Land Bridge? Financing? 15 years later? ECRL is ready in 2 years.

Land Bridge? Financing? 15 years later? ECRL is ready in 2 years.

Kra Canal? Scrapped many years ago. Actually did not start…

Many years ago, someone told me that Thailand is building Kra Canal. This is a 100km water canal from the Gulf of Thailand to the Andaman Sea, cutting across Thailand. Somehow, I confidently told him that this is not as easy as simply building it. Who will finance it? If it’s Thailand, they will be facing budget deficits or needing a huge loan in order to make it happen.

How long will it take? At the time, I estimated it to be 10 years at least. Planning… Acquisitions… Building… Last but not least, how will this change Thailand because it will then essentially be divided into two! Not sure what Fengshui would say but emotionally, I look at the map and I will feel uneasy if someone were to split my country into two. Maybe just me? Anyway, Kra Canal is no longer happening. The final news I read was this:

Now, it’s a Land Bridge proposal

“Briefly, this is a 90km land bridge. and is expected fully completed in 2039 at a total cost of RM130 billion. It will cut down the duration of travel for ships by 6 to 9 days if they use this land bridge versus using the Malacca Straits.” News Source: thesun.my

I repeat… FULLY COMPLETED in 15 years from this year and will cost RM130 billion and is said to cut down the duration by 6 to 9 days versus ships using the Straits of Malacca.

Here’s one BETTER alternative, maybe

“At speeds of up to 160km/h, the ECRL passenger trains will significantly cut travel time from Kota Bharu to ITT Gombak to approximately 4 hours.” Info source: https://www.mrl.com.my/en/ecrl/overview/

By 2027, shipping lines could also stop at Port Klang and use the ECRL to proceed to the ports of Kemaman / Kuantan within just a few hours. This can be done if indeed time saving is critical for the higher value goods. This will continue to be the case and if indeed this is a popular way, then more shipping lines may consider this and would have been using this smoothly for at least 12 years before the land bridge is completed.

Yes, I think China will be interested with the Land Bridge proposal

As of now, I did not read any official report on China’s response to Thailand’s proposal to them; invest into the land bridge. However, I believe China will be interested to have another option because if they did not and somehow some other investors take it up, then China will lose the opportunity to have another strategic investment. This is essential because 90 percent of all China’s trade and oil are currently transported through the Straits of Malacca. If some delays were to happen, it will be catatrophic.

Just remember… ECRL’s financier is China too…

“Malaysia received attractive financing terms for the ECRL with an 85 percent of the project financed with soft loan of 3.25 percent from the China Exim Bank, and the balance 15 percent to be funded through a sukuk programme managed by local investment banks.” Source: https://www.mof.gov.my/portal/arkib/speech/2017/ECRL_9OGOS2017.pdf

Okay, China is NOT the financier for Singapore Port yeah

So, if they indeed want to divert some of their shipments away from the straits of Malacca, then they would definitely choose to start using the ECRL via Port Klang and in the future, start to use the Land Bridge after 2039. I think it’s very clear how all these would pan out because just as 100 percent of all ships going through the Straits of Malacca is risky, relying on just ECRL route or the Land Bridge is certainly a risk as well. Perhaps all three routes would be used and this ensures alternative routes are always available.

We will have to see if what I think is correct or not. We will know soon since ECRL will start in the beginning of 2017. Will follow Land Bridge news and report to all. Cheers.

Please share with people you care.

Sign up for daily investment news updates (FREE since Nov 2013 and FOREVER). 

Alternatively, Follow me on Telegram here.

Please LIKE kopiandproperty.com FB page to get daily updates about the property market beyond kopiandproperty.com articles.