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Sunday, November 18, 2018

India intelligence review had recently revived the Thailand Kra Canal issue.

What's the possibility of the Kra Canal project?

We had analyzed the Kra Canal project previously below.  Therefore, we'll just add on to our previous analysis in this post.

The Thai generals are very interested in the Kra Canal project because of the employment and economic benefits that it can bring to Thailand. It is estimated that the Kra Canal project can bring in US$10b per year for Thailand and Thailand can recover the construction cost of US$30b in just 3 years.  As we had stated previously, Thailand had lost the golden opportunity to earn multi-billion of revenues by not having the Kra Canal project.

The times have changed because Thailand needs China to make this Kra Canal Project viable rather than China needs Thailand for its strategic purpose.  Why? This is because China can develop its Arctic sea lane now.

Thailand needs China for the following:
Cargo volume

China can provide the aforesaid assistance to Thailand that no other country can provide.  First of all, China can use the AIIB to provide the financing to Thailand for the project.  Then, China has the engineering capabilities to construct such a project.  As we've seen in recent years, China had built South China Sea islands and the HK-Zhuhai-Macau bridge that marveled other countries.

Lastly, close to 80% of the cargo ships plying the Strait of Malacca are from China.  Therefore, Thailand has to let China take a majority stake in the Kra Canal project if it wants to make the project viable.  Without China, this project has a low success rate because China can bypass the Kra Canal by using the Myanmar port.  Thailand has to learn from Panama's lesson.  Panama also involved China because China had become a major customer.

In conclusion, Thailand has to entice China by giving it a majority stake in exchange for the aforesaid assistance to make the project viable because China can divert its resources to develop the Arctic sea lane.  Once Thailand becomes a sea hub, it also will become a financial hub because of the gargantuan international trading activities that come with it.

Needless to say, this Kra Canal project will destroy Singapore sea hub status and affect our financial hub too.

1 comment:

Eric Ho said...

My verdict is Thailand is not ready to entice China yet.