September 11, 1999 
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| September 11, 1999 | atimes.com | |
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| Southeast Asia The grand canal plan unveiled (Business Times) The plan Thai government scientists and economists have proposed building a canal across the isthmus of Kra in just six years. The massive construction project is estimated to be worth 810 billion baht (US$1 = 39.5 baht). They claim it will be financially viable, it will create three million Thai jobs, and leapfrog the country to developed economy status. The plans call for building the Kra Canal, a 102-kilometre long and 500-metre wide channel linking the Andaman Sea with the Gulf of Thailand. It will cut across the southern isthmus of Thailand from Satun on the west coast to Songkhla city on the east coast. The canal will . . . provide simultaneous passage to two 250,000 dead weight tonne vessels. The finances One of the authors of the new proposal, Chieanchuang Kalayanamitr, an adviser to the labour and social welfare commission, said that the construction cost of the canal of 810 billion baht is broken down as: 306 billion baht for land acquisition at 300,000 baht per rai (one rai equals 1,600 sq metres), 204 billion baht to develop a free trade zone along the contours of the canal, and 300 billion baht to build the canal. He added one caveat - the 810 billion baht estimate holds good only if the canal is built within six years, much quicker than an earlier plan to build it in 10 years. Once it is ready, the canal is expected to make further demands on the government in the form of operational expenses of about 1.5 billion baht a year, plus maintenance costs of another 1.4 billion baht annually. Income from the canal's transit fees is estimated at 7.5 billion baht in the first year of operation. Besides, there will be earnings from services offered by the seaports on the east and west coasts worth about five billion baht a year. Thus, in the first year of operation alone the canal would take in total direct earnings of 12.5 billion baht, and net earnings of about 9.6 billion baht. It is estimated that over a 20-year period, transit fees alone would bring in more than 160 billion baht, and service fees would yield more than 100 billion baht. The planners told (the) seminar that the proposals are aimed at silencing critics of the project who charge that the government can ill-afford it. Funds for the project are to be raised from the private sector, government-backed bonds, and multilateral loans. The World Bank and the Asian Development Bank are expected to come to the table with long-term loans of up to 40 percent of the project cost or about 244 billion baht. The government is expected to issue bonds worth 489 billion baht. Meanwhile, the developers of the free trade zone are expected to inject 197 billion baht, and the government is expected to allot 30 billion baht as a loan to the Canal Development Authority. The route The newly proposed Satun-Songkhla route is favored over previously discussed routes - such as from Ranong to Chumporn, and Phang Nga to Surat Thani - because it would be the shortest canal route at 102 km, and provides for a good natural location for the proposed seaports on the east and west coasts. Moreover, population density and development are fairly low along the new route, making for minimal human displacement. As a result, the land expropriation cost is much lower than for half a dozen other proposed routes. Infrastructure The proposed canal would require a 20-km beltway running alongside the entire length of the canal. The 102-km long, 500-meter wide canal with its 20-km beltway requires a total area of 2,040 sq km, with natural parks en route adding another 204 km. A free trade zone would be developed on both sides of the canal in order to justify the huge expenditure on its construction. ''With the Kra Canal as the catalyst to develop the free trade zone, the period for the return of investment will shorten considerably by as much as 15 years,'' Dr Chieanchuang said. He pointed out in his proposals that the Kra Canal and the free trade zone must be developed together in order for the huge project to be successful. However, after the free trade zone becomes operational, the financial and economic benefits deriving from the businesses would far exceed the earnings from the Kra Canal, he said. . . . And something for Singaporeans Thailand should grant permanent resident (PR) status to all Singaporeans in a gesture of goodwill and cooperation because the construction of the Kra Canal could challenge Singapore's status as the premier regional port, a leading banker (said) at a seminar on the Kra Canal. Thai banker Vichai Punpocha, the country manager for Germany's Dresdner Bank AG in Thailand and an expert on the Kra Canal, told the seminar: ''Prosperity should be shared with Singapore. Thailand should grant Singaporeans PR status in Thailand - forever. ''This should be offered not only to Singapore investors, but to all Singaporeans. They will have the same rights as the Thais, but they will not vote, nor can they run for Parliament.'' | |||||||||
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