August 7, 2017 12:25 pm JST

Influential Thais in push for Kra Canal project

China's Belt and Road Initiative may kick-start long-envisaged $28bn seaway

WILLIAM MELLOR, Contributing writer

Sunset over the Andaman Sea near the proposed entrance to the Kra Canal (Photo by William Mellor)

SIKAO, Thailand -- Fisherman Sittichai Bohmung lounges on a remote pier beside a ramshackle waterfront village in this southern Thai district and recalls the time last year when a bunch of retired generals from Bangkok and businessmen from China came calling.

"I didn't believe it when I heard they wanted to see me," said Sittichai, 48, as the crimson rays of an Andaman Sea sunset silhouetted the bays and inlets he has navigated since childhood. "Someone had told them how well I know this coastline and they hired me to take them out in my boat and be their guide. They even asked for my opinion about their plan."

The plan the generals and businessmen had in mind is one of the most ambitious and transformational infrastructure megaprojects ever contemplated in Asia -- construction of a $28 billion, 135km shipping canal across Thailand's narrow Isthmus of Kra to link the Pacific and Indian oceans.

An Asian equivalent of the Suez or Panama canals, the so-called Kra Canal would slice through the Malay peninsula some 800km south of Bangkok and about 200km north of Thailand's border with Malaysia, linking the Gulf of Thailand and the Andaman Sea at roughly the same latitude as the resort island of Phuket.

The canal's purpose would be to bypass the narrow, traffic-choked, piracy-prone and strategically sensitive Malacca Strait, the world's busiest trade route, which links China, Japan and other East Asian nations with the oil fields of the Middle East and major markets in Europe, Africa and India. The distance saved for ships passing between the Indian and Pacific Oceans would be at least 1,200km, or two to three days sailing time. Equally significantly, it would provide an alternative route to a strait through which a record 84,000 vessels passed last year -- a figure that is rapidly approaching capacity.

Although Thailand's Prime Minister, Gen. Prayuth Chan-ocha, has said that the Kra Canal is not on his ruling junta's agenda, the Nikkei Asian Review has confirmed that some of the country's most influential figures -- including retired military chiefs, politicians, academics and leading businessmen with close links to China -- are urging him to change his mind.

They believe that if Prayuth can be persuaded to approve a feasibility study, the canal can be funded in large part through China's multibillion-dollar Belt and Road and 21st Maritime Silk Road infrastructure initiatives, aimed at reshaping trade around Asia.

A group of retired generals has formed an organization called the Thai Canal Association for Study and Development, which last year worked alongside researchers from Beijing's Peking University and a little-known Chinese company to survey the proposed route. Although not part of China's official BRI initiative, the company has provided funding for the Kra study, according to Pakdee Tanapura, a Bangkok businessman and long-time campaigner for the canal to be built.

Apart from hiring fisherman Sittichai's boat to study the canal's planned entrance, the retired generals also borrowed a helicopter from Thailand's Fourth Army to make an aerial reconnaissance of the terrain. Meanwhile, on the ground, they launched a "hearts-and-minds" campaign to win the backing of villagers likely to be affected by the canal, collecting 100,000 signatures supporting its construction. Now the generals want to get the entire Thai population behind them by calling for a nationwide referendum.

Feasibility plan

Should Prayuth agree to conduct a feasibility study into the plan, experts say a 450-meter-wide, 26-meter-deep canal capable of carrying the world's biggest oil tankers, container ships and bulk carriers could be operational within five years.

Canal supporters intend to argue their case at an international conference in Bangkok in September that will be co-sponsored by King Mongkut's Institute of Technology Ladkrabang, a leading Thai university. Prayuth's economic guru, Deputy Prime Minister Somkid Jatsripitak, will be invited to make the opening speech.

"We hope the people will send a message to the government to pick up this project," Gen. Pongthep Tesprateep, a former army chief of staff who chairs the Thai Canal Association and took part in the helicopter survey, told the Nikkei Asian Review in an interview. "It is a project that is very good for our country and the whole world, but until now has been left under the table gathering dust."

Since retiring from active military duties in 2005, Pongthep, 72, has served as secretary-general of the General Prem Tinsulanonda Statesman Foundation, a charitable foundation set up by Gen. Prem Tinsulanonda, a former prime minister who presides over the Privy Council, an elite body that advises Thailand's king.

Pongthep, assisted by another retired general, former army Director-General of Civil Affairs Pradit Boonkerd, runs the canal association from the offices of the Prem foundation, although he said he is acting in a personal capacity and that neither Prem nor the foundation are directly involved. "We are retired officers, we have time, we are just like normal people," he said with a self-deprecating smile.

Even so, Pongthep and Pradit's fellow canal advocates include a Who's Who of Thai elder statesmen. Among their number: Former Prime Minister Thanin Kraivichien, who in 2016 wrote an open letter to Prayuth in support of the canal, former Supreme Commander General Saiyud Kerdphol, and Admiral Supakorn Buranadilok, president of the Royal Thai Navy Advisory Group.

Former Thai Deputy Prime Minister and canal proponent Bhokin Bhalakula heads the influential Thai-Chinese Culture and Economy Association. (Photo by William Mellor)

Another high-powered pro-canal group is the Thai-Chinese Culture and Economy Association of Thailand, a Bangkok-based organization with close links to Beijing that is headed by former Thai Deputy Prime Minister Bhokin Bhalakula. In recent speeches in China, Bhokin has called for the Kra Canal to be considered for inclusion in Beijing's BRI initiative. Bhokin told the Nikkei Asian Review that Chinese officials have expressed support for the idea, but are waiting for Thailand to approve the canal formally. "They respect Thai sovereignty and do not want to force Thailand to accept Chinese ideas," he said.

As the region's largest economy, China would clearly be the biggest beneficiary of a Kra Canal. According to a 2017 report published by the Stockholm-based Institute for Security Policy, more than 30% of the world's seaborne trade and 80% of China's energy imports pass through the Malacca Strait, a choke point that Beijing fears could be blocked by the U.S. or some other rival power. To reduce its dependence on one vulnerable route, China has been building overland pipelines, roads and railways through Central Asia, Pakistan and Myanmar, and is contemplating opening a northern sea route to Europe through the Arctic.

International funding

Still, canal promoters say they do not want China to be the only source of investment, and are trying to convince other countries, such as Japan, South Korea, India and most of Thailand's neighbors in the Association of Southeast Asian Nations (ASEAN), that they would gain similar benefits from a canal shortcut. The hope is that all these countries, as well as the U.S., will take part in an internationally-funded special economic zone centered on the canal.

"If the right interest groups were aligned, could this get done? Of course," said Jonathan Hillman, a global infrastructure expert and director of the Reconnecting Asia Project at the Washington-based Center for Strategic and International Studies. "It could be a game-changer in the region, strategically and economically."

According to a Thai-language book published by the canal's promoters, the waterway alone would cost $28 billion. A surrounding special economic zone would cost another $22 billion, which would fund related industries and infrastructure, including new cities and artificial offshore islands built with excavated earth. The combined project would eventually create some 2.5 million jobs according to the promotional book -- enough to employ one in four of the roughly 10 million inhabitants of southern Thailand. Locals who would lose land to canal construction would be paid compensation based on a percentage of the tolls levied on ships using the canal.

For Thailand, construction of the canal could help to revive an anemic economic performance since Prayuth's junta seized power three years ago. Although Thailand is Southeast Asia's second largest economy, the World Bank estimates that its output will expand by just 3.3% between 2017 and 2019 -- the weakest growth among developing Southeast Asian nations.

A successful canal operation could even lead to a major realignment of economic power in Southeast Asia because shortcutting the Strait of Malacca would also bypass Singapore, the richest economy in ASEAN and one of the region's great trading hubs. By canal supporters' estimates, 30% of Malacca Strait shipping could move north to use the Kra Canal. The canal would also attract vessels too big to pass through the strait, which are presently forced to take much longer routes to and from East Asia via the Sunda or Lombok straits. Using the Kra Canal instead of the Lombok Strait would save 3,500km and six days' sailing time.

Still, the project faces serious obstacles, including exclusion from Prayuth's list of priorities. "Those who want to initiate the Kra Canal have to push forward the project in the next government," he said last year. "I won't do it now because I have a pile of urgent work to finish."

Public support for the canal is also far from unanimous, with proponents and opponents arguing about the security implications of the waterway, which would divide most of the overwhelmingly Buddhist country from three insurgency-plagued and largely Muslim southern provinces.

A canal could also fuel tensions within Asean because it would take business from other regional shipping hubs. "The challenge is that it would likely benefit Thailand and cut into Singapore's incumbent advantage," CSIS's Hillman said.

Then there are the technical challenges of such a megaproject. Although the Isthmus of Kra is just 45km wide at its narrowest point, the proposed canal route would be three times that distance to avoid inland mountain ranges. That would make the Kra Canal 58km longer than its counterpart in Panama.

Historically, the canal has often seemed to be more a mirage than a vision. First proposed 350 years ago by Thai royalty, it was stymied repeatedly by political, financial and technical obstacles. As recently as two years ago, the project became shrouded in confusion when two little-known companies from Thailand and China announced they had signed a memorandum of understanding to build it, only for their respective governments to deny that a deal had taken place.

Serious players

Nicholas Farrelly, a Southeast Asia expert at the Australian National University's Coral Bell School of Asia Pacific Affairs, is skeptical that Thailand has the capacity to strike a deal, raise the necessary capital and begin excavations in the near future. However, he does not rule out the possibility of the retired generals eventually winning their campaign, especially as the junta needs to boost the country's still-fragile economy.

"These old warhorses are indicating to their proteges that this is something that needs putting on the agenda," Farrelly said. "Although they are somewhat estranged from direct executive authority, they are serious players. At some stage, I think it is likely to happen."

Technically, the challenges are also surmountable, according to Harald Wagner, a former World Bank consultant who has worked on canals in Europe and now teaches civil engineering at King Mongkut's Institute. Unlike the Panama Canal, the Kra route would be at sea level and require no elaborate system of locks. "Technically, it is easy to solve," he said.

As well as using their clout within Bangkok's corridors of power, the canal's backers have also embarked on a highly-organized grass roots campaign to win support among Southern Thais.

The canal would directly affect some 60,000 people in 90 villages and the Thai Canal Association has set up local committees along the proposed route to sign up supporters, spell out compensation proposals and explain the job opportunities a canal would create.

To further encourage locals, the canal association has hired one of Thailand's top environmental experts, Chumphon Sukkasean, a former ASEAN wildlife protection chief, as a key adviser. Chumphon said the proposed western entrance to the canal had been moved slightly on the recommendation of residents so that approaching vessels would not sail close to coral formations and the habitat of endangered dugong sea mammals.

The canal's entrance would be at the estuary of the Galasai River, which forms the border between Krabi and Trang provinces on Thailand's Andaman Sea coast. Although within about 100km of the beaches, limestone karst formations and coral reefs that lure international tourists to Krabi, Phuket and the Phi-phi islands, this part of Thailand is underdeveloped.

As it heads eastward, the canal route detours through a gap in the isthmus's hilly spine and bypasses the sensitive Thalev Noi bird sanctuary wetland before exiting into the Gulf of Thailand on a lonely beach midway between the cities of Nakhon Si Thammarat and Songkhla.

In these parts, many locals eke a living from fishing and farming, selling their produce at traditional floating markets, or work on rubber plantations. Annual family incomes can be as low as 50,000 baht ($1,500), according to village leaders. Between 75% and 98% of the population of these communities want the canal's economic benefits, these local leaders told the Nikkei Asian Review.

In mid-June, villagers at Taborn, a district of 8,000 people straddling the canal's proposed eastern exit point, met at their community hall to be blessed by saffron-robed Buddhist monks and to discuss their future. Asked whether they supported the canal's construction, the audience responded with a sea of raised hands.

"The people here aren't worried about the canal being built," district headman Pramot Saengarun, 63, said later, as he squatted under a shade tree. "What they are more worried about is that it won't happen."

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