22 May 2015

Investing in Thailand's Kra Canal project? Let's read first...

It comes to our attention that some of our readers attended an investment seminar recently about this Kra Canal project. What's that actually? Is it another investment scam?

An interesting project...
After a quick check, Kra Canal project was actually mooted by Thailand government long long time ago. It's an interesting idea to build a canal cutting through the narrowest neck of Thailand's southern part. With this canal, ships travelling between China Sea and Indian Ocean could save up to 72 hours sailing time or 1,200km by skipping Peninsula Malaysia and Singapore.

Due to this interesting idea, on and off, many conman like to use back the same old idea as a bait to fetch their victims into believing the viability of the project.

Obviously, the main beneficiary would be Thailand, which can enrich and transform the poorer southern provinces. Other than that, the two of the most populous countries and upcoming economic powerhouse China and India will definitely like the idea which can boost their trading while cutting cost and time between them. That's why it's highly speculated that China is the main investor of the project.

One of the world's busiest port situated in Singapore

The multi-billion ringgit RAPID project at Pengerang, Johor
However, below is the 5 reasons why the project MAY NOT able to take off:

  1. Thailand's southern part has been dominated by separatist insurgents over the years.
  2. Physiologically, the canal will separates Thailand into two parts, leaving people of the southern part being isolated politically and socially.
  3. Environmental issues which could dealt a blow to the area affected and people living there.
  4. Political pressure from Singapore and Malaysia governments which are the two most affected countries due to the project. Both countries already poured in billions of USD to build their own world class port facilities as logistic services contributed significant FDI especially Singapore.
  5. After all, the saving of 72 hours sailing time is NOT significant enough if compare to Panama Canal and Suez Canal.

After understanding the whole project and its challenges, let's come back to the investment scheme being presented during some seminar recently. Is it viable? Is it true?

True or not, we leave it back to your own judgement.
However, before we make decision, just ask ourselves these 2 questions as below:

  • The project needs 10 years time to complete. Would it be the investment horizon that you as an investor would like to consider?
  • Since the project is so interesting, why the project still need our small investment, instead of China?

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