Iran\u2019s decision to charge fees for ships transiting the Strait of Hormuz\u2014and U.S. President Donald Trump\u2019s tentative endorsement of that idea\u2014are reverberating in a different waterway around 4,000 miles away.<\/p>\n
On April 22, Indonesia\u2019s finance minister, Purbaya Yudhi Sadewa, suggested the Southeast Asian country might start imposing levies on ships transiting the Strait of Malacca, which connects the Indian Ocean with the South China Sea. The strait is one of the world\u2019s busiest shipping lanes, carrying around 30% of global trade<\/a>. Two hundred ships travel through Malacca each day, double the number that pass through Hormuz.<\/p>\n \u201cIran is now planning to charge ships passing through the Strait of Hormuz,\u201d Purbaya said during a symposium<\/a> in Jakarta. \u201cIf we split [income from levies] three ways\u2014Indonesia, Malaysia, and Singapore\u2014it could be quite substantial.\u201d He added that Indonesia stood to benefit most, given that its stretch is \u201cthe largest and longest.\u201d<\/p>\n Purbaya quickly walked back his suggestion, acknowledging that a decision would require buy-in from both Singapore and Malaysia, which also sit alongside the strait.<\/p>\n Yet Purbaya\u2019s idea, even if just a hastily raised trial balloon, shows just how quickly the conversation around freedom of navigation has changed in the two months since the outbreak of war in Iran.<\/p>\n Iran is now openly charging tolls for ships to traverse the Strait of Hormuz (often paid in Chinese yuan<\/a> or cryptocurrencies<\/a>), and is planning to set up a regime to formalize this control even after the war ends. U.S. President Donald Trump has at times signaled his comfort with Iran charging tolls for ships to pass through the strait, and even suggested that the U.S. and Iran could jointly manage the waterway as part of a settlement to end the war.<\/p>\n Indonesia, Malaysia, and Singapore<\/p>\n The Indonesian archipelago straddles many of the waterways governing access between the Indian Ocean and the rest of East Asia, which hasn\u2019t escaped the notice of Indonesian officials. President Prabowo Subianto has publicly pointed out<\/a> that 70% of Asia\u2019s trade travels through the Indonesian straits of Lombok, Sunda, and Malacca.<\/p>\n Indonesia\u2019s neighbors have responded differently to the idea of tolling the Strait of Malacca.<\/p>\n \u201cThe right of transit passage is guaranteed for everyone,\u201d Singapore\u2019s Minister of Foreign Affairs Vivian Balakrishnan said yesterday<\/a> during a CNBC event. \u201cWe will not participate in any attempts to close or interdict or to impose tolls in our neighborhood.\u201d<\/p>\n Singapore had previously stated that it wouldn\u2019t negotiate with Iran in order to sail its ships through the Strait of Hormuz, calling Tehran\u2019s closure of the waterway a violation of international law. Ships, under international law, are freely allowed to traverse straits like Hormuz, which don\u2019t fall within one country\u2019s territorial waters.<\/p>\n Several other countries, like India, Thailand, and Pakistan, secured safe transit<\/a> through Hormuz after negotiations with Iran.<\/p>\n \u201cI can\u2019t engage in negotiations for safe passage of ships or negotiate on toll rates,\u201d Balakrishnan explained during a parliamentary debate on April 7<\/a>.<\/p>\n Singapore\u2019s economy relies on free navigation. The city is the world\u2019s largest transshipment and bunkering hub, and over 130,000 vessels call at its ports every year. Any limits to transit through the Strait of Malacca are thus a significant threat to its economy.<\/p>\n Neighboring Malaysia has also expressed caution about plans to impose levies on the strait, though didn\u2019t reject the idea outright.<\/p>\n \u201cWhatever is to be done in the Strait of Malacca must involve the cooperation of all four countries,\u201d said Malaysia Foreign Minister Mohamad Hasan<\/a> on Wednesday, referring to Malaysia, Indonesia, Singapore, and Thailand. \u201cIt cannot be done unilaterally.\u201d<\/p>\n Yet some in Malaysia have bristled at Singapore\u2019s statements over the Iran conflict. When Balakrishnan in early April said he wouldn\u2019t negotiate with Tehran to secure access through Hormuz, Nurul Izzah Anwar, daughter of Malaysia Prime Minister Anwar Ibrahim, grumbled <\/a>that \u201cMalaysia will not be lectured on the merits of engagement.\u201d<\/p>\n Thailand sees an opportunity<\/p>\n Thailand, the only other country to sit alongside the Strait of Malacca, has its own plans. On April 20, Deputy Prime Minister Phiphat Ratchakitprakarn said the country will fast-track a plan<\/a> to build a land bridge between the Strait of Malacca and the Gulf of Thailand. The bridge would link seaports on either side of the country through road and rail networks, potentially cutting transit time by four days and shipping costs by 15%.<\/p>\n The land bridge\u2014which is expected to cost 1 trillion Thai baht ($31 billion)\u2014is a less radical version of a plan floated by some Thai administrations to build a canal<\/a> across the Kra Isthmus, the narrowest part of the Malay Peninsula. Several governments have launched feasibility studies, only to balk at the massive cost involved.<\/p>\n Still, with the fragility of maritime trade now in the spotlight, Bangkok may be looking for an opportunity.<\/p>\n \u201cThe Middle East conflict has demonstrated the advantage of controlling a transport route,\u201d Phiphat said. \u201cThailand will have a great advantage by operating the link between the Pacific Ocean and the Indian Ocean.\u201d<\/p>\n