International Business & Economy Penang-Songkhla link talks at G-to-G level: End of Kra Canal

Penang-Songkhla link talks at G-to-G level: End of Kra Canal

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Promising a better connectivity between two seaports that are the Penang Port in the northern peninsular of Malaysia to the Songkhla Port in southern Thailand will now move on to government-to-government discussions.

The first sign of the high-level talks came with reports that the Thai Prime Minister Prayut Chan-o-cha sees it as a positive development.

Some sources said the proposal was mooted during the Malaysian Second Finance Minister Johari Abdul Ghani’s visit to Thailand in mid-Sep 2017.

If the proposal becomes a reality, both countries are expected to see a good flow of goods and containers between Songkhla Port and Penang Port, bypassing the busy Straits of Malacca, and it could also replace the proposed Kra Canal at southern Thailand.

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The two seaports are presently connected by a 226km road which passes through Bukit Kayu Hitam and the travelling time by car is about 3.5 hours.

Since the proposal was mooted, Malay Mail has reported that MMC Corporation, the shareholder of Penang Port, has proposed a 300km railway line (source: The Independent, 29 Sep) to connect the two ports, said Maybank IB Research today.

The proposed railway line will pass through Bukit Kayu Hitam (80km from Songkhla, 200km from Penang Port). The total travel time, including loading and unloading of cargo, could take just 9-10 hours compared to five days via a sea-route, passing through the Straits of Malacca. Both Thai and Malaysian governments will discuss on this in the next few weeks.

Maybank IB said it is positive on this proposal as it will help to speed up economic activities in the northern Peninsular.

“A major highway or railway line would also help to lift the movements of people (besides cargo) and tourism activities.

“For Atlan, it would benefit from higher spendings at its duty-free outlet at Bukit Kayu Hitam, sandwiched between the Thai and Malaysian Customs and Immigration checkpoints; it could also help kick-start major development on its large tract of land where its duty-free outlet sits.

“Besides Bukit Kayu Hitam (in Kedah), Atlan also has duty free outlets at the other border towns with Thailand – at Padang Besar (Perlis), Pengkalan Hulu (Perak) and Rantau Panjang (Kelantan),” said the Research house.

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