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Mar. 10, 2015 - Updated 04:16 UTC



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Canal Proposed for Southern Thailand

Karnbodi Ngamjit

Feb. 24, 2016

The government of Thailand is looking at a proposal to build a canal across the southern part of the country. It would link the Indian and Pacific Oceans, saving shipping companies time and money.

The canal would cut through the Malay Peninsula, which is only 50 kilometers wide at its narrowest point.

In the southern Thai province of Nakorn Si Thammarat, most of the land is flat. People have been digging canals there for a long time, using the water to grow crops.

A 20-year-old waterway in the province is reportedly a model for the new canal.

Opas Ratanaburi is an academic behind the project, known as the Kra Canal. He submitted his plan to the government in 2005.

"What's important is that the canal would be a shorter route to deliver oil to 2 major economies, Japan and China," Opas says.

Goods being sent to East Asia are currently transported via container ship on the Indian Ocean through the Malacca Strait. The academic says building a new canal on the Malay Peninsula would slash 3 days from the journey.

He says it would also help ease congestion in the strait. But the cost -- about a third of Thailand's annual national budget -- has raised eyebrows.

The China-led Asian Infrastructure Investment Bank may help push the project forward. The bank is trying to foster more infrastructure projects in Asia using its huge reserves of funds.

Opas says he has received several inquiries from Chinese firms and organizations.

"China is looking closely," he says. "China is highly likely to invest because the canal project will benefit the country."

The prospect of Chinese investment has fuelled expectations that the canal will be built.

Rujathit Sucharto works a company that produces food for fish farms. The firm has a plant on the east side of the peninsula. So it exports its products only to China and other East Asian countries.

Company officials say the proposed canal would allow them to ship products to India, Myanmar and elsewhere.

"The canal would cut our shipping costs and expand our exports," Rujathit says. "We believe it would create a bright future."

But some neighboring countries, particularly Singapore, aren't enthusiastic about the plan.

Many tankers passing through the strait use Singaporean ports, mainly to switch cargo. Shipping accounts for 7 percent of Singapore’s gross domestic product.

"There is concern on how it will impact Singapore's economy. If the Kra canal is built, essentially the bulk of the maritime traffic that passes through the Malacca Strait will deviate or use the Kra canal," says Graham Ong-Webb, the Chief Operating Officer at Future Moves, a Singapore-based consultancy.

"Business is going to shift towards Thailand in this case. Thailand will become the new maritime hub so to speak."

It’s clear that Thailand would benefit greatly from the canal. Government officials seem to be carefully assessing these benefits as well as the cost and the risks, including opposition from the country’s neighbors.

Karnbodi Ngamjit joined anchors Aki Shibuya and Sho Beppu in the studio from NHK World's Bangkok bureau.

Shibuya: Many people stand to benefit from the construction of the canal. What is the prospect of this idea?

Karnbodi: Locals' expectations for the realization of the canal are rising. But the current Thai government has still not announced its stance officially. Thai authorities are also considering a number of other infrastructure development plans to spur economic growth. But the reality is the country can't afford to finance them on its own. It's looking at possible support from China. Thailand was one of the first countries to join the China-initiated Asian Infrastructure Investment Bank.

Beppu: So, briefly, is the Thai government eager to proceed with this plan?

Karnbodi: The southern side of the possible canal route is home to a large Muslim community. It's an area considered unstable because of separatist activity. The academic I spoke with in the report, Professor Opas, says the Thai government is concerned because the canal would separate the north from the south. However, without question, it's a fact that Thailand would benefit from the building of the canal. The Thai government is now giving careful consideration to the plan and is balancing various factors.

Beppu: Well, so I understand that much remains to be seen on how the decision will be made. Thank you.