The news was broken at the British Chamber of Commerce in Thailand (BCCT) Phuket Business Dinner event at the Amari Phuket resort south of Patong on Thursday night (Feb 1), where two key proponents behind the project – Royal Thai Navy Adm (Rtd) Soopakorn Boonranadiloak and Pakdee Tanapura – were guest speakers.
Hopes are high that this time the request, proposed on Dec 25, will be heard, despite such a canal being proposed no less than 28 times in the past 300 years, since the reign of King Narai, explained Adm Soopakorn.
The timing is exquisite, as global development is already making the choice for Thailand with the Strait of Malacca facing overload within the next decade, he noted.
Currently 122,000 ships pass through the strait each year and with 3.1% sustained annual growth the vital sea lane will reach capacity within 10 years, added Mr Pakdee, who serves as Board Member and International Director of the Executive Committee of the Board of Directors and acting spokesperson of the Study of the Kra Canal Project.
The Strait of Malacca is already the transit route for half the world’s cargo transported by sea, Mr Pakdee noted.
About US$1 trillion in goods pass through the strait each year – about US$2.7 billion per day, including more than 16 million barrels of crude oil each 24 hours.
Delivering the cargo are 83,740 vessel transits (of vessels 300 gross tonnes or more) each year – that’s one every 6.3 minutes, he added.
The strait is already congested to the point that maritime accidents and collisions, such as that of USS John McCain with Liberian-flagged Alni MC in August last year, which resulted in the deaths of 10 US sailors and left another five injured, are a serious concern.
Other hazards are also increasing risk for larger ships, with depths of only 23 metres at some points in the Phillips Channel immediately off Singapore.
The “next-gen” mega-container ships already under construction, with the capacity to carry more than 23,000 TEU (twenty-foot equivalent units), will bottom out in 23 metres of water.
As a result, large container ships already avoid the Strait of Malacca, preferring to either pass through the Sunda Strait directly south of Singapore or re-route through the Lombok Strait and pass to the east of Borneo, avoiding shipping traffic around the passage entirely, Mr Pakdee noted.
“You cannot imagine how the world will be if there is a major incident or accident in the Strait of Malacca,” Mr Pakdee said blankly.
Change of plan
If approved, the feasibility study is expected to take two years to complete, and no less than five years but no more than 10 years to actually build the canal, all approvals included.
On that front the group has already made huge headway, setting out a new planned route for the canal which has already gained 74% approval from residents across Southern Thailand in a poll conducted by the Prince of Songkhla University.
Mr Pakdee also noted that local residents to be affected are keeping up to date on the project, with 27,000 visits per month to his Facebook page and more than 300,000 visits each month to his website on the project – all in Thai language.
Key to the surge in approval is likely the new planned route polled. The new route, dubbed “9A”, is located further up the coast than its predecessor, “5A”, which would have seen ships enter the canal at Pak Bara in Satun.
Only 135 kilometres long, the route 9A will see ships enter the canal at Sikao in Trang, little over 100km in a direct line southeast of Phuket.
The canal will then proceed through Wang Wiset, Huay Yod and Rassada Districts also in Trang, then through Thung Song and Hua Sai in Nakhon Sri Thammarat, and empty into the Gulf of Thailand at Ranode in Songkhla.
Current plans for the canal is for the waterway to be 400 metres wide to allow two 23,000 TEU “mega-ships” to pass en route across the isthmus. Highlighting simply how big this would be, Mr Pakdee noted that the Rama IX bridge in Bangkok serves as a perfect indicator of the size a bridge would need to be to span the canal.
The new selected route sets aside the issue of laying waste to thousands of hectares of wild mangroves in Satun’s Pak Bara region, as route 5A would have required, and which for years served as a major sticking point for the environmentally conscious local community there.
Also, the location of route 9A alleviates concerns of pirates targeting ships entering the canal, Mr Pakdee explained.
The security issue of pirates operating in the Strait of Malacca has surfaced time and again over the years, with the many small uncharted islands in the region providing ideal cover for bases from which to launch strikes, as they have done in centuries past.
More recently, in 2004, pirate attacks were so common in the Strait of Malacca that Lloyd’s Market Association Joint War Committee rated the sea lane a “War Risk Area”, Mr Pakdee noted.
Everyone wants in
The canal once complete is projected to generate US$300 billion (B9.426 trillion) in revenue in its first 30 years, but carving the canal is projected to cost a relatively mere US$55bn (B1.724trn).
At that rate of return every player in the global development market wants in, including China, the US, the UK, India and even Saudi Arabia, Mr Pakdee pointed out.
The canal will dramatically reduce transit time, saving ships currently passing through the strait two to three days, and saving larger ships passing through the Lombok Strait up to seven days in transit.
By connecting with cargo transport routes being developed under China’s Belt and Road Initiative and other regional programs, the Kra Canal has the potential to create great economic benefit across an entire sector of the globe by causing a “ripple effect” through the economies of the nations in the region, with implications even for markets as far away as Europe, Mr Pakdee explained.
“The canal will transform the entire region into a ‘Global Village’,” Mr Pakdee noted. “We could see mangoes from Shanghai arrive in Mumbai in just four days.”
Why hasn’t it worked before?
The concept of excavating a canal across the Kra Isthmus is nothing new, as Adm Soopakorn admitted in his opening remarks. The idea has been stymied by technical ability to undertake such a project, finance and socio-political reasons. A World War or two hasn’t helped, either.
Yet those barriers now seem to belong to the past. Even the internal security concern of artificially creating a “division of the country” by isolating the peoples across the southern border provinces can be resolved, Adm Soopakorn explained.
In decades past, and even today, the geographical separation of the people in the Deep South is a genuine serious concern, but technology and the ability to build roads and tunnels for trains under the canal to keep the people connected in today’s world will assuage those fears, Mr Pakdee pointed out.
However, Adm Soopakorn noted that the most promising coalescing factor will be the economic benefits made real from the presence of the Kra Canal.
Make no mistake, Adm Soopakorn is a military man whose career saw him rise to the position of Commander in Chief of the Royal Thai Fleet, yet he has also served as a member of the National Reform Council.
And here he believes the solution to the violence in the Deep South is financial relief to the poor made possible through the economic benefits delivered by the Kra Canal, as he sees the unrest as the work of illegal organisations highly active in the area, and not violence not born out of religious division.
In short, he believes that higher legitimate incomes will displace the effect of what he calls the “dark influences” in action.
Bay Area Economics
Highlighting the economic impact of port flows to major commercial hubs around the world, Mr Pakdee pointed out that thriving bay area economies even played critical roles in the success of American giants New York and San Francisco.
Citing by example, the New York bay area encompasses 31 cities with a total population of 65 million yet has a GDP of US$1.5 trillion, creating a GDP per capita of $23,077, he said.
Meanwhile, the San Franciso bay area includes 12 cities with a population of 7.6mn who are privy to a collective GDP of US$800bn, and hence GDP per capita $105,263, giving rise to one of the most influential economies in Apec.
Closer to home, the Tokyo bay area of 10 cities with a combined population of 35mn fosters a GDP of US$1.3 trillion that delivers a GDP per capita of US$37,143, while the prime example of the Guangdong-Hong Kong-Macao “bay area” and its 11 cities and a comparable population 67 million has generated a GDP of US$1.34trn and a GDP per capita of $20,084.
In comparison, the World Bank designated Thailand in 2016 as having a GDP per capita of just US$5,907.91.
A new “bay area economy” created by the Kra Canal will directly affect one third of the world’s population living in the region, and the rising global population only added to argument to build the canal, Mr Pakdee added.
“I know people don’t like the thought of the rising population,” he said, “but we have to prepare for it.”
Concerns raised from Singapore about loss of trade through redirected shipping were also waylaid by Mr Pakdee, who also serves as a board member of the Singapore-Thai Chamber of Commerce, calling some of claims unrealistic.
“I have had people approach me worried that we will take all of the shipping away from them. I have told my Singaporean colleagues many times, I kept telling them but they don’t believe me, that it is impossible that we take every ship from Singapore.
“If we take only 30% of the ships passing through the Strait of Malacaa in the next 10 years, that’s only 40,000 ships (a year, not accounting for the growth in the number of ships using the strait) – and that’s enough for us to pay off the Kra Canal very easily,” he said.
“And Singapore will actually benefit from the ripple effect, too. It’s a win-win situation for us – for Thailand, for Malaysia and for Singapore,” he added.
The financial landscape has also changed over the years. No longer are the budgets of national governments required to make the canal a reality.
It seems the only choice left for Thailand to make is who to select as their partners in a project of such great benefit, was the consensus reached at the event on Thursday night.
The only thing stopping Thailand from reaping such benefits is Thailand, was the understanding at the event on Thursday.
To this, Mr Pakdee said, “We hope the Thai people understand how the world works today.”
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