10 reasons on why the proposed Kra Canal Project could be the Chinese Panama Canal

1. History – Kra Canal is being developed since 1677!!!

Similar to Panama Canal, history of the Kra Canal is vast and holds a lot of value to Importers and Exporters located in the region of South China Sea and beyond. The first time this idea cropped was as far back as 1677 when Thai King Narai asked the French engineer de Lamar to survey the possibility of building a channel to connect Songkhla with Marid aka Myanmar to cut short the time for traders. This idea was eventually discarded due to lack of technological resources at that time.

2. Geography – One of the toughest terrains to build a Canal

More fondly known as Kra Isthmus, the landbridge is shared by the countries of Thailand on the East and Myanmar on the West. Lying to the west of the Isthmus is the Andaman Sea, while Gulf of Thailand falls on the East Side of the river. The Isthmus of Panama also is also located very strategically, connecting the continents of North and South America.

3. Strategic Value – A Game Changer for South Asia

A canal located in the vicinity of Thailand could enable Larger Transport carriers to transport cargo via India, China and Japan instead of using the Strait of Malacca, thereby boosting the Thailand and Chinese Economy. Currently 94000 vessels pass each year through the Strait of Malacca, which is roughly equivalent to one-fourth of the World’s Traded Goods. An estimated 15.2 million barrels of oil was passed through the Strait in 2011, which is largely controlled by western Countries.  The Panama Canal is currently of far greater strategic value to the United States with an estimated 15000 vessels passing through the canal every year. And up till 2009, 333.7 Million tonnes had been transported via the Canal.

4. It could be one of the Greatest Engineering Feats of the 21^st Century

The stakes are very high and while the infrastructure is well backed by the bulging Chinese Economy, there are many technological, environmental and political issues which have to be addressed. The estimated cost is a whopping 28-30 billion USD, and will take 10-12 years to complete the entire project. An estimated 5000 people during the initial stages will have to be employed as well. The Panama Canal also had to go through a tremendous amount of obstacles before it could be built. Ranging from French Ownership, to the development of the Canal undertaken by the US, and Volatile Political Climates.

5. To be or not to be???

Currently there is no estimation as to when can the project be completed. Another important projection which has not been penned down is the profit margins. The Chinese Government is willing to take up to 25 years for returns to be yielded via the Kra Canal, making it a very unstable project to be banked upon. The Panama Canal took almost 15 years for generating increasing rate of returns.

6. Cost and time efficiency

If the Kra Canal is built in time it will reduce the trade time by 3-4 days, which is not a great margin in shipping days; however there are other issues which have to be factored in. Cargo Vessels with less than 10 days of transportation time will greatly benefit from the building of the Kra Canal.  Apart from this there is the issue of Piracy in unchartered waters, and the Malacca Strait being a ‘Water Blockade’ for China and India. The Panama Canal was similarly built to avoid the opposition from the Columbians and other islanders.

7. Total Capacity intake of the Canal

An estimated 350 to 400 million tonnes of goods, and 12000 vessels  are expected to be docked and traded every year, which will be a major boost to all the surrounding countries. Currently the entire trade route passes through Singapore which has developed into an industrial hub of sorts for transportation and financial services. In 2009, 333.7 million tonnes worth of goods passed through Panama Canal, further highlighting the similarity in size of operations.

8. The potential to take over the World for China - Economically

China benefits the most in the short term future with impact of up to 21 Billion USD by 2030. India falls into the 2^nd most beneficial country with the development of 17 Billion USD. The GDP of both the economies is said to increase by 0.5 within 5 years of development. Outside of the South Asian Countries, the EU is said to directly benefit by 23 Billion USD. And in total an estimated 90 Billion USD is the total amount of gains estimated from the Kra Canal.

9. Primary Objectives

There are three main reasons for building the Kra Canal.

a. First is the easier route for larger Shipping Containers which is not of optimum capacity in the Strait of Malacca.

b. The Second is for Transportation of Bulk and General Cargo. Many tax advantages can be utilized for all of the larger Containers, which have a heavy tax route via Strait of Malacca.

c. Lastly, Oil Handling for China will be a major boon for them in the future, as that is the biggest challenge they have  to currently face for the existing Trade Route

10. A Boon or a Bane??

As you may have guessed from the above points that the development of Kra Canal is as much as an Economic Decision, as it is a Strategic one. If done for the right reasons, it may tip the balance of power in the hands of countries like India and China. However with ever mounting pressure on Thailand from other vested interests, the building of the canal may still take some time. So now the world waits whether a  Daunting task like building the Kra Canal will finally be successful or not !