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Expert punts for Phuket Free-Trade Zone in Kra Canal push

PHUKET: A Free Trade Zone (FTZ) expert has called for Phuket to become the “test bed” for the country to prove the economic viability of a “Free Zone” as part of the support for the Thai government to push ahead with the Kra Isthmus Canal, or now called the “Thai Canal”, which would cut a shipping lane through Southern Thailand from the Andaman Sea to the Gulf of Thailand.

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By Chris Husted

Sunday 24 September 2017, 10:00AM


 

The call follows the “Thai Canal Conference” held in Bangkok on Sept 11, which attracted an array of experts in their various fields, including Chinese investors ready and willing to invest between US$29-35 billion (B959.32bn-B1.157 trillion) to construct the Thai Canal mega-project. If initiated, the project is touted to become a ‘Legacy Project’ of the current administration.

“Obvious concerns from Singapore and Malaysia has planted doubt and concerns in previous Thai administrations but with the recent developments of the Silk Road & Steel Belt rail routes whereby containers once carried by ships from China to Europe and taking around 45 days transit time now has competition from the new rail links,” explained FTZ expert Tony Restall.

“At the moment a single rail track is in operation but the Chinese are quick to announce that by 2020 some 7.5 million containers [a year] will shipped by rail. Where does that leave the already under pressure shipping lines, all of which are showing operational losses globally?” he asked.

To speed up the maritime transit times between China and Europe the shipping lines will be forced to evaluate “Off-Route” hub ports such as Jebel Ali in Dubai and attempt to stick to the most efficient routes without diversions, he noted.

“The Thai Canal can greatly assist that process by shaving off up to three days in each direction. However the Thai Canal isn’t another Suez or Panama Canal, which save lengthy voyages around Africa or South America respectively,” Mr Restall explained.

“The rationale and justification to now go ahead and build the Thai Canal has thus been endorsed by global experts,” he added.

“How to pay for it as an investment of US$29-35bn is no small sum of money and this may be what has scared off the Thai Government to support the project,” Mr Restall, President & CEO of DSI Ltd, explained to the conference, while pointing out that the case for the Thai Government was to follow the investment route of Dubai, which has witnessed “phenomenal” growth of its Ports & Free Zones since its first Free Zone was launched in 1985.

“In 2015 the Emirate of Dubai posted a Free Trade throughput total figure in excess of US$500bn (about B16.54trn, Source: Dubai Economic Department) with Jebel Ali Port and Free Zone posting US$140bn (B4.629trn) of that total,” Mr Restall explained.

To prove that a Free Zone regime in Thailand would be successful, he challenged the Thai Administration to set up a pilot scheme using Phuket Port as the “test area”.

This is not new to Phuket as Mr Restall in 2004 proposed the establishment of a FTZ following what he witnessed happened to the Phuket economy after the tsunami.

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In 2006, he presented the case for an FTZ in Phuket to the then-Secretary General to the Thai Prime Minister, Gen Pongthep Tesprateep, who in turn endorsed and supported the submission. Mr Restall even brought in to Phuket investors from the UAE as well as Qatar who were ready to commit the investment into Phuket.

However, the coup of 2006 put everything on hold and investors took a step back as the investment risk into Thailand was increased.

Phuket Port still sleeps having lost its annual 32,000 containers per year trade and the consortium proposed by Mr Restall were ready to construct a new quay extension, passenger jetty and international ocean terminal, he explained.

“Everything is back on the table if we can seek the support of the Thai Government and Phuket administration to utilise Phuket Port as the trial facility that will ultimately create between five to sic million new jobs in the Thai Canal corridor and contribute significantly to the GDP of Thailand,” Mr Restall said.

“More importantly [the project would] provide hope to the children of Thai farmers working in the rice fields and rubber plantations, which are not attractive employment options to those farmers’ children,” he added.

“Sure, we can bring in foreign investment to develop Phuket Port and establish a Free Zone Phase 1 Trading Hub, but given the excellent ROI on FTZ development there would be more than sufficient interest from domestic investors,” Mr Restall pointed out.

“Let’s use Phuket as the testing ground and this can then be replicated all over Thailand (sea ports, airports and border crossings). Free Trade Zones shouldn’t be confused with SEZ – Special Economic Zones – which Thailand currently operates and which do not have a high success rate in Thailand and the Asean community,” he added.

To that point, Thailand’s Dawei Project was launched as an SEZ and has not delivered as expected, he highlighted.

“Our plans are to introduce a weekly sea feeder service into Phuket Port linking up Singapore, Kuala Lumpur and Penang Ports and linkages to Myanmar ports to the north,” Mr Restall said.

“The success of the UAE Free Zones is well recorded and has witnessed tremendous growth both inside and outside the Free Zone location. A public meeting in Phuket would provide the business community and local population with a unique insight to see the benefits associated with a successful Free Zone regime and professionally run sea port with sea feeder access to short sea routes.

“This is a win-win situation for all those involved… once established, taking three to four years to set up, a Free Zone alone could easily contribute US$2-3bn (B66.14bn-B99.24bn) into the economy of Phuket much as it has been proved in smaller Free Zones in the UAE,” Mr Restall noted.

 

 

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