Thailand Pitching $28 Billion Malacca Strait Bypass Plan

(Bloomberg) —

Thailand is pitching a multibillion-dollar project that will significantly cut shipping times between the Indian and Pacific oceans by bypassing the Malacca Strait — one of the world’s busiest sea lanes.

Prime Minister Srettha Thavisin told investors in San Francisco on Monday that the project can cut travel time by an average of four days and lower shipping costs by 15%. With traffic volumes projected to exceed the Malacca Strait’s capacity by 2030, the new project will ensure seamless flow of goods, he said.

The so-called Landbridge project will cost about 1 trillion baht ($28 billion), with seaports to be built on either side of the country’s southern peninsula and linked by highway and rail networks, according to the government. The 100-kilometer (62-mile) connection would replace a decades-old Thai proposal to dredge a canal through the Kra Isthmus.

The Malacca Strait — a narrow sea lane between Malaysia and Singapore — is the shortest sea route linking the Asia-Pacific region to India and the Middle East. About a quarter of the world’s traded goods pass through the strait and it will only become busier, pushing up shipping costs, Srettha said, noting that there are more than 60 maritime accidents a year on average in the passage. 

“The Landbridge will be an additional important route to support transportation and an important option for resolving the problems of the Malacca Strait,” Srettha said. “This will be a cheaper, faster and safer route.”

The port on the west will have capacity to handle 19.4 million ton equivalent units, while the eastern one is designed for 13.8 million TEUs, together accounting for about 23% of the Port of Malacca’s total cargo, he said.

Srettha said the project, which he’s also pitched to investors in China and Saudi Arabia in recent weeks, will help create 280,000 jobs and propel Thailand’s annual economic growth rate to 5.5% when it is fully implemented. Southeast Asia’s second-largest economy grew 2.6% last year and is forecast to expand 2.5%-3% in 2023.

Thailand aims to complete the project by 2030 and foreign investors will be allowed to own more than 50% in joint ventures with local companies in building the ports and related infrastructure. The deep sea ports in Ranong in the Andaman Sea and Chumphon in the Gulf of Thailand may cost 630 billion baht, according to the Office of Transport and Traffic Policy and Planning. 

The Landbridge “presents an unprecedented opportunity to invest in this commercially and strategically important project that connects the Pacific Ocean and the Indian Ocean, connecting people in the East with the West,” he said. 

Thai officials will hold a presentation for prospective US investors during the Asia-Pacific Economic Cooperation summit this week. US firms interested in the project include SSA Marine Inc., Port of Long Beach, Oracle Corp. and Webtec, Srettha said.

Thailand had for decades discussed an idea for a canal that would traverse the nation’s narrowest point and trim the travel distance by 1,200 kilometers, but that proposal was dismissed several times on environmental concerns.  

© 2023 Bloomberg L.P.

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