Thailand and China have signed a memorandum of understanding (MOU) in Guangzhou to jointly cut a shipping passage across Kra Isthmus in southern Thailand, the narrowest part of the Malay Peninsula.
The canal, located at Kra Isthmus, will enable ships to bypass the Malacca Strait so as to shorten their voyage by 1,200 km. The canal will be 102 km long, 400 meters wide and 25 meters deep.
Unlike the Suez Canal the Kra Canal does not exist yet. For centuries, the Thais have been mulling about the possibility of building a deep-water canal cutting through Thailand’s long peninsula to link the Indian Ocean with the South China Sea.
Observers say that Kra Canal could be a reality in 10 years at the cost of US$210 billion. If nuclear and other technologies are used in the construction, the timeline could be shortened to 7 years but at a cost of US$360 billion.
It is an important project of China’s 21st century maritime Silk Road. China says it will provide great economic gains for the countries that have to go through the Malacca Strait for their trade with the Middle East and Europe.
Canal planners say that, strategically, it is very important for China to get an alternative route for its energy and trade security, as India has control of the Malacca Strait.
Thailand would benefit from toll collection, port fees and a range of developments surrounding the canal.
Shipping and logistics companies would definitely welcome the lowered costs of moving goods between East Asia and Europe. A shorter trip without going through the Straits of Malacca would also reduce the risk of running into pirates.
However, China’s ambassador to Thailand has denied any official involvement in a project to construct a canal through the Malay Peninsula linking the South China Sea and the Andaman Sea.