Thailand's 26 Billion Euro Bet: A Land Bridge to Bypass the Strait of Malacca

A fifth of world trade flows through a single strait. Thailand wants to bypass it with 90 kilometers of highway, rail and two deep sea ports. China is listening closely, experts have doubts, and locals are pushing back.

Thailand is planning a 90 kilometer land bridge between the Pacific and the Indian Ocean to bypass the Strait of Malacca. Since the Hormuz blockade, the 26 billion euro project has gained new momentum. In a month, a special commission will present its decisive study.

The Strait of Malacca is the busiest strait in the world, with around a fifth of global seaborne trade squeezing through the bottleneck between Malaysia, Singapore and Indonesia. Thailand has long pursued a plan to bypass this dependency, a land bridge in the far south of the country, where only 90 kilometers separate the Pacific from the Indian Ocean, roughly the distance from Hamburg to Kiel. A highway, rail tracks and two deep sea ports yet to be built are meant to carry containers across the country, and according to the government the route saves four days and 15 percent of costs compared to sailing through the strait.

The dimensions are enormous. Up to 20 million standard containers are to be handled via the land bridge each year, more than double what the Port of Hamburg moved last year. Costs are estimated at the equivalent of 26 billion euros. The idea is decades old and has been run through the numbers by successive Thai governments, but since the blockade of the Strait of Hormuz the planning has gained new urgency, the vulnerability of maritime chokepoints is suddenly no longer a theoretical debate.

What Thailand Hopes For and Who Is Pushing Back

In the western province of Ranong, where one of the ports is to be built, the local economy hopes for a boost. Manus Sukvanitvichai, an adviser to the local chamber of commerce, tells Reuters of up to 200,000 new jobs, plus growing hotels, restaurants and service businesses as people and investors come to the province.

On the ground, enthusiasm is limited. Fisherman Chaiyaporn Arunrasamee, who lives on an island surrounded by mangrove forests in the south, says he absolutely does not want the project to happen, as it threatens his village's livelihood. In the Phato district, residents fear the destruction of forests and farmland. And coffee trader Chalermchart Seekhiao calculates that the project would need around 25 years just to recoup its costs, while his village's durian harvest generates the equivalent of 260 million euros a year without building anything.

China's Malacca Dilemma

The most strategically interested observer sits in Beijing. Around 80 percent of China's crude oil imports currently pass through the Strait of Malacca, and for decades Chinese politicians have spoken of the Malacca dilemma, in the event of a blockade, for instance by the United States, China would quickly come under pressure. A land route through neutral Thailand would reduce that risk. First high level meetings between Chinese and Thai officials have already taken place, but no investment commitments are known so far.

The Economic Doubts

That restraint has reasons. Experts such as Darshana Baruah of the International Institute for Strategic Studies in Singapore doubt the land bridge would pay off for shipping companies. Freight would have to be transloaded twice in Thailand, once from ship to rail or truck and once back, while Singapore is currently building a fully automated mega port that relies on artificial intelligence. Land alternatives are useful in times of crisis, Baruah says, but in peacetime under normal circumstances transport will always run by sea.

In about a month, a special commission of the Thai government is due to present its comprehensive study, and the economic analysis will likely be decisive. The real question behind it reaches beyond Thailand. After Hormuz and Malacca, it is becoming visible how much the global economy is willing to pay to become less dependent on individual chokepoints, and whether that willingness survives once the crisis of the day has passed.