BGA Cambodia Senior Analyst Kunmakara May wrote an update to clients on the peace deal between Cambodia and Thailand.

Context

  • Cambodia and Thailand signed a joint declaration October 26 in Kuala Lumpur, Malaysia, aimed at restoring peace and normalcy and strengthening bilateral cooperation after months of border tensions, some skirmishing and diplomatic strain. The accord, witnessed by U.S. President Donald Trump and Malaysian Prime Minister Anwar Ibrahim on the sidelines of the Association of Southeast Asian Nations (ASEAN) Summit, marks a turning point for the grouping in resolve disputes between neighbors.
  • The signing of a peace declaration marks a pivotal moment in reviving normal diplomatic ties and bilateral economic relations under a clear monitoring mechanism: the ASEAN Observer Team. The agreement paves the way for a gradual land border reopening as business leaders and investors express cautious optimism about renewed trade and tourism. However, more time will be needed for people-to-people reconciliation. The agreement comes after months of military tension that disrupted logistics, strained diplomatic ties and threatened Cambodia and Thailand’s trade which totaled roughly $5 billion in 2024 with a $4 billion surplus in Thailand’s favor.

Significance

  • Cambodia and Thailand’s expanded ceasefire agreement is aimed at ending months of escalating border tensions. The deal was brokered with the involvement of Trump, who was present at the signing alongside Anwar. It builds on earlier diplomatic efforts and includes commitments to withdraw heavy weapons, release detained personnel and establish joint monitoring mechanisms under ASEAN oversight. It also outlines steps for restoring trade, tourism and cross-border cooperation.
  • Cambodian Prime Minister Hun Manet and Thai Prime Minister Anutin Charnvirakul formalized the accord. The declaration reaffirms both countries’ commitment to peaceful dispute resolution, mutual respect and expanded collaboration across trade, tourism, education and humanitarian efforts. By reaffirming commitments to peaceful dispute resolution and expanded collaboration across key sectors, the declaration is expected gradually to restore investor confidence and unlock stalled economic initiatives.

Implications

  • Key outcomes include the signing of terms of reference for the ASEAN Observer Team, which has been tasked with monitoring the ceasefire and supporting military deescalation. Both sides agreed to an immediate cessation of hostilities, respect for sovereignty and territorial integrity, withdraw heavy weapons from border areas, begin joint operations to clear landmines in disputed areas and reduce the numbers of troops along the border. They also pledged to refrain from inflammatory rhetoric and implement confidence-building measures to restore trust and diplomatic relations.
  • As part of the peace deal, the United States announced that it will lift its arms embargo on Cambodia first imposed in 1975, and both sides agreed to restart the bilateral Angkor Sentinel defense exercises, last held in 2017. Additionally, the United States will increase the number of seats for Cambodian officers at U.S. military colleges such as West Point and the Air Force Academy.
  • The United States and Cambodia also agreed to expand cooperation on combating transnational crime organizations, including narcotics traffickers and online scam centers. Criminal enterprises in Southeast Asia are estimated to have stolen more than $10 billion from U.S. citizens in 2024.

We will continue to keep you updated on developments in Cambodia as they occur. If you have any comments or questions, please contact BGA Cambodia Senior Analyst Kunmakara May at kmay@bowergroupasia.com.

Best regards,

BGA Cambodia Team

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Senior Analyst

Makara has nearly 20 years of experience working in Cambodia’s media sector. With broad networks in government ministries and institutions, the business community and civil society, he helps BGA clients understand the rules, regulations and policies that impact investors’ success locally, regionally and globally.  In his professional journalism career, Makara focuses on Cambodia’s macroeconomics, politics and geopolitical issues. His reporting has covered the garment, banking and finance, capital markets, trade, investment and tourism sectors. Earlier, he worked as a financial officer at the Thai-owned TV3 television station.  Makara holds a master’s degree in business administration from Asia Euro University, a ... Read More