A Fragile Start
Issue 30 — Key Developments Across Cambodia, Laos, Myanmar, and Thailand
Editor’s Note
by Mattia Peroni, Lead Editor - Mekong Belt Desk
Just a week into 2026, we start off the first newsletter of the year with a series of stress tests for governance across the region. Thailand enters the new year facing a convergence of global shocks, currency distortions, and an early election—testing whether economic management can hold amid mounting uncertainty. In Cambodia, public debt remains sustainable on paper, but 2026 will test whether fiscal discipline can endure as borrowing increases and contingent risks linger. Myanmar offers the starkest rupture: the junta’s attempt to revive the Myitsone Dam underscores a regime trading long-term environmental and social stability for (unlikely) short-term political survival. Laos closes the issue with a quieter but no less important test—whether commitments to gender justice ahead of CSW70 can translate into real access, accountability, and leadership.
Thailand 🇹🇭
Thailand Enters 2026 Amid Global Turmoil and Domestic Economic Strain
by Satid Sootipunya, in Bangkok
Thailand enters 2026 under mounting economic and political uncertainty, as global geopolitical tensions and domestic instability weigh on an already fragile outlook. The year began with heightened international volatility following reports of the U.S. military operation targeting Venezuelan President Nicolás Maduro, which triggered a rise in global gold prices. On January 3, gold spot prices climbed by 0.36% to USD 4,330.50 per ounce, underscoring investors’ growing flight to safe-haven assets.
This volatility offers a glimpse of the challenges Thailand may face throughout 2026. Rising geopolitical tensions have dampened global trade, a critical concern for Thailand, whose economy remains heavily dependent on exports. The International Monetary Fund (IMF) has warned that global trade growth will slow significantly, reflecting escalating trade disputes and heavy front-loading of shipments in 2025 to avoid anticipated U.S. tariffs. Domestically, Kasikorn Research forecasts that Thailand’s exports could contract by 1.2% in 2026 as external demand weakens.
Beyond trade pressures, Thailand is also grappling with currency dynamics that complicate economic recovery. The baht strengthened by nearly 9–10% in 2025, making it the strongest currency in the region, despite modest economic growth, high household debt, weak consumer purchasing power, narrowing fiscal space, and ongoing political uncertainty. A stronger baht has weighed on tourism and export competitiveness at a time when both sectors are crucial for growth.
According to the Bank of Thailand (BOT), intensified gold trading has been a major driver of the baht’s appreciation. Daily gold trading volumes have reached approximately THB 65 billion—significantly exceeding average daily stock market turnover of around THB 42 billion. As gold is typically traded in U.S. dollars, periods of rising gold prices prompt investors to sell dollars and convert proceeds into baht, increasing demand for the local currency and pushing it higher.
To mitigate the impact of speculative gold trading on the exchange rate, the BOT and the Ministry of Finance have introduced a set of measures. These include requiring gold trading platforms to report transaction data to the Revenue Department to improve monitoring of capital flows; considering a specific business tax on online gold trading, particularly speculative transactions without physical delivery; and exploring transaction value caps to curb large-scale “hot money” trading that can distort currency markets.
Looking ahead, the IMF projects Thailand’s economy will grow by only 1.5–1.6% in 2026. This subdued outlook reflects the combined effects of geopolitical instability, slowing global trade, currency appreciation, and structural domestic challenges. Political uncertainty adds another layer of risk. Thailand is heading toward a general election on February 8, following Prime Minister Anutin Charnvirakul’s decision to dissolve parliament on December 11, just two months after taking office.
As Thailand confronts overlapping geopolitical, economic, and political pressures, the start of 2026 raises a pressing question: can the country navigate this convergence of risks, or is a deeper economic slowdown looming?
Satid is a multimedia economic journalist and news anchor who covers macroeconomic trends, Thailand’s fiscal policy, and key regional developments for Bangkok Biz. A Journalism graduate from Thammasat University, he has reported on major issues such as the US–China trade tensions, the Myanmar crisis, and global corporate stories, drawing on prior newsroom experience at The Momentum, the Bangkok Post, AFP, and Varasarn Press. His work blends economic analysis, foreign affairs, and digital storytelling, with a strong focus on making complex financial and political topics accessible to Thai audiences.
Cambodia 🇰🇭
Understanding Public Debt and Why Cambodia Keeps Borrowing
by Sokna Thea, in Phnom Penh
Cambodia’s public debt has become a growing topic of concern, particularly as the government continues to borrow despite years of solid economic growth. This anxiety is understandable. In a global environment marked by slowing trade, rising borrowing costs, and more selective development aid, public debt warrants close scrutiny.
The 2026 national budget helps explain the government’s approach, which centers on development through investment. Total government revenue is projected at USD 7.57 billion, while total expenditure is expected to reach USD 9.61 billion, resulting in a fiscal deficit of USD 2.04 billion. This gap will be financed primarily through external borrowing, with only limited reliance on domestic instruments such as government bonds.
A key point often overlooked in public debate is that Cambodia continues to run a current account surplus of about USD 991 million. This indicates that routine government operations—including salaries, utilities, and administration—are covered by existing revenue. Borrowing is therefore largely directed toward capital expenditure, particularly infrastructure and other long-term investments.
From a broader perspective, Cambodia’s debt level remains relatively moderate. As of 2025, total public debt stands at approximately USD 12.67 billion, equivalent to about 27 percent of GDP. At the same time, the country holds USD 26.2 billion in official reserve assets—more than double the size of its public debt. Cambodia’s economy has also grown at an average rate of around 6 percent over the past decade, reaching a GDP of USD 46.4 billion in 2024. In this context, public debt appears manageable relative to economic size.
International assessments reinforce this view. The joint World Bank–IMF Debt Sustainability Analysis classifies Cambodia as being at low risk of debt distress. Most public debt is external and highly concessional, characterized by low interest rates, long maturities, and extended grace periods. Domestic debt remains minimal, and local bond issuance is still limited as the financial market develops.
Cambodia is also rated as having a “medium” debt-carrying capacity, based on a Composite Indicator score of 3.02. Under this classification, safety thresholds place the present value of external public debt below 40 percent of GDP and total public debt below 55 percent. Cambodia remains well below both limits. Even under forward-looking projections, total public debt is expected to rise gradually to around 30 percent of GDP by 2034.
The primary risks to debt sustainability do not stem from regular government borrowing, but from contingent liabilities—particularly those linked to public-private partnerships and potential financial sector stress. Stress tests estimate these risks at 14.1 percent of GDP for PPPs and 10 percent for the financial sector. While current buffers remain sufficient, this margin could narrow quickly if large off-budget obligations materialize.
Borrowing, therefore, is not without risk. Cambodia remains vulnerable to external shocks, climate-related disruptions, and shifts in global financing conditions. As the country approaches graduation from Least Developed Country status, access to concessional financing will gradually diminish. This transition will make borrowing more expensive, underscoring the importance of prudent debt management today.
Sokna has a background in International Affairs and Business & Commercial Law. He’s currently a Senior Project Coordinator at the Ministry of Economy and Finance of Cambodia, working on the Financial Management Information System (FMIS) Project. His professional focus is driven by entrepreneurship, business development, and financial technology, with a particular interest in how private-sector innovation drives Cambodia’s economic growth.
Myanmar 🇲🇲
The Junta’s Gamble on Myitsone Dam
by Mozart
Myanmar’s military junta has moved to revive the long-suspended Chinese-backed Myitsone Dam in Kachin State, one of Southeast Asia’s most controversial hydropower projects. Suspended in 2011 under Myanmar’s former quasi-civilian government, the project has long faced strong public opposition. Its renewed push reflects the junta’s deepening economic and diplomatic dependence on China—and how far it is willing to go to secure Beijing’s backing.
China has consistently sought to restart the project since its suspension. Now, amid international isolation and intensifying conflict at home, the junta appears increasingly reliant on Chinese investment and political support. The attempted revival has triggered renewed public anger and resistance, particularly in Kachin State.
On December 19, 2025, the junta’s National Defence and Security Council (NDSC) issued a warning that individuals or groups criticizing or opposing the Myitsone Dam without what it called “sufficient evidence” could face legal action. The statement framed the project as a state business governed by registered contracts, asserting that opposition could be prosecuted under existing laws. The order applies nationwide and has further inflamed opposition from anti-regime forces, including the Kachin Independent Army (KIA), the junta’s long-standing political and armed rival in the region.
The Myitsone Dam agreement was originally signed in 2006 under former military ruler Than Shwe, between Myanmar’s Ministry of Electric Power and China’s state-owned China Power Investment Corporation (now SPIC). At the time, public debate and criticism were effectively impossible. The project is located at the confluence of the Mali and N’Mai rivers—the birthplace of the Irrawaddy River—and would involve constructing a massive concrete-faced rock-fill dam, creating a vast reservoir and dramatically altering downstream ecosystems and livelihoods.
Opposition to the dam has been driven by multiple concerns. The project would flood approximately 766 square kilometers at the source of the Irrawaddy, a site considered sacred by many, threatening biodiversity hotspots and displacing thousands of people. It is also located near the active Sagaing Fault, raising fears of earthquakes and catastrophic flooding. Compounding these concerns, roughly 90% of the electricity generated would be exported to China, offering limited benefit to local communities.
These risks sparked nationwide protests under the slogan “Save the Ayeyarwaddy,” prompting then-President Thein Sein to suspend the project in 2011 as Myanmar began opening politically and economically. Although China continued to push for its revival during the National League for Democracy (NLD)’s administration, no agreement was reached.
The junta’s renewed effort marks a return to this unresolved conflict. The project was never formally cancelled, only suspended—leaving the door open for its revival. A reconstituted committee of 13 members is now reportedly working closely with SPIC Yunnan International Power Investment, with indications that construction could resume as early as 2026.
For local communities in Kachin State, who would bear the brunt of the environmental and social costs, opposition remains firm. Many have called for the permanent termination of the project. Ultimately, the Myitsone Dam has become more than an infrastructure proposal: it symbolizes Myanmar’s struggle over sovereignty, governance, and control of its future. The junta’s pursuit of Chinese backing risks sacrificing the Irrawaddy River—and the livelihoods and heritage tied to it—for short-term political survival.
Mozart is a research assistant at Mosaic Myanmar and is currently pursuing a Bachelor of Arts in Liberal Arts and Sciences at Parami University. His academic and professional interests span community development, minority issues, and social impact research. He has held roles including service-learning intern, student mentor, and operations coordinator for local initiatives, supporting project management, monitoring and evaluation, and education programs in Myanmar.
Lao PDR 🇱🇦
It Is Lao PDR’s Time to Advance Gender, Justice, and Inclusive Development
by Thipphavanh Virakhom, in Vientiane
As preparations begin for the 70th Session of the United Nations Commission on the Status of Women (CSW70) in March 2026, the international community stands at a critical moment for advancing gender justice. CSW70’s priority theme—“Ensuring and Strengthening Access to Justice for All Women and Girls”—builds on extensive global evidence showing persistent systemic barriers in law, policy, and social norms that limit women’s access to justice, equal rights, and full participation in public life. Globally, nearly one in three women experiences physical and/or sexual violence in her lifetime, yet fewer than 40 percent seek help and less than 10 percent report incidents to the police. This justice gap continues to undermine social cohesion and economic development worldwide.
At the regional level, ASEAN has articulated important collective commitments to gender equality, including the ASEAN Guidelines for a Coordinated Response to Violence against Women and Girls and the Regional Plan of Action on the Elimination of Violence against Women and Children. However, progress remains uneven. Across ASEAN, women are disproportionately represented in vulnerable employment (63% for women compared to 56% for men), while unpaid care work remains a major barrier to economic participation. Although investment in the care economy is widely recognized as essential to women’s empowerment and inclusive growth, implementation continues to lag in many member states.
For Lao PDR, CSW70 offers a strategic opportunity to align national priorities with ASEAN and global gender agendas. Women currently hold around 22% of seats in the National Assembly, below both national targets and international benchmarks for gender-balanced representation. Moreover, while women make up nearly half of the civil service, only 18% occupy decision-making roles, and subnational leadership representation remains as low as 5–7%. These gaps underscore persistent barriers to meaningful political participation, influence, and leadership.
Access to justice remains a critical challenge. In Lao PDR, more than one-third of women are estimated to experience some form of violence during their lifetime, yet only around 2% seek assistance from legal authorities. This reflects deep structural constraints, including fragmented service delivery, weak enforcement, social norms that discourage reporting, limited legal literacy, and gaps in survivor protection mechanisms.
CSW70 also provides an entry point to advance implementation of recommendations from the 10th CEDAW periodic review and to accelerate commitments under Beijing+30. The CEDAW Committee has urged Lao PDR to address persistent gender stereotypes, strengthen legal and institutional responses to gender-based violence, expand survivor-centered justice services, and adopt temporary special measures to increase women’s representation in decision-making. These priorities closely align with Beijing+30’s emphasis on eliminating violence against women, advancing leadership, safeguarding civic space, and strengthening accountability within justice and governance systems.
By foregrounding these evidence-based priorities during CSW70 preparatory processes—particularly within Asia-Pacific regional consultations—Lao PDR can help frame access to justice as a multidimensional issue encompassing legal protection, economic security, political participation, institutional accountability, and dignity. Priority actions include scaling up survivor-centered legal aid and referral systems, adopting temporary special measures to accelerate women’s leadership, and strengthening gender-disaggregated data systems to track progress under SDGs 5 and 16.
Ultimately, CSW70 is more than a reporting exercise. It is a strategic platform for shaping a practical, inclusive gender justice agenda that reflects Southeast Asia’s realities and aspirations. Early engagement, evidence-based advocacy, and a focus on implementation will be essential to translating commitments into measurable improvements for women and girls in Lao PDR and beyond.
Thipphavanh holds a bachelor’s degree in international affairs. She is a governance and development professional specialising in rule of law, access to justice, and gender equality in Lao PDR. Her work focuses on strengthening justice sector institutions, advancing people-centred governance, and promoting gender-responsive systems. With extensive experience in project coordination, monitoring and evaluation, stakeholder engagement, and strategic communications, she has collaborated closely with national institutions and international partners to support inclusive and sustainable development.
Editorial Deadline 02/01/2026 11:59 PM (UTC +8)
Really strong analysis across all four countries. The framing of 2026 as a series of "stress tests" for governance captures something important - these aren't isolated challenges, they're all hitting at a moment when the margin for error is unusually narrow.
The Cambodia section is especially valuable for cutting through the panic around debt levels with actual context. The distinction between current account operations and capital expenditure borrowing is critcal, and so often gets lost in headlines. That said, the point about contingent liabilities from PPPs is worth tracking closely - those hidden obligations have a way of materializing at the worst possible moments.
On Myanmar, the Myitsone Dam revival feels like a case study in how desperation drives terrible decision-making. Trading long-term enviornmental and social stability for short-term political survival with China is exacty the kind of move that locks in future crises.