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(Septermber 28, 2018) China's Belt & Road impact on Thailand - Thitinan Pongsudhirak

As China's ambitious Silk Road Economic Belt (SREB) and Maritime Silk Road (MSR) -- popularly known as the Belt and Road Initiative, or BRI -- continues to make ripples and waves in international affairs, its likely impact on mainland Southeast Asia warrants attention. Unlike many of the countries on the Eurasian landmass and along waterways from the South China Sea through the Indian Ocean to eastern Africa, Thailand and its immediate neighbours are not directly on the BRI path.

While Vietnam is located near the MSR, Cambodia, Laos, Myanmar and Thailand -- the CLMT group of countries in mainland Southeast Asia -- are to be connected to the SREB through two of six corridors. One is the the Kunming rail link with a port in Kyaukpyu in Myanmar's southwest region of Rakhine state. Owing to Myanmar's terrain and internal conflicts, the Kunming-Kyaukpyu corridor has made little headway.

The other is the half-completed Kunming-Vientiane rail project, which is designed to cross the Mekong river and connect with Nong Khai province in Thailand's northeast region. From Nong Khai, the railway would continue all the way through Nakhon Ratchasima province to Bangkok and the Gulf of Thailand. Land-locked Laos has taken a US$5.9 billion (191 billion baht) loan from China's Export-Import Bank for the railway construction over five years until 2021, when construction is planned for completion. Its overall cost is more than half of the GDP of Laos, which holds only 30% of the company that was set up to carry out the concession.

On the other side, Thailand's portion of the rail connection from Yunnan through Vientiane has faced delays because of domestic politics, bureaucratic inertia, and cost-benefit reservations. The military government of Prime Minister Prayut Chan-o-cha initially went head over heels for Chinese support after seizing power in a military coup in May 2014. But after China's tough conditions for the rail project, including rights over land use and imports of Chinese workers as well as a relatively high interest rate, the Prayut government dithered. It was thus interesting to observe that Gen Prayut was one of three Asean leaders not invited to the major BRI forum in Beijing in May 2017.

While they are not overly enthusiastic, Thailand's economic policy planners and government leaders remain supportive of BRI, although there are local concerns about a potential debt trap and a raw deal with disadvantageous terms. The military government has sought, like its neighbours such as Malaysia, to balance Japan's similar interest in regional infrastructure development vis-à-vis China's. The Thai government, in principle, has agreed to allow Japan to build an east-west railway across the central region to connect horizontally with Laos and Vietnam, but this plan remains under a feasibility study phase.

With an eye on returning to power after a 2019 election, the Thai military government has tried to blend its cornerstone "Thailand 4.0" development strategy and Eastern Economic Corridor (EEC) with the BRI. With potential investments of $50 billion, the EEC is a special economic zone focusing on new industries, such as next-generation cars, smart electronics, affluent medical and wellness tourism, digital and medical services, robotics, aviation, biofuels, bio-chemicals, among other "S-curve" niches.

Most conspicuous is the renewed interest in Thailand's age-old dream and alluring elephant project -- a canal across the Kra Isthmus through the peninsula in southern Thailand, connecting the Andaman Sea and the Gulf of Thailand against the backdrop of a second passage between the Indian and Pacific oceans.

If ever built, the multi-billion-dollar canal would cut the shipping distance through the Malacca Straits by 1,200km. It would provide a new, strategic channel of trade and transport to China and Japan, with far-reaching geopolitical implications. Thailand's role would rise but it may undercut Singapore's regional maritime hub status. Asean unity and centrality may consequently be undermined.

The Kra Canal through southern Thailand would also pose domestic conflicts. The Thai mindset is glued to a unitary state and geographical cohesion after past territorial concessions to Britain and France. Cutting through Thailand's southern peninsula and putting a canal in its place would also have ramifications on the virulent Malay-Muslim insurgency in southernmost border provinces.

Despite periodic interest in public discourse, the domestic wherewithal among the populace and officialdom has been seen as insufficient to make the Kra Canal happen. But now perhaps a new kind of politics is in the offing. The Kra Canal has long been a pleasant and convenient dream but its realisation has just always been too far away.

It materialising is still highly unlikely but somehow a canal across the Kra Isthmus seems a tad less inconceivable today than it did in the past. Perhaps it is a situation akin to Suvarnabhumi airport, Thailand's main aviation gateway in Bangkok. For decades, Suvarnabhumi airport was synonymous with its local reference as nong ngu hao, a swamp full of cobras. Plans to build a new airport there were endlessly bogged down. The older Don Mueang airport helped and bought time with capacity expansion until it was overstretched.

Eventually, Suvarnabhumi airport was built after years of vacillation, incompetent governments, corruption, and myriad impediments. Market demand made it happen. If the BRI can offer similar market-based drivers, the Kra Canal could become Thailand's most valuable and consequential contribution to China's BRI enterprise. But it should only be considered in line with the maintenance of peace and stability in the region.