BOI eyes Japanese investment shift from Cambodia to Thailand

Narit Therdsteerasukdi, Secretary-General of the Board of Investment (BOI), said that only a small number of investors have relocated their production bases from Cambodia to Thailand following the closure of the Thai–Cambodian border in August 2025.

He explained that the BOI had introduced relief measures for both Thai and foreign investors affected by the shutdown. Despite the disruption, which pushed transport costs up by five to ten times and extended delivery times from half a day to as long as seven days, most foreign manufacturers have remained in Cambodia.

Many of these investors operate large, labour-intensive factories in Cambodia, making relocation difficult. “The factories there were built to rely on abundant low-cost labour,” Narit noted.

However, with the border situation still tense due to security concerns, he warned that reopening would take time. “Foreign investors must now adapt their business models to cope with the disruption,” he said.

Relocating production from Thailand to Cambodia is also unlikely, he added, as Thai industries generally use advanced technology and skilled labour. While a shift from Cambodia to Thailand could be possible, the main challenge lies in sourcing sufficient manpower. “This is an area where government support will be needed,” Narit said.

Japan-backed firms expected to consider relocation

The BOI has held discussions with several Japanese investors affected by the border closure, particularly those whose supply chains span both countries. These companies typically send raw materials from Thailand for processing in Cambodia and then return semi-finished components for further production.

Since the closure, logistics routes have had to divert through Vietnam and Laos, sharply increasing both cost and delivery time. Japanese manufacturers in Cambodia, such as Minibea and Denso, are among those hit hardest, mainly in the electronics parts sector.

Given the prolonged disruption, the BOI expects some Japanese investors to consider shifting part of their operations to Thailand, where infrastructure and skilled labour are more readily available.

BOI relief measures for affected investors

On August 8, 2025, the BOI board approved special investment promotion measures to assist companies impacted by the border shutdown.

These include import duty exemptions on second-hand machinery in all cases. The value of such machinery, if not older than 10 years, can be counted as 100% of the investment capital eligible for corporate income tax exemption. Other incentives remain subject to standard BOI criteria.

For projects moving only part of their machinery from Cambodia to combine with existing BOI-promoted projects, the BOI will allow importation of the transferred equipment for one year from the date of project amendment approval.

Investors must submit relocation plans from Cambodia and file their applications by the end of 2026.