Thai government starts review of Kra Canal

by Vincent Low

The Bangkok Post yesterday (11 Feb) reported that the Thai government has officially started to review the feasibility of the Kra Canal project which would connect the Gulf of Thailand to the Andaman Sea across southern Thailand, significantly short-cutting the marine route between the Indian Ocean and Pacific Ocean.

Most importantly, the canal would provide an alternative to transit through the Straits of Malacca, by-passing Singapore altogether. It will help shorten especially the transit for shipments of oil from the Middle-East to Japan and China by 1,200 km. China has referred to the Kra Canal as part of its 21st century maritime Silk Road.

Thai government spokesperson Lt Gen Sansern said that his government is studying the pros and cons of the project, including its implications for national security and budget expenditures.

He added the public should be wary of any news stories about the project going ahead. He was responding to a movement of people preparing to rally support for the canal project. The group has been encouraging the public to share the campaign’s message of endorsing the Kra Canal online.

“Prime Minister Prayut Chan-o-cha has emphasised the [pro-Kra Canal] movement has not been approved by the government and the project is still pending a study,” said Lt Gen Sansern.

In early 2016, former prime minister and then-privy councillor Tanin Kraivixien submitted an open letter to Thai PM Gen Prayut, urging him to review the Kra Canal project’s implications. In the letter, Mr Tanin said the project had been suspended earlier due to international relations and security-related issues. However, China and other Asia-Pacific nations have expressed interest in studying new maritime routes.

Mr Tanin further wrote that a feasibility study of the project was a good idea.

Singapore might lose 30% of shipping

It has been estimated that with the Kra Canal, bunker savings for a 100,000 dwt (deadweight) oil tanker, for instance, could be as much as US$350,000 per trip, according to some estimates.

In recent times, a coalition of Thai military, political, academic, and business leaders has sided with Chinese interests to lobby PM Gen Prayut’s government to build the canal. Strong arguments are being made about the benefits this gigantic infrastructure project would bring to Thailand:

  • Toll fees
  • Jobs
  • Port charges
  • Development of the surrounding areas

China also has a lot to gain from a completed Kra Canal. In addition to shaving off nearly three days of travel time for ships journeying between the Pacific and Indian oceans, the Kra Canal would also serve to lessen the Chinese economy’s current dependence on sea routes via the Straits of Malacca. China is particularly concerned that in the event of a confrontation with US, China would be extremely vulnerable to a naval blockade in the straits, cutting off its oil supply route.

Hence, China is said to be seriously considering underwriting the 10-year project, estimated to employ as many as 5,000 people and cost as much as $28-30 billion. That deal has yet to be officially confirmed, but insiders say, off the record, it’s a definite possibility.

China appears to be moving on this with diplomatic caution so as not to alienate Singapore. (source) It is aware that the Kra Canal could cause Singapore to lose some 30 percent of its business among shippers.

But if Singapore continues to say the wrong things internationally to anger China, it’s hard to predict what China would do in future.

In an article in the Nikkei Asian Review, Nicholas Farrelly, a regional expert at the Australian National University, came to this conclusion about the Kra Canal after taking everything into account: “At some stage, I think it is likely to happen.”