Seven advantages of the Thai Canal
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Thailand’s vision of a mega infrastructure project for a sustainably prosperous future
The Thai Canal, also known as Kra Canal, Kra Isthmus Canal or Kra Peninsula Canal, could be Thailand’s first infrastructure project with a global impact. A Herculean task that can reshape Southeast Asia and provide the Land of Smile with substantial economic benefits for at least the next hundred years. The 200-year-old plan of a global shipping and economic hub that will dramatically shorten East-West shipping routes. The idea has been dusted off every few years but never materialized.
From a global perspective, three canal projects have been realized. The Panama Canal, the Suez Canal and the North-[to]-Baltic Sea Canal (aka. Kiel Canal). All three projects have been a solid and sustainable success with respect to infrastructure, profits, and global political importance of the three countries.
The Thai Canal, connecting the Gulf of Thailand to the Andaman Sea, is the better alternative to the Malacca Straits which is controlled by Singapore and has an estimated traffic volume of 84,000 ships, equal to around 30% of global trade. The impact of a canal solution would be massive in many aspects. The key data are pretty impressive:
- Compared with the Straits of Malacca, 2 to 3 days and 1,200 km could be saved.
- Compared with the Sunda Strait, 4 to 5 days and 2,800 km could be saved.
- Compared with the Lombok Strait, 6 to 7 days and 3,500 km could be saved.
By a conservative estimation, the total investment amounts to US$ 30 billion, 15 years and 5,000 people. It would be a cost-efficient shortcut between China, Japan, and other East Asian nations with the oil fields of the Middle East and markets in Europe, Africa, and India. The canal would compete directly with ports in the Strait of Malacca area, including Port Klang, Tanjung Pelepas, and Singapore itself.
As the Thai Canal would be built across Thailand and does not pass through other countries, it would naturally come under the sole jurisdiction of Thailand unless its sovereignty and neutrality are compromised by investment conditions set by international financiers.
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A brief history of time of the new Kra Peninsula Canal
October 2018: Constructing a canal across the narrow isthmus that connects Thailand to the Malay peninsula is on the agenda, again. This time it is the so-called “9A” 120 km canal route, which runs from Krabi in the Andaman to Trang and stretches further to Nakhon Si Thammarat and Songkhla, next to the Gulf of Thailand.”If we dig the canal, we would become the leader of ASEAN” states the Thai Canal Association (TCA), which is lead by an army general. (Source: Bangkok Post).
May 2019: The project is on the agenda of the OBOR. As part of the China-Indochina Peninsula Economic Corridor, it links the EEC by connecting the Gulf of Thailand to the Andaman Sea. The financing gap of now estimated US$ 63 billion seems to be one of the smaller problems while geostrategic and Thai political concerns have a significantly greater weight in the policy decisions.
January 2020: The Thai government set up a 49-member committee to study the canal project within 120 days. The latest version of the Kra Canal project would dig through Krabi, Trang, Phatthalung, Nakhon Si Thammarat and Songkhla with a distance of 128 kilometers.
The seven advantages of the Thailand Canal project
#1. Thailand’s wake-up call to the world: The Thai Canal as a national task could be the big bang to bridge local conflicts, reunite its people, solving technological, environmental and political issues and work together for the greater good. The most apparent evidence that the Land of Smile is strong and fit enough to master national challenges beyond religion, political believes and individual interests of individuals and groups. Linking Southeast Asia to Europe through the Indian Ocean is a game-changer of global strategic value.
#2. Southern prosperity: Similar to the Thai Riviera project and contrary to the EEC, the Thailand Canal will bring business and prosperity into the Deep South of the country to overcome huge security and social implications. One of the key concerns about the project related to security. Some feared the project would separate the South from the rest of Thailand and allow insurgents in the deep South to expand their movement.
#3. Building phase: The construction time has been recently estimated as five to six years. More realistically, a time period of 10 to 15 years should be taken into consideration. During the building phase, the Southern provinces, as well as the whole of Thailand, will benefit from the high investments in workers, building equipment, and financing.
#4, Industrial Sea Zone: The combination of the Kra Peninsula Canal with a large-scale industrial sea zone scheme could multiply the overall benefits. By massive fuel savings, by reducing the environmental risks for eighty percent of China’s oil which currently going through the Strait of Malacca, this alone would make the Kra Peninsula Canal a huge success.
#5. Naval Power: To own and control the sea route will significantly strengthen Thailand as a maritime power and its ASEAN and geopolitical influence. This military and economic choke point would mean a significant shift in the balance of power between Singapore and Thailand. By-passing the Strait of Malacca and Singapore altogether, would make Singapore’s all-important geographical location redundant. For many years, a rumor circulates that Singapore had lobbied Thai politicians to derail the plan, as its regional maritime hub status might be undercut if the Kra Canal was developed.
#6. OBOR: Currently, China’s one belt, one road project mainly bypasses Thailand. Thailand is not at all a main player in the Belt and Road Initiative (BRI). However, China’s global vision of a new Maritime Silk Road includes the possibility of developing the Kra Canal. By accomplishing the Kra Isthmus Canal, the maritime silk road leads directly through Thailand and opens the door to a huge bundle of economic, political and even military options. By establishing the “Chinese Panama Canal”, Thailand would provide a solution to China’s “Malacca Dilemma” and participate directly and indirectly in the biggest infrastructure project the world has seen for decades.
#7. Tourism: The Kra Canal has an obvious huge potential to be an international tourist attraction. The Panama Canal attracts more than 1 million tourists each year.
Professional services regarding the Kra Isthmus Canal
PUGNATORIUS Ltd. is the Bangkok-based specialist provider of legal services and tax advice on foreign investments in Thailand’s manufacturing and service industries as well as property acquisitions and developments. Sophisticated solutions in a complex business environment. Serious legal and tax advice in the land of smile.
The law firm initiates and moderates efforts and aspirations to make the Thai Kra Canal project a success for the whole of Thailand. Financial aspects are discussed at “Seven aspects of Thai cross-border financing“.