International Business & Economy Penang-Songkla railway link to replace Kra Canal

Penang-Songkla railway link to replace Kra Canal




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Today, Malay Mail, a daily newspaper in Klang Valley reported that the MMC Corporation Bhd (MMC) has proposed a 300km railway line that will connect the deep sea port of Penang to the Songkhla port.

If this is successful, it will negate the need for the long-bandied about Kra Canal in southern Thailand, said Thailand’s ambassador to Malaysia Damrong Kraikruan.

“There is a deep sea port in Penang currently, and we plan to eventually have a deep sea port in Songkhla. So when shipments come from India into Penang port, we can unload cargo and put it on a train to Songkhla.

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“Total time taken including loading and unloading would be around nine or ten hours compared to five days if ships pass through the Straits of Malacca and Singapore. This is a new proposal by a large Malaysian company which currently owns Penang Port,” Kraikruan told reporters on the sidelines of an economic briefing at the Royal Thai Embassy here yesterday.

MMC Ports, the ports operating arm of MMC, gained full control of Penang Port for RM220 million in May, and continues to hunt for more assets to add to its portfolio — Sabah Port being its latest target — in the run up to MMC Ports listing by end-2018 or early 2019.

“The proposal came from your side (Malaysia). There is no value to it yet, but for further details you need to ask (MMC controlling shareholder Tan Sri Syed Mokhtar) Al-Bukhary — he was the one who proposed it.

“It is about 80km from Songkhla to Bukit Kayu Hitam and another 200km from Bukit Kayu Hitam, so the proposed line would be around 300km long. Thai and Malaysian governments will be having discussions on this in the next few weeks,” Damrong said.

But “studies one after another” conducted on Kra Canal have concluded that the canal is not realistic, he said.

“The return on investment is not attractive enough to go ahead with the plan. International canals like Panama and Suez have been effective because they are essential to trade, cutting off weeks and months of travel.

“The most Kra Canal would save shippers is only a few days. Another factor to consider is would west-going ships use it or will they go down to Singapore? Singapore has been there a long time, and we cannot offer the same level of logistics, deep sea bunkering, shipping, banking and finance services it does.

“Moreover, sea-going vessels are getting larger and larger. Can we dig a canal wider than 20km on the peninsula and how much will it cost us? If Kra Canal is too narrow at less than 20km, can we compete with Singapore?” Damrong said.

He said the latest whispers of the Kra Canal came not from the Thai government, but from the private sector and “someone from China”.

“While Thailand can be the gateway to mainland Southeast Asia, Malaysia will continue to be the maritime gateway to countries like Brunei, Philippines, and Indonesia. We can complement each other,” he said.

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