Prime Minister Srettha Thavisin has cited the “Landbridge,” to be constructed in southern Thailand, as an additional important route to support transportation and an important option for resolving the problems of the Malacca Strait. This will be a cheaper, faster, and safer route.
In his statement made at the Thailand Landbridge Roadshow at the Ritz Carlton, San Francisco, on 13 November 2023, the Prime Minister explained that the Malacca Strait is the main regional shipment route for countries bordering the Pacific and Indian Oceans. A quarter of the world's trade passes through the Malacca Strait, and more than 70% of oil exported from the Middle East is also transported through the Malacca Strait. This makes the Malacca Strait the most congested shipping bottleneck in the world.
He said, “There are approximately 90,000 vessels passing through the Malacca Strait each year, which increase every year by 2.35 % on average. This amount is now expected to exceed the capacity of the Malacca Strait by 2030. If the Malacca Strait becomes even more congested, serious economic consequences are likely.
“The Malacca Strait is long and narrow, especially in the Philips Channel, where it is only 2.8 kilometers wide, so vessels have to queue and move slowly. There are more than 60 marine accidents each year involving a wide variety of vessels, from local vessels to large oil tankers, and all vessels are vulnerable to piracy and unfavorable weather conditions.
“For these reasons, it is expected that shipping commodities through the Malacca Strait will face more problems in the future, including more travel time and cost. This is because vessels have to wait several days and thus incur significant opportunity cost and cost due to spoilage of goods during delay.”
The Prime Minister stated that comparing costs and time for transportation through the Landbridge versus the Malacca Strait, the potential target group for Landbridge was identified as feeder vessels.
He said, “Cargos from China and European countries transported by mainline vessel will be distributed by feeder vessels in this area save at least 4% on costs and five days in time.
“Products travelling from Southeast Asia to Central Asia and the Middle East using feeder vessels crossing between the Indian Ocean and the Pacific Ocean can save at least 4% on costs and three days in time.
“Products from Thailand, Laos, Cambodia, and South China to BIMSTEC and European countries can be distributed via feeder vessels at the Landbridge to various regions. These will save up to 35% in costs and 14 days in time.
“In summary, transporting cargo via the Landbridge will reduce travel time by four days and reduce costs by 15% on average.
“The total cargo volume at the western port will be 19.4 million TEUs, and at the eastern port it will be 13.8 million TEUs, accounting for approximately 23% of Malacca’s port total cargo shipment.
“This will cement Thailand as the hub for transportation and commerce. And as a major connecting point between the east and the west, it will also hold significant strategic importance.
“For crude oil, the amount produced from the Middle East for shipping is approximately 19 million barrels per day. 56% or approximately 10.7 million barrels per day passes through the Malacca Strait, with 44% going to the Asian Far East and the remaining 7% going to Southeast Asia. The Landbridge is particularly attractive for this 7%, since it will help save at least 6% in cost.
“In addition, investors can benefit from the Landbridge development in service sector via enchanted logistics, real estate, and banking, in the primary sector via enhanced agriculture output, and in the industrial sector via new S-curves and manufacturing.
“The Landbridge will drive the overall national economy creating 280,000 jobs, and Thai GDP is projected to grow by 5.5% per year, or the equivalent of 670 billion dollars when the project is fully implemented.
“I believe this presents an unprecedented opportunity to invest in this commercially and strategically important project that connects the Pacific Ocean and the Indian Ocean, connecting people in the East with the West.”
Prime Minister SretthaI invited investors to explore this opportunity to become partners in this historic project and benefit from it together.