24
Feb
17

Proposed Kra Canal a big risk to RM200 billion Carey Island proposal

Will Carey Island port lift Malaysia’s sea fortunes?

KUALA LUMPUR, Jan 24 — The plan to develop Selangor’s Carey Island into a giant port city on the Malacca Strait has been touted by as a maritime game changer for Malaysia that has long been overshadowed by Singapore as a global shipping hub.

The new port-city project, Kong said, will comprise the development of an integrated port and related infrastructure, industrial parks and free trade zones, commercial and residential buildings in an area over 100sq km or double the size of Putrajaya.

He also said it will be able to handle 30 million TEUs (twenty-foot equivalent units) more container cargo than Northport and Westports combined.

The first phase of development is expected to take about six to seven years if the project is launched now.

Kong said while the project is open to interested parties from port operators, shipping lines and infrastructure developers from all over the world, he indicated that a Chinese firm has specifically expressed its interest in the project.

However, other captains of industry have expressed reservations over the scale of the project and its timeline in the desire to supplant Singapore as the next global sea trade hub.

Former PKA chairman Datuk Lee Hwa Beng said the PKA and Transport Ministry need to consider four aspects carefully before deciding on a third seaport within the Port Klang area that already has the Northport and Westport in operation.

Infrastructure: Who will pay?

“First it is to understand whether there is really a demand for such a facility. After that, it is to test if it is feasible to set up a port there because if it is not, it could translate to huge government subsidies,” Westports chief executive Ruben Gnanalingam told Malay Mail Online.

In the case of Carey Island, Ruben also said a port in the area would need a lot of infrastructure.

He pointed that apart from constructing an expensive breakwater structure, the authorities would also be required to conduct massive dredging works to build terminals.

“This may challenge its feasibility to do transshipment containers at a cost effective rate without some kind of government support like subsidies or grants,” he said.

On giving an operator license to run a port, Lee claimed that PKA would provide initial funds for an operator to build the basic infrastructure, while subsequent developments would be undertaken by the latter.

“Port operators will then have to pay PKA some amount every month like a tenant paying to his landlord in a 30 years lease which the lease is renewable after that,” he said.

Thailand’s Kra Canal

The construction of the canal has been an ongoing talk by the Thais since the 1600s when its king sought to shorten shipping time around Asia. It was put off for various reasons ever since.

According to initial reports, the artificial canal would cut through southern Thailand, connecting the Gulf of Thailand with the Andaman Sea. This will allow vessels heading to China from Europe or vice versa to bypass the Malacca Straits.

The construction of the canal does not involve works on Malaysian land.

News reports said the project, once started, will take a decade or so for completion and would incur a cost of more than RM1.2 trillion.

It was reported that China and Thailand have signed a memorandum of understanding on May 15, 2015. However, after the signing of the agreement, both countries have yet to begin construction works of the canal.

Lee pointed that if the proposed Kra Canal or the Thai Canal goes through, it would significantly reduce traffic in the Malacca Straits and thus leaving the Penang, Port Klang and Johor ports, including the Singapore port, a less likely destination to disembark transshipment cargos.

“If the Thai Canal comes up, let’s not even talk about the Carey Island port, the available ports in the west coast will ‘die’,” he said.

China-UK overland freight rail route

Lee also pointed that the recently launched rail service between China and European cities as another factor that could likely affect operations of the Carey Island port “to a certain extent” should it be given the green-light for construction.

“Currently, many European vessels go through the Strait of Malacca to get to China and with this new train service, I am sure that in time, it will result in lesser traffic at the Malacca channel because the rail service is touted to be cheaper than air and faster than sea,” he said.

…more
Will Carey Island port lift Malaysia’s sea fortunes?
January 24, 2017 – MMO

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