Thai Canal and Malacca straits: Complementing or competing stratagem for trade development in South East Asia

Abstract

About 94.8 per cent of Malaysian trade is depending on collective inter/intra-regional maritime networks. Straits of Malacca is an important strait and the only strait that connecting Indian Ocean and South China Sea which contributes to the nation’s economic growth significantly. This strait plays a key character to enable the trade connection between east and west of the globe. In average, about 63,000 different types of vessels passing through the strait per year and the number of the vessels keep accelerating every year. Conversely, the introduction of Thai Canal to detour the trade voyage between Indian Ocean to South China Sea is expecting to reduce about three to four days journey time between these two passages. Although the development of this canal is predicted to provide substantial benefits to shipping lines, the grey area or disadvantages change to implications of this canal need to be explored especially on Malaysian trade and infrastructure. Therefore, a qualitative approach has been employed to achieve the aim of this paper. Face-to-face interviews with experts from various agencies had been conducted to gather information on the impact of Thai Canal on Malaysian trade and infrastructure. The outcome of this paper indicates that the implication of Thai Canal reduces the productivity of Malaysian seaports, transformation of seaports in northern region as a major hub of the nation, enforcing equal regional development between west and east coast Malaysia and administering dramatic progress on multimodalism in each state. The outcome of this research is important as an input for the preparation of Malaysian seaport system due to any significant changes in the trade route. Although, the development of Thai Canal reduce the overdependence on Malacca Straits, the impact of this this new canal will affects the trade performance of this region. Hence, this paper is significant to understand the implications that might occur to this nation due to dynamism of maritime logistics.