodian border clashes on the country's industrial confidence index.
According to Thai News Agency, these clashes have disrupted economic activities and border trade, leading to a decrease in the industrial confidence index, with growing concerns over a reciprocal tariff affecting competitiveness.
Mr. Kriangkrai Thienukul, President of FTI, shared the results of the Industrial Confidence Index survey for July 2025, which fell to 86.6 from 87.7 in June 2025. This decline is attributed to the border dispute, which has significantly affected economic activities and border trade. In June 2025, the total trade value stood at 10.90753 billion baht, marking a 32.29% decrease compared to the previous month and a 23.3% decrease year-on-year.
Additionally, floods and flash floods in northern Thailand, including Nan and Chiang Rai provinces, continue to cause damage to communities, homes, and industrial plants. Concerns about a 36% reciprocal tariff, effective from August 1, 2025, are further impacting the competitiveness of Thai businesses. There are also worries about potential delays in the preparation of the 2026 fiscal year budget, alongside the expedited disbursement of the 2025 budget and the 115 billion baht economic stimulus budget within the designated timeframe. Slowing domestic purchasing power, especially in durable goods like air conditioners and machinery, is also putting pressure on domestic consumption.
Despite these challenges, the "Travel Thailand Half Each 2025" project, offering 500,000 rights under a budget of 1.75 billion baht, effective July 1, 2025, is seen as a positive factor. This initiative is expected to boost local economies and stimulate community economic activities. Investment is anticipated to continue growing, with the first half of 2025 witnessing a total investment value of 1.06 trillion baht, a 138% increase year-on-year. This growth is expected to stimulate investment, strengthen the economic structure, and increase employment in the industrial sector. Moreover, stable oil prices are helping to reduce costs for operators.
A survey conducted by FTI in July 2025, covering 1,356 entrepreneurs from 47 industry groups, revealed increasing concerns about the domestic economy (70.1%), the global economy (66.7%), government policy (57.2%), exchange rates from an exporter perspective (44.9%), energy prices (35.5%), and loan interest rates (27.1%). However, concerns about access to credit decreased (42.3%).
Looking ahead, the index forecast for the next three months has also declined to 89.2 from 90.8 in June 2025. This is due to the outcome of reciprocal tariff negotiations with the United States, which could impact competitiveness if Thailand's tariffs are higher than those of regional competitors. The ongoing dispute between Thailand and Cambodia continues to affect the value of border trade.
Nevertheless, some measures are expected to support the economic situation. These include an energy price freeze measure, which will keep the electricity price at 3.94 baht per unit from September to December 2025, measures to promote solar rooftop installations to reduce costs and encourage clean energy use, and the 20 baht flat-rate electric train fare measure starting October 1, 2025, aimed at alleviating public living costs.
The private sector has proposed that the government implement relief measures for businesses affected by the Thai-Cambodian border conflict, enabling them to resume operations swiftly. A support and assistance program for Thai businesses investing in Cambodia has also been proposed to mitigate impact and reduce long-term business risks.
Support measures in the form of low-interest loans or relaxed conditions are suggested to enhance financial liquidity and assist entrepreneurs affected by US import tariffs and SMEs in the supply chain. The government is also urged to expedite investment in developing systematic water resource management infrastructure to prevent and alleviate flooding in the northern region, as well as improve water storage, distribution, and sustainable restoration of aquatic ecosystems.