It’s now or never for the much talked about Thai canal project.

The much talked about Kra Canal project may get un­der­way as soon as next year with an as­sist from China’s Belt And Road ini­tia­tive.

Norway-Asia Business Review - - Contents - CHEYENNE HOL­LIS

How­ever, with noth­ing cur­rently signed and a his­tory of fail­ing to get off the ground, the canal is far from a done deal. The idea of the Kra Canal is noth­ing new. It was first floated in 1677 and both the Bri­tish and French sur­veyed po­ten­tial ar­eas for the canal around Songkhla dur­ing the 19th cen­tury. King Rama IV even gave per­mis­sion to the Bri­tish to build it in the mid­dle part of the cen­tury, but the plan was even­tu­ally aban­doned.

In the early 20th cen­tury, King Rama VI re­port­edly had an in­ter­est in build­ing with the canal yet it never moved be­yond the idea phase. Var­i­ous at­tempts since then to get the canal built have failed to gain any trac­tion un­til re­cently. With China con­tin­u­ing to em­pha­sis the Mar­itime Silk Road as part of its Belt And Road ini­tia­tive, the Kra Canal is a project firmly on the coun­try’s radar.

“When you look at the sea routes of South­east Asia, and in par­tic­u­lar the Straits of Malacca, the Kra Canal is needed. The Straits of Malacca are very con­gested and the num­ber of ships pass­ing through it is only go­ing to in­crease,” Dr Har­ald Wag­ner, Civil En­gi­neer­ing In­struc­tor at King Mongkut’s In­sti­tute and a for­mer World Bank Con­sul­tant, ex­plains. “The Kra Canal would re­lieve this pres­sure and im­prove ship­ping flow be­tween the In­dian and Pa­cific Oceans.”

The first step for the project is a fea­si­bil­ity study, which the gov­ern­ment has yet to sign off on. Ac­cord­ing to Dr Wag­ner, the ap­proval is very close to hap­pen­ing and could be granted as soon as early 2018.

“It is im­por­tant for the gov­ern­ment to au­tho­rize a fea­si­bil­ity study on the Kra Canal and get it com­pleted. Both China and Ja­pan have stepped up and of­fered to fi­nance the fea­si­bil­ity study mean­ing the Thai gov­ern­ment won’t have to spend a sin­gle Baht on this,” Dr Wag­ner says. “The study it­self will be com­pre­hen­sive and pro­vides the next gov­ern­ment the base to make a de­ci­sion on how best to pro­ceed.”

Should the fea­si­bil­ity study be ap­proved, a re­al­is­tic time­line for the build­ing and com­ple­tion of the Kra Canal would then start to take shape.

“The fea­si­bil­ity study would take two years to com­plete. There would also be a one-year ne­go­ti­a­tion pe­riod that would in­clude the agree­ment of con­struc­tion con­tracts with mul­ti­ple firms and a risk man­age­ment plan af­ter that. Once that is com­pleted, con­struc­tion could then pro­ceed,” Dr Wag­ner de­tails.

He con­tin­ues, “Should the fea­si­bil­ity study be ap­proved in 2018 and ev­ery­thing moves ahead as planned, the Kra Canal could be op­er­a­tional as soon as 2027. This fac­tors in the five years it would take to build the ac­tual canal as well as the fea­si­bil­ity study and other nec­es­sary steps. How­ever, in or­der for this am­bi­tious tar­get to be re­al­is­tic, ac­tion must be taken soon.”

Once the fea­si­bil­ity study is com­pleted, plans will need to be pre­sented to the gov­ern­ment for ap­proval. The Nikkei Asian Re­view re­ports that there has been pres­sure from re­tired Thai gen­er­als, politi­cians, aca­demics and busi­ness­men to get the Kra Canal project mov­ing, but the cur­rent gov­ern­ment has said it will not act on the project given its size and scope.

“The cur­rent gov­ern­ment will let the next gov­ern­ment de­cide what to do since it will have the nec­es­sary con­di­tions and leg­isla­tive frame­work in place to ap­prove it,” Dr Wag­ner says. At the mo­ment, the cur­rent gov­ern­ment has sev­eral other projects it is work­ing on and wants to get these com­pleted.”

Elec­tions in Thai­land are ten­ta­tively sched­uled for 2018 with the next gov­ern­ment set to take of­fice in 2019. How­ever, should these elec­tions

be de­layed, the fea­si­bil­ity study may be com­pleted be­fore the new gov­ern­ment is in place.

In this sce­nario, the cur­rent gov­ern­ment would ei­ther need to make a de­ci­sion on how to pro­ceed or de­lay the project’s ap­proval un­til the elected gov­ern­ment is in­stalled. With China ea­ger to get the project it is will­ing to sup­port both fi­nan­cially and lo­gis­ti­cally off the ground, any de­lay on a de­ci­sion from the Thai gov­ern­ment may sub­ma­rine the re­newed ef­forts to get Kra Canal built.

“Thai­land should take ad­van­tage of China’s po­si­tion now and start the Kra Canal project. Don’t de­lay the project, now is the right time. If Bangkok de­lays the project it might not get the back­ing from China,” Mr. Jing­song Song, a pro­fes­sor at Shang­hai Jiao Tong Uni­ver­sity, warned dur­ing a re­cent con­fer­ence. The hold up

Even with both do­mes­tic and in­ter­na­tional play­ers try­ing to per­suade the gov­ern­ment to move for­ward with the Kra Canal project, the sheer size and scope of it com­bined with a lack of tan­gi­ble in­for­ma­tion has left some skep­ti­cal as to its im­pact and cost.

“There is still some un­cer­tainty sur­round­ing the project from a Thai per­spec­tive. It is a large project and one that will need to be stud­ied thor­oughly,” Dr Wag­ner pointed out. “How­ever, it is im­pos­si­ble to cal­cu­late the de­tailed im­pact un­til a fea­si­bil­ity study is con­ducted. Once that hap­pens, the im­pact of the project will be known and we will also have a fact-based idea of how much it will cost.”

Af­ter more than 300 years of false starts, the Kra Canal just might yet be­come a re­al­ity. Dr Wag­ner be­lieves a leap of faith is the only thing now needed for the project to nav­i­gate the choppy wa­ters of un­cer­tainty fac­ing it.

“It is im­por­tant for peo­ple to be­lieve in the Kra Canal project and com­mit to it. For­get about the doubts. This is a project that both Thai­land and the ASEAN needs. It is fea­si­ble and it is sus­tain­able as long as ev­ery­one be­lieves in it and acts ac­cord­ingly,” Dr Wag­ner pro­claims. Why it’s needed now

Ex­perts such as Mr Pakdee Tana­pura, Vice Chair­man of ThaiChi­nese Cul­ture and Econ­omy As­so­ci­a­tion and Head of the Kra Canal Study Team note that build­ing the Kra Canal will solve two ma­jor is­sues: the strug­gling econ­omy in the South of Thai­land and the con­gested Straits of Malacca.

Op­po­nents of the canal claim the project would cause fur­ther di­vi­sion in the con­flict-plagued South since it will cre­ate a phys­i­cal sep­a­ra­tion be­tween Thai­land and its south­ern prov­inces. How­ever, those liv­ing in the South are cham­pi­oning the project as a way to im­prove the re­gion’s econ­omy which could pos­si­bly help end the con­flict.

“Thai peo­ple, es­pe­cially those in the South, agree that the Kra Canal is the kind of mega-project that will ef­fec­tively stim­u­late econ­omy due to mas­sive in­vest­ment, cre­ation of jobs, new trades and de­vel­op­ment op­por­tu­ni­ties and de­vel­op­ment of new tech­nolo­gies it will bring,” Mr Pakdee notes. “I can tell you that a ma­jor­ity of Thai peo­ple in the South want it. It’s now up to the present Gov­ern­ment to lis­ten to the peo­ple.”

It is not just the peo­ple of the South ea­gerly watch­ing how the Kra Canal plans de­velop. Busi­nesses are also keep­ing an eye on the sit­u­a­tion with the Straits of Malacca per­pet­u­ally con­gested and near­ing ca­pac­ity. Ac­cord­ing to World Bank es­ti­mates, the pas­sage could have as many as 122,640 ships pass­ing through it, which would be above its es­ti­mated ca­pac­ity of 122,000 set by the Mar­itime In­sti­tute of Malaysia.

Mr Pakdee be­lieves the World Bank pre­dic­tions to be a bit high, but pre­dicts that ca­pac­ity will be reached within the next 10 years. With­out the Kra Canal, ships might need to di­vert their route, some­thing that will cost busi­nesses both time and money.

“If the Kra Canal is not com­pleted on time, ships will have to go through Lom­bok Straits in In­done­sia which is about 3800 kilo­me­tres away. That will for sure in­crease the ship­ping cost and lo­gis­tics,” Mr Pakdde says. “Be­sides the Straits of Malacca are too shal­low to ac­com­mo­date mod­ern ves­sels which are de­signed to be­come big­ger and big­ger to sat­isfy the ex­pan­sion of trade be­tween two oceans.”


Above left: A ship nav­i­gat­ing the Panama canal. Above: Map show­ing var­i­ous pro­jec­tions of the pro­posed Kra Canal.


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