BANGKOK - The dramatic departure of nearly 190,000 Cambodian migrant workers from Thailand threatens to hit labour-intensive industries hard, from seafood to construction, inflicting damage on the Thai economy just as it teeters on the verge of recession.
Panicked labourers - who help keep major Thai businesses afloat but often lack official work permits - have fled in droves, fearing a crackdown by the new military junta after it warned illegal migrants face arrest and deportation.
Despite officials from both countries denying a clampdown is under way, rumours of violent anti-immigration raids have spread across Thailand, where businesses already report feeling the pinch of a shrinking workforce.
In Rayong province, around 200 kilometres (125 miles) from the Thai-Cambodian border, factories have cut production after losing many of their Cambodian workers, said Sanguan Seangwongkij, vice chairman of the association of rubberwood operators in the region.
"Many of the factories in my group have had to slow down production because of an up to 30 per cent shortage of workers," he said, adding it was "damaging foreign confidence" in the sector.
The factories, which process old rubber trees to make furniture, rely upon Cambodian labour but also hire workers from Myanmar, he explained.
Thailand has around 2.3 million legal migrant employees and a further 800,000 are thought to be working illegally, according to the employment department.
The latter is a conservative estimate, according to the International Organisation for Migration (IOM).
The kingdom has virtually no unemployment and depends upon neighbouring Cambodia, Laos and particularly Myanmar - where the majority of Thailand's migrants come from - to fill manual labour vacancies.
Workers from Myanmar are not returning home in large numbers, and analysts suggest the Cambodian exodus may be linked to the close alliance between Cambodian premier Hun Sen and Thailand's fugitive former leader Thaksin Shinawatra, who is bitterly opposed by the military now running the country.
The sudden departure of what may be the entire Cambodian illegal migrant worker community - the IOM estimates there are up to 180,000 unofficial Cambodian labourers - has triggered concerns for the Thai economy.
"We can't afford to lose migrant workers. They are of vital importance to the expansion of Thailand's economy," said Suchart Chantaranakaracha, vice chairman of the labour affairs department of the Federation of Thai Industries.
"If the rumours continue and there is still drainage of Cambodia migrant workers out of Thailand, then there will be a problem," he said.
Even before the May 22 coup in which the army seized power, Thailand's once-vibrant economy was reeling from nearly seven months of deadly street protests, which dented consumer confidence and scared off foreign tourists.
The economy shrank 2.1 per cent quarter-on-quarter in the first three months of 2014, according to an official estimate. The fear is that it will contract again in the second quarter, sliding into recession.
The junta has been keen to show it is serious about kick-starting the economy, leading some analysts to suggest the army misjudged the impact of its warning to illegal migrant workers.
"Politically, it's always convenient to blame immigrant workers... The junta didn't realise how quickly the rumours would circulate. Now they're trying to backtrack," said Bruno Jetin, a researcher at the Research Institute on Contemporary Southeast Asia.
Thailand's migration strategy has previously been criticised by groups including the IOM for failing to implement long-term policies to address labour shortages.
In a possible bid to stem the outflow of migrant labourers, the military regime has said it recognises their importance to the workforce.
On Monday an army general said plans to create special economic zones would better manage the movement of migrants, while a junta spokesman later said the regime was going to simplify registration for work permits.
The recent crisis has exposed Thailand's reliance upon foreign labour but could prove to be a short-term problem, said economist Charl Kengchon of the Kasikorn Research Center.
"If both countries can clarify misunderstandings, the situation will be resolved soon," he added.
But it remains unclear exactly how long it will take to refill the vacancies created by the flight of the Cambodians.
Construction worker Yem Savoeun crossed the border on Wednesday morning after abandoning his job in the eastern Thai city of Nakhon Ratchasima, where he was helping to build a seven-storey hospital.
He suspects the project has stalled as most of the workers on-site were Cambodians, nearly all of whom have fled.
"I don't know whether the Thai military will regret the actions that led to Cambodians fleeing," he said. "But employers will lose out."