Land bridge: a great opportunity for Thailand or another dream project?


Among several projects that Prime Minister Srettha Thavisin's government is pushing to attract foreign investors is the land bridge, an ambitious undertaking that would link the Andaman Sea to the Gulf of Thailand and provide thousands of positive opportunities and benefits.

But while the government has worked tirelessly to convince the world of the viability of this megaproject, the response has been vague and wary.

Potential investors, particularly in such major economic countries as the US, China, and Germany, have expressed their appreciation while maintaining an interest in investing, positions that seem to reflect their scepticism about whether this megaproject will be a great profitable opportunity for all parties or just another effort by the Thai government to impress investors worldwide before fading away like some previous projects.

Their suspicions may be exaggerated, but they have reasons to be reluctant.

What is the land bridge and why now?

Thailand's cabinet gave the green light to build a land bridge from the Gulf of Thailand to the Andaman Sea as a route for international trade on October 16.

During a special talk on the topic at the “Than Talk” forum on December 20, Chayatham Promsorn, permanent secretary of the Transport Ministry, noted that this megaproject would undoubtedly save costs and time, thus improving trade flow.

He added that the megaproject will create a new link between the Pacific and Indian oceans, relieving shipping congestion in the Malacca Straits, which is currently the main regional trade route for cargo.

Acknowledging that this was not Thailand's first mention of the land bridge project, he pointed out that the time had come for it to become a reality, as the number of freighters and cargos passing through the Malacca Straits is expected to increase to 122,000 per year by 2030.

Given the already congested overcapacity, building another optional transit mode like the land bridge in this region is very interesting.

Chayatham went on to emphasise three key success factors for the project. First, it should be considered as a business model plan rather than infrastructure development because the operational period is crucial. The second step is to manage the land bridge as a “One Port Two Sides” operation with a complete land-link connection. The third option is to invest and operate as a consortium with a single operator.

Prime Minister Srettha Thavisin previously noted in an article published on December 17 in Nikkei Asia that the project would include the construction of deep-sea ports at Ranong on Thailand's Andaman coast and Chumphon on the Gulf of Thailand.

He said the two ports will operate under a "one port, two sides" concept, supported by a motorway and dual-track railway lines connecting the ports to each other and to the country's national network.

"Once completed, the land bridge is expected to reduce travel time between the Indian and Pacific Oceans by an average of four days and transportation costs by 15%. For a company shipping goods from Chennai to Yokohama, for example, this could mean a shorter transit time and a 4% cost savings," he explained.

The first phase of construction is scheduled to begin in September 2025 and last until October 2030. Contractors will most likely be invited to bid on the project between April and June 2025.

He expected that land bridge would benefit Thailand's economy by 1.3 trillion baht and boost the country's annual GDP growth rate by 1.5% due to increased export opportunities and the creation of 280,000 jobs. It will also create new development opportunities in other provinces in southern Thailand.

Is the project worth investing in?

According to the pitches made by the Thai government to international investors thus far, this land bridge project appears to be both appealing and investible.

However, many still doubt the possibility of its becoming a reality while others see difficulties and a few are already shaking their heads.

Piset Rittapirom, chairman of the Bangkok Shipowners and Agents Association, said at the Than Talk forum that the land bridge project is a mission impossible.

Although he is impressed by the government's and other parties' efforts and bravery in creating such an ambitious project, he believes the land bridge will never be built.

As a shipping operator, he pointed out that changing a shipping route plan is not simple as making a simple switch.

He explained that shippers consider several factors when determining ship routes, including product volume, space utilisation, carrier sizing, revenues, container flow, port management, and energy efficiency.

Making the decision to dock at one port implies that the port can assist carriers in unloading and reloading product in large quantities thus saving time, money and energy.

That means that, in addition to a land bridge, Thailand must have an efficient logistics network and management system.

Unfortunately, the country's current ports and logistics network are still in disarray and inefficient, and it is still a long way from meeting new global green standards.

Besides, Thailand's transshipment laws and regulations are out of date, making it more difficult for shippers to operate in the country.

Changing the shipping route would require a time saving of more than 7 days. So, the government’s promise of saving five days is irrelevant to major shippers around the world.

Also, while all large shipping companies and port operators are transforming to be more environmentally friendly, Thailand's logistic ecosystem still has many more issues to address in order to meet global green standards.

Piset cited as examples electronic trucks, charging stations, and other facilities to support new hydrogen engine carriers, which are currently unavailable in Thailand's port and logistics.

Rather than focusing on land bridges, he believes the country should prioritise improving logistics management to alleviate crowded land logistics issues, which play critical roles in connecting ports and businesses.

He explained that transferring cargo from a freighter docked at Laem Chabang, the country's main deep-sea port, currently takes at least a day.

Given that docking fees average around $100,000 per day, it should only take a few hours or less.

He insisted that Thailand should prioritise inland logistics improvements right now to achieve the country's goal of becoming ASEAN's logistics hub.

His viewpoint is shared by some international analysts.

Lu Xiang, a senior researcher with the Chinese Academy of Social Sciences, a Beijing-focused government think tank, told CTN news on November 27 that China is taking a cautious approach to the land bridge because it is not a high-profile strategic project.

He concluded that offloading and reloading was not a viable solution due to the complexity and potential lack of cost savings.

However, Lu said Chinese firms may evaluate their options independently and discuss them with their Thai counterparts.

While China may have mixed feelings, it will not object if Thai firms do business with Chinese firms, he added.

Zhu Feng, dean of Nanjing University's Institute of International Relations, is concerned that the project’s fate is in the hands of the Thai government and subject to changes in political dynamics.

He anticipated that once the project began, Chinese corporations would play an important role as contractors, but that China would not provide funding.

He then noted that there will be fewer state-led investments to build megaprojects overseas, and the Belt and Road initiative will focus on logical business decisions based on investment returns for the next decade.

Meanwhile, DW, a German news outlet, reported that Ernst Wolfgang Reichel, the new German ambassador in Bangkok, reportedly told Thai government officials in November that he would lobby German companies to invest in the project.

However, it remains to be seen whether German companies, such as Siemens, which helped build parts of Bangkok's rail system, would be interested in investing in such a scheme.

The report also cited a German diplomatic source who asked not to be named because they were not authorised to speak about the matter. He said if German companies were to invest in the scheme, they would most likely focus on port development, but added that German participation would most likely be "limited".

Mark Cogan, a Thailand expert at Japan's Kansai Gaidai University, noted in this DW report published on November 21 that another major stumbling block for European investors could be the project’s environmental and social implications, which have not been fully assessed.

He pointed out that the immediate challenge for Srettha is to demonstrate that the land bridge will not only be profitable, but will also not increase carbon emissions.

Given the scepticism, the Thai government will have a lot of work to do to dispel those doubts and ensure that the land bridge project is fully accepted.

Nonetheless PM Srettha remains confident that the project will strengthen regional supply chains while capitalising on ASEAN's potential as a logistics hub.

He noted that, following Asia's experience with the pandemic, improving supply chain resilience has become a goal in and of itself, and that the land bridge can ensure benefits for all parties involved.

The land bridge will also help to resolve issues with existing shipping routes, as well as provide a faster and safer option for transportation and trade at a lower cost and with environmental considerations, he added.

Only time will tell whether the land bridge will ever achieve the image envisioned by the Thai government.