Cambodia B1.4bn loan still on[- Will Hun Xen still accept Thai charity?]

Prime Minister Abhisit Vejjajiva said yesterday Cambodia's decision to scrap a 1.4 billion baht loan from Thailand to subsidise a road improvement project was the result of a misunderstanding.

He was responding to a news report which quoted Cambodian Foreign Ministry spokesman Koy Kuong as saying Phnom Penh decided to cancel the loan.

Mr Abhisit said Cambodia thought Thailand terminated the loan so it sent a letter to inform the government that it would cancel the loan.

He said talks were under way to correct the mix-up. "Cambodia thought we had cancelled [the loan], so they sent a letter to cancel it," Mr Abhisit said.

"In fact, the cabinet hasn't made a decision on the loan scheme."

The 1.4 billion baht loan to upgrade a road from Surin to Siem Reap was discussed by the cabinet after the recent diplomatic spat erupted.

However, the termination of such an international agreement requires approval from parliament to take effect.

Thai-Cambodian ties turned sour when Cambodia's Prime Minister Hun Sen appointed Thaksin Shinawatra as an economic adviser.

Relations took a turn for the worse when Cambodia rejected Thailand's request for extradition of Thaksin to serve a two-year jail sentence and Thailand responded by threatening to review agreements and projects including the loan in question.

Mr Abhisit yesterday brushed aside former foreign minister Surakiart Sathirathai's suggestion that the government initiate talks with Phnom Penh to normalise the ties. He said the results of the meeting of the Thai-Cambodia General Border Committee (GBC), which concluded on Friday, were satisfactory.

Thani Thongpakdi, deputy spokesman of the Foreign Ministry, said yesterday the ministry received Cambodia's letter to terminate the loan deal. He declined to say if Phnom Penh's latest move was suggesting bilateral ties were further strained.

He said it was a normal practice for governments to review and if necessary cancel loan deals.

Meanwhile, the GBC meeting and the meeting between detained Thai engineer Sivarak Chutipong and his mother, Simarak na Nakhon Phanom, was seen as a good sign for bilateral relations.

Mr Sivarak, official of the Cambodian Air Traffic Services, was arrested on Nov 12 for allegedly stealing flight information concerning Thaksin. It took two weeks before his mother was allowed to visit him at prison.

His bail request is pending a court review.

Mr Sivarak is scheduled to appear in court for a first hearing on Dec 8.