Statement by H.E. Mr. Srettha Thavisin, Prime Minister of the Kingdom of Thailand at Thailand Landbridge Roadshow
on 13 November 2023, The Ritz Carlton, San Francisco.
It is an honor for me to deliver the opening speech and participate in the "Thailand Landbridge Roadshow" today. I truly believe that this is a great opportunity to put Thailand as the hub for commerce and transportation, and also a great investment opportunity for the private sector as well.
Globally, there is a total annual trade value of 38 trillion dollars. Asia is the region with the highest export and import values, at approximately 40%, followed by Europe, at approximately 38%. For such trade by sea between Asia and Europe, container ships have to pass through the Malacca Strait.
The Malacca Strait is the main regional shipment route for countries bordering the Pacific and Indian Oceans. A quarter of the world's trade passes through the Malacca Strait, and more than 70% of oil exported from the Middle East is transported through the Malacca Strait also. This makes the Malacca Strait the most congested shipping bottleneck in the world.
There are approximately 90,000 vessels passing through the Malacca Strait each year, which increase every year by 2.35 % on average. This amount is now expected to exceed the capacity of the Malacca Strait by 2030. If the Malacca Strait becomes even more congested, serious economic consequences are likely.
The Malacca Strait is long and narrow, especially in the Philips Channel where it is only 2.8 kilometers wide so vessels have to queue and move slowly. There are more than 60 marine accidents each year involving a wide variety of vessels, from local vessels to large oil tankers, and all vessels are vulnerable to piracy and unfavorable weather conditions.
For these reasons, it is expected that shipping commodities through the Malacca Strait will face more problems in the future, including more travel time and cost. This is because vessels have to wait several days and thus incur significant opportunity cost and cost due to spoilage of goods during delay.
Owing to its strategic location at the heart of the Indochinese Peninsula and linkage between the Pacific Ocean and the Indian Ocean, Thailand has developed into a key strategic hub for production and transportation. The Landbridge will be an additional important route to support transportation and an important option for resolving the problems of the Malacca Strait. This will be a cheaper, faster, and safer route.
Comparing costs and time for transportation through the Landbridge versus the Malacca Strait, the potential target group for Landbridge was identified as feeder vessels.
Cargos from China and European countries transported by mainline vessel will be distributed by feeder vessels in this area save at least 4% on costs and 5 days in time.
Products travelling from Southeast Asia to Central Asia and the Middle East using feeder vessels crossing between the Indian Ocean and the Pacific Ocean can save at least 4% on costs and 3 days in time.
Products from Thailand, Laos, Cambodia, and South China to BIMSTEC and European countries can be distributed via feeder vessels at the Landbridge to various regions. These will save up to 35% in costs and 14 days in time.
In summary, transporting cargo via the Landbridge will reduce travel time by 4 days and reduce costs by 15% on average.
The total cargo volume at the western port will be 19.4 million TEUs and that eastern port will be 13.8 million TEUs, accounting for approximately 23% of Malacca’s port total cargo shipment.
This will cement Thailand as the hub for transportation and commerce. And as major connecting point between the east and the west, it will also hold significant strategic importance.
For crude oil, the amount produced from the Middle East for shipping is approximately 19 million barrels per day. 56% or approximately 10.7 million barrels per day passesthrough the Malacca Strait, with 44% going to the Asian Far East and the remaining 7% going to Southeast Asia. The Landbridge is particularly attractive for this 7% since it will help save at least 6% in cost.
In addition, investors can benefit from the Landbridge development in service sector via enchanted logistics, real estate, and banking, in the primary sector via enhanced agriculture output, and in the industrial sector via new S-curves and manufacturing.
The Landbridge will drive the overall national economy creating 280,000 jobs and Thai GDP is projected to grow by 5.5% per year or the equivalent of 670 billion dollars when the project is fully implemented.
I believe this presents an unprecedented opportunity to invest in this commercially and strategically important project that connects the Pacific Ocean and the Indian Ocean, connecting people in the East with the West.
I would like to invite you all to explore this opportunity to become partners in this historic project and benefit from it together.