This article first appeared in The Edge Financial Daily, on December 16, 2015.
PETALING JAYA: Kra Isthmus Canal, which would connect the Andaman Sea with the Gulf of Thailand, is unlikely to become reality in the foreseeable future due to conflicting views of the many stakeholders involved, according to China Merchant Holdings (International) Ltd senior project manager Chen Zubai.
Chen, who commented on the feasibility of the project in his own capacity, said the project is a thorny issue for the Thai government and the many stakeholders involved.
“I think it might not be a possible project in the foreseeable future. Every time I have a project overseas, first of all, I would look at the politics in the country, and this project’s closely linked with so many political issues internally and abroad.
“Internally, from the perspective of the Thai government, I think it is not a good thing for them. There will be benefits for people in southern Thailand, who have different opinions.
“Also, this is complicated as there are so many different stakeholders with different views, a lot of different elements and a lot of countries that are playing different roles at the back. Presently, I don’t think [it] can be a serious project in the foreseeable future,” Chen told a crowd of 400 at a forum on Enhancing the 21st Century Maritime Silk Road Through Malaysia, organised by the Port Klang Authority here yesterday.
Kra Isthmus Canal has become a topic of discussion in recent years as it is said to be the game changer in the international logistics industry as it improves the connectivity between the Andaman Sea and the Gulf of Thailand, and reduces travelling time and distance.
Additionally, this would also have an impact on the strategic advantage enjoyed by Malaysia in the Strait of Malacca all these years.
Similarly, this would also affect the One Belt One Road (Obor) initiative by China, which leverages the Strait of Malacca to connect Asia with Europe and Africa.
The Obor initiative, launched by Chinese Premier Xi Jinping in 2013, promises great opportunities for Malaysia’s logistics and port industries, not only in terms of trade volume, but also potential funds to develop port infrastructure and connectivity in the region.
Evergreen Marine Corp (M) Sdn Bhd vice-chairman Ooi Lean Hin said Malaysia can tap into China’s foreign reserves of US$3.5 billion (RM15.09 billion) to develop its infrastructure in line with the Obor initiative.
Ooi said Malaysia should position Port Klang as a gateway for the China-Indo-China Peninsular corridor for cargoes destined for West Asia, East Africa and Europe using the rail link.
Under the China-Indo-China Corridor, a high-speed railway and highways will run from the Pearl River Delta of South China to Singapore via Nanning in Guangxi province and Hanoi, Vietnam. This is the only land belt that is relevant to Malaysia, he added.
He said Malaysia should also expand its key hub ports, namely Port Klang and Port of Tanjung Pelepas (PTP) instead of building new ports to capitalise on existing success to further enhance capacity and connectivity.
Although participants expressed concern that the land belt would mean more goods and services to be delivered by land, MMC Corp Bhd managing director Datuk Seri Che Khalid Mohamad Noh said that transportation of goods on land is far more expensive than by ship.
“Over [a] long distance, delivering goods through ships is still cheaper than via road,” Che Khalid added.
Westports Malaysia Sdn Bhd head of commercial Eddie Lee concurred that Obor would stimulate more goods and services to be delivered across the border, and Malaysia can have both maritime and land routes.
He added that there had been many mergers and acquisitions this year within the shipping industry, such as the merger of China Shipping and Cosco Shipping, and the acquisition of APL Shipping by CMA CGM for US$2.4 billion.
“There will be more consolidations moving forward. We have not seen so many M&As, happen in a long time,” Lee said.
However, Lee believes there is unlikely to be another M&A among Malaysian ports in the short term after MMC Corp took control of Northport Holdings Bhd (NCB) a few months ago, when the company bought over a 53% stake from Permodalan Nasional Bhd for RM1.1 billion, increasing its stake in NCB to 86%.
Currently, MMC Corp owns PTP, Johor Port, NCB and Penang Port.