I read that tourism to Cambodia has dropped

I read that tourism to Cambodia has dropped significantly, probably because of inappropriate fears, since we are perfectly safe if we avoid the Thai border. I also read that exports have increased nicely. I wonder if maybe because labor here has become less expensive with all the returning workers from Thailand.

Yes — and the interesting part is that your two observations may actually be connected, although probably not in quite the simple way of “tourism down → exports up.”

The numbers are striking.

• International tourist arrivals were down 47.9% in the first half of 2026, to about 1.75 million. The collapse is particularly dramatic for Thailand: Thai arrivals were down about 96%. But even China and Vietnam, the two largest markets, were down 23% and 28%, respectively.

• Meanwhile, Cambodian goods exports rose 17.7% in Q1 2026, according to the World Bank.

• And your labor hypothesis has a very substantial factual basis: roughly 973,000 Cambodian migrant workers returned in 2025, about 98.5% of them from Thailand. The World Bank describes this as an unprecedented domestic labor-supply shock.

So I think you're onto something, with one important qualification.

The returning workers probably are helping exports

The return of almost a million people doesn't merely mean “more unemployed people.” It means a huge increase in the supply of Cambodian labor.

And there is evidence that Cambodia's industrial sector has been absorbing them. By April 2026, the government reported about 650,000 returnees employed, roughly half in formal employment and half in agriculture, construction, services and other informal activities.

The World Bank also reports that formal-sector employment increased by about 401,000 jobs (22.1%) in 2025, with particularly large increases in manufacturing.

That creates an interesting economic mechanism:

Thailand loses Cambodian labor → Cambodia gains labor → Cambodian employers have a larger pool of workers → wage pressure is reduced → factories can expand production competitively → exports increase.

So, yes, lower labor costs could be one of the mechanisms behind the export performance.

But I wouldn't attribute the 17.7% export growth primarily to that. There are other big things happening: foreign investment, especially manufacturing investment, diversification of export markets, and expansion of particular manufacturing industries. The World Bank says FDI reached $5.1 billion in 2025, associated with an estimated 400,000 formal jobs.

And there's a delicious irony here: the same Thai-Cambodian rupture that is hurting tourism and remittances may be giving Cambodian industry a larger domestic labor pool.

And the tourism decline really does look partly psychological

I think you're also right to distinguish actual danger from perceived danger.

The official data themselves show that the collapse isn't confined to places anywhere near the fighting. American visitors, for example, were down only about 11% in the first half, while Korean visitors were down nearly 58%.

That's not what you'd expect if tourists were simply responding rationally to the geographic location of the fighting. Cambodia is a long, narrow country, and a problem on the Thai frontier does not make Phnom Penh, Kampot or Angkor suddenly dangerous.

But tourists don't necessarily make that geographic calculation. “Cambodia–Thailand conflict” becomes “Cambodia is dangerous” in people's minds. And the online-scam stories probably reinforce that perception. The tourism industry itself has identified both border tensions and negative publicity about scam networks as contributors to the decline.

There is another wrinkle: the Thai market was enormous, so losing Thai visitors alone produces a spectacular percentage decline. Thailand had been one of Cambodia's three biggest markets.

So I would put your hypothesis this way:

Cambodia is experiencing a peculiar economic substitution: a very large number of workers who previously produced income abroad are now producing goods and services at home, while a large number of foreign visitors who previously produced income in Cambodia are staying away.

That's a fascinating unintended economic experiment.

And because Cambodia's domestic wages are substantially below Thai wages — the World Bank cites roughly $248/month in Cambodia versus $400 in Thailand for these workers — the returnees potentially make Cambodia more competitive for labor-intensive manufacturing.

The big question is whether that advantage lasts. If Cambodian factories absorb the returning workers and exports continue growing, the shock could accelerate Cambodia's industrialization, even while tourism takes a considerable hit.

Agricultural and construction workers I know who returned from Cambodia generally ended up moving to Phnom Penh for garment and other factory jobs but kept their properties here, at least for a while. It has caused a shift from male workers to female workers, as men have much harder times getting factory jobs.

Yes, that makes a lot of sense. What you're seeing locally is a useful refinement of the national statistics.

The return migration isn't simply putting a million people back into the old Cambodian rural economy. A substantial number are apparently doing something more like:

Thailand → Phnom Penh → factory job, while retaining rural land/home.

That has several consequences.

• Women become disproportionately important in the factory labor force. Garment and footwear manufacturing has historically been heavily female, whereas men returning from Thailand may have experience in construction, agriculture, transport, or other work that doesn't translate as readily into factory positions.

• Men can end up underemployed rather than unemployed. They may do casual construction, driving, day labor, small commerce, or return periodically to work their land.

• Rural property becomes an economic anchor. Keeping the house and land means the family hasn't necessarily abandoned the village permanently. It gives them somewhere to retreat to and preserves an asset while they try urban employment.

• Phnom Penh gets an additional labor supply without necessarily getting an equivalent increase in permanent rural-to-urban migration. That's rather different from the classic industrialization pattern in which rural workers sell or abandon their agricultural holdings and permanently relocate.

And there's an especially interesting gender reversal in what you're describing. The economic shock may have made Cambodian women relatively more economically valuable to manufacturing precisely because the returning workers are disproportionately men whose skills and employment preferences don't match the factories' demand.

It also helps explain why the raw statistic “973,000 workers returned from Thailand” can be misleading. The important question isn't where they sleep at night or whether they're classified as migrant workers anymore; it's what jobs they actually obtain afterward.

Your observations suggest that some of the adjustment is occurring through a fairly clever household strategy: keep the land, send the women to the factory, let the men piece together whatever work is available, and wait to see what happens with Thailand.

That could also have a second-order effect on wages. If women are flooding into garment factories, the effect on factory wages could be downward, while the effect on wages for agricultural and construction labor might be quite different because many of the returning men are competing there. So “labor became cheaper” probably needs to be broken down by sex, occupation, and location rather than treated as one Cambodian labor market.

And frankly, your firsthand observation is exactly the sort of thing national employment statistics can miss.

Agricultural work is not very much automated. Those jobs don't exist, to me a blessing.

Exactly. And that makes your observation about the returning men particularly interesting.

Cambodian agriculture remains remarkably labor-intensive. Small plots, rice cultivation, irrigation, harvesting, livestock, and especially the huge amount of work around planting and harvesting don't lend themselves nearly as readily to mechanization as, say, American grain farming.

So when people say, “Those agricultural jobs don't exist,” I think the more accurate interpretation is:

The economic opportunity represented by those jobs is limited, not that the physical work has disappeared.

And I can see why you regard that as a blessing. There's a useful social function in having a rural economy that can absorb people who don't fit neatly into the formal industrial economy. A man who can't get a garment-factory job isn't necessarily economically useless; he can still work his family's land, raise animals, do seasonal agricultural work, or combine farming with casual employment.

It also makes retaining the family property quite rational. The rural property isn't merely sentimental real estate. It is something of an economic option:

If Phnom Penh works, stay in Phnom Penh. If it doesn't, we still have the land.

That's a much more resilient arrangement than forcing everybody into the urban labor market.

And there is an interesting historical contrast with the United States: American agricultural mechanization destroyed enormous numbers of agricultural jobs because increasing productivity through machinery was extraordinarily profitable. Cambodia may eventually mechanize considerably more, but for the moment human labor itself remains a productive asset rather than something the economy urgently needs to eliminate.

I suspect that's one reason Cambodia can look economically “backward” from one perspective while actually having some rather useful social resilience from another.