A closer look at Thailand’s THB1trn Land Bridge for global trade
The plan to build a “Land Bridge” from the Gulf of Thailand to the Andaman Sea as a route for international trade was given the green light on October 16.
The megaproject will forge a new link between the Pacific and Indian and oceans, relieving shipping congestion in the Malacca Straits, currently the main regional trade route for cargo.
Prime Minister Srettha Thavisin invited Chinese investors to participate in the project during the Belt and Road Forum (BRF) in Beijing on October 17-18.
The Land Bridge, which is expected to become a key link in the China-led Belt and Road trade infrastructure project, will require investment of over 1 trillion baht.
The project will be divided into four phases, taking a total of eight years to complete.
It involves constructing deep-sea ports in Chumphon and Ranong and transforming transport routes between Chumphon and Ranong to link the ports.
Phase 1 requires total investment of approximately 522 billion baht, phase 2 about 164 billion baht, phase 3 around 228 billion baht, and phase 4 approximately 85.1 billion baht.
The Land Bridge project will boost trade and investment and bring other benefits for Thailand, said Associate Professor Aat Pisanwanich, director of the Centre for International Trade Studies at the University of the Thai Chamber of Commerce.
It will connect the Andaman Sea in Ranong province to the Gulf of Thailand in Chumphon province, cutting the distance that cargo shipments have to travel and avoiding navigation through the narrow Malacca Strait. The new route will also aid shipment of goods from Thailand to markets in India, Southeast Asia, the Middle East, and Europe.
It should also enhance investment to modernise the agriculture-related sector in the upper and central southern regions (Ranong, Chumphon, Surat Thani, and Nakhon Si Thammarat provinces), including the rubber industry, modernised agricultural processing, and the future food industry. Other industries expected to benefit from the new trade route include the alternative energy sector, such as wind energy.
However, the Land Bridge project faces competition from Malaysia's East Coast Rail Link (ECRL).
As such, it is important to attract investors by ensuring good connections between China's maritime routes and Thailand's Chumphon port. Thailand must be able to guarantee that Chumphon port's potential matches that of Malaysia's Port Klang. Otherwise, shipping businesses may continue using Malaysia's services.
Other incentives are also needed to attract investors since merely constructing roads, railways, and ports will not be sufficient.
The project aims to increase the GDP of the southern region by 1.4 trillion baht. If well planned and executed, it will create employment opportunities, enhance economic activities in the local private sector, and attract more foreign investment to the southern region.
Over the next 10 years, the Land Bridge Project is expected to raise the southern region's GDP by an average of 130 billion baht per year, totalling 1.4 trillion baht and contributing 8% of Thailand's GDP. This will result in over 100,000 new jobs.
The service sector is forecast to enjoy the highest revenue growth, followed by the industrial and agricultural sectors. The economic benefits of the 1.4-trillion-baht boost will be distributed mainly among four provinces: Ranong, Chumphon, Nakhon Si Thammarat, and Surat Thani.
The Land Bridge Project, a public-private partnership, is expected to attract interest from China, Japan, India, Saudi Arabia, and others. Large Thai businesses expected to benefit from the project include the rubber industry, processed fruit industry, and future food industry.
The Land Bridge project is projected to capture an economic share of 15-20% from Singapore and Malaysia, based on the value of logistics transportation.