BANGKOK – A recent visit to Myanmar by General Prayuth Chan-ocha, Thailand’s prime minister and coup leader, has restarted the most ambitious project in Southeast Asia, Dawei Special Economic Zone (SEZ). The bilateral cooperation between Thailand and Myanmar will consist of a seaport, an industrial park, and a transport link connecting Dawei, a city in southern Myanmar, to Bangkok. Dawei seaport would be a gateway for Thailand to reach the Indian Ocean and for countries in the west to reach Thailand without having to go around the Malay peninsula.
Although Thailand borders Andaman Sea in the Indian Ocean, all maritime traffic from Bangkok and the heavy industrialized Eastern Seaboard has to go around Singapore before continuing its journey to Europe, Middle East and India. Most of the economic activities, especially ones that require an exit to the sea, are located in the central and eastern region of the country. 42 out of 47 industrial estates in Thailand are located around of the Gulf of Thailand on the opposite side of the peninsula facing away from the Indian Ocean.
The distance to the nearest port on Andaman coast, Ranong, is also too far. It is more than 550 kilometres from Bangkok or seven hours via highway. Even though ships would save more than 10 days travelling to and from Ranong to their western destinations, the port would be too costly to be used for transport purposes from the central and eastern region. The port also lacks facility to accommodate large ships. The plan to build a large seaport in Krabi, another city on the Andaman coast, has also been protested by local residents and environmental experts.
Dawei SEZ is one of Thailand’s efforts in cutting cost and saving time to reach the Indian Ocean. But this is not the first time the country has attempted to find a quicker westward route to the sea. The country has long attempted to find ways to reach Indian Ocean without having to go around the Malay peninsula. Few canal projects similar to Panama Canal have been proposed throughout history as shortcuts to bypassing the 1,400 kilometre long peninsula.
THE THAI CANAL DREAM
The first attempt dated back in 1677 during the reign of King Narai the Great of Ayutthaya, the former capital of Thailand. De Lamar, a French engineer, was hired to conduct a feasibility study for a canal that would cut through the Malay Peninsula connecting Songkhla and Myiek. The project was shelved due to the lack of technology to complete the project. Similar idea resurfaced a decade after Bangkok became the capital. The canal was proposed to facilitate naval ship movements and strengthen the defence of country’s western coast.
There were several attempts to construct the canal during 19th century. British East India company conducted a survey but abandoned the project after it was proven financially unfeasible due to mountainous geography. Ferdinand de Lesseps, a developer of Suez Canal, visited Kra Isthmus but was not permitted to explore the area in detail. British Empire later decided not to build a canal to reinforce the dominance of Singapore as a transport hub. The intent also reflected in the 1946 Anglo-Thai Treaty almost five decades later.
In the late 20th century, the Executive Intelligence Review or EIR, an American weekly newsmagazine, the Fusion Energy Foundation, an American think tank, and several Japanese firms suggested using atomic bombs to make ways through the mountains. The canal gained interest again after 1997 Asian financial crisis. Global Infrastructure Fund estimated a cost for the construction of the canal at 20 billion US dollars. The most recent interest on the project came from Yingluck Shinawatra’s government.
However, the canal project presents too many obstacles. One of the problems is the geographical feature of Malay peninsula. Tenasserim Range runs along Myanmar and Thailand border to the southern tip of the peninsula. The highest point of the mountain chain is 75 metres high compare to 64 metres in Gaillard Cut in Panama. The distance of Thai Canal varies from 50 to 100 kilometres depending on where the canal would be constructed whereas the distance of Panama Canal is 77 kilometres.
Financial feasibility and return on investment of the project is another problem. The construction of the project would require a large sum of financial investment but would not yield as much financial return as Panama or Suez Canal. Thai Canal would save approximately1000 kilometres around the Malay Peninsula while Panama Canal saves nearly 8,000 kilometres around South America and Suez Canal saves more than 9,000 kilometres around Africa.
However, the biggest concern in constructing a canal through Malay Peninsula is the effect it would have on international relations between Thailand and other countries, especially Malaysia and Singapore. The canal would benefit Cambodia, Myanmar, Vietnam, India and China but it would divert most of the traffic between Indian Ocean and South China Sea from the pirate-dominated Strait of Malacca to the canal. This would lead to a huge profit loss in Malaysia and Singapore.
The insurgency in Thailand’s southern border provinces is also raising concerns about the project geopolitically. The ongoing conflict started over a decade ago and have taken more than 6,000 lives and injured more than 10,000 people. The separatist groups in the Muslim-majority region want to gain independence from the country. Cutting a canal through the country is considered a bad omen by many Thais because it would separate southern Thailand from rest of the country.
THE AMBITIOUS BACK-UP PLAN
Since the canal has proven to be a far fetched dream for Thailand, Dawei seaport was proposed. The idea of Dawei SEZ was brought up in 2006 during the government of Thaksin Shinawatra, an ousted prime minister, of which the southern insurgency has occurred. Located 350 kilometres directly west Bangkok, Dawei is the nearest point from Bangkok and the Eastern Seaboard to the Andaman Sea. It seems like a logical solution to go west through Myanmar to reach the Indian Ocean.
Dawei is the capital of the Tanintharyi Region, which was once under the rule of Ayutthaya Kingdom. Historically, Myeik, a city south of Dawei, was a chief port for the kingdom’s European trade. So this route from Thailand to the Indian Ocean is not exactly a new idea. Situated 28 kilometres north of Dawei, the project was officially launched in 2008. Dawei SEZ consists of three main infrastructures: an industrial estate, a seaport, and a transportation links to Thailand. Once completed, it will cover the area of 205 square kilometres, more than three times larger than the size of Manhattan and almost twice the size of Paris.
The industrial estate will feature oil refinery plants, natural gas processing plants, petrochemical plants, steel mills, fertiliser plants, pulp and paper processing plants, electric generating stations and heavy to light industrial parks. The industrial estate will be 15 times larger than Map Tha Phut, Thailand’s largest industrial estate, and will be 50 times larger than the first phase of Thilawa SEZ, Myanmar’s first industrial estate south of Yangon. It will be as large as the urban area of Hong Kong. It will also be the third largest industrial park in the world after Khalifa Industrial Zone in United Arab Emirates and Alberta’s Industrial Heartland in Canada.
The Dawei seaport and dockyards are designed to handle large and heavy loaded vessels and to handle up to 250 million tonnes of cargo per year. Its capacity will be equivalent to that of Hong Kong Port and will place it at number 12 on the list of world’s busiest ports according to the ranking by the American Association of Port Authorities. It will be able to handle almost five times more cargo tonnage than Thailand’s largest and busiest seaport, Laem Chabang.
Transportation links will include eight-lane highway, rail road, transmission lines and oil and gas pipelines. The roads and rails are being built from Bangkok toward Dawei cutting through mountains in the remote part of southern Myanmar. The road will also complete the western end of the Greater Mekong Subregion (GMS) Southern Corridor connecting Myanmar, Thailand, Laos, Cambodia and Vietnam. The GMS Southern Corridor runs from Dawei to Quy Nhon and Vung Tu, port cities in Vietnam. The road link will be a land bridge connecting Indian Ocean and South China Sea.
The economic zone will also serve as a base for oil and gas industry in the Andaman Sea. PTT, Thailand’s only company on Fortune 500 list, has many of its operations in the Myanmar’s sea. The company will directly benefit from the project. Dawei SEZ is expected to be one the largest petrochemical industrial estates in Southeast Asia. Apart from investment and tax benefits an SEZ usually provides, businesses in Dawei SEZ will also benefit from a quick access to the sea and Myanmar’s cheap and young labour force.
The project will directly benefit Myanmar as it brings countless of jobs to the country. It will also boost the economic growth in other countries along the GMS Southern Corridor like Cambodia and Vietnam. Thailand will benefit from having an alternative to westward exit to the sea and an alternative to an overcrowded Eastern Seaboard. International trades and transportation will also benefit from the project as there is a road link connecting four countries from Dawei.
Despite all the benefits, Dawei seaport and road link will not replace an oil transport route between the Middle East and East Asia. Moreover, although the port can save travel time to reach Indian Ocean from Bangkok, it requires a transfer via road or rail to the port. If the canal were to be built, it would save more cost in transport. So the conversation and the possibility of constructing a canal bypassing the Malay Peninsula will not be eliminated and might gain interest again in the future.
Dawei SEZ has been stalled in past several years because the parties involved were unclear with the direction of the project and because many villagers were affected by the relocation of their homes. However, the project could become a reality in the near future. Japan, a sole investor in Thilawa SEZ, has agreed to recommit to the Dawei project. Thailand and Myanmar will again meet during 25th ASEAN Summit on November 12 and 13 to further move the project forward.