Indonesian Finance Minister Raises Possibility of Imposing Toll on Strait of Malacca |
ASEAN Beat | Economy | Southeast Asia
Indonesian Finance Minister Raises Possibility of Imposing Toll on Strait of Malacca
Whether or not it was serious, Purbaya Yudhi Sadewa’s suggestion is a sign of how far the norm of freedom of peaceful navigation has been eroded by the Iran war.
Cargo ships pass Singapore via the Strait of Malacca.
Indonesia’s finance minister yesterday raised the idea, albeit half-jokingly, of imposing a levy on ships passing through the Strait of Malacca, describing it as a possible way that the country could leverage its proximity to a key artery of global trade.
Speaking at an infrastructure symposium in Jakarta, Purbaya Yudhi Sadewa said that such an idea aligned with President Prabowo Subianto’s directive that Indonesia should play a more active role on the global economic stage, according to the Jakarta Globe.
“As the president has instructed, Indonesia is not a peripheral country,” the finance minister reportedly said. “We sit on a strategic global trade and energy route, yet ships pass through the Malacca Strait without being charged. I’m not sure whether that’s right or wrong.”
The Malacca Strait, which is bordered by peninsular Malaysia, Singapore, and Indonesia’s Sumatra island, is the shortest route between the Indian and Pacific oceans, and hence, one of the busiest trade routes in the world. Last year, the number of transits through the Strait, which is just 2.8 kilometers wide at its narrowest point, topped 100,000 for the first time.
Unsurprisingly, Purbaya said the idea to impose a levy on Malacca arose in the context of Iran’s plan to charge ships passing through the Strait of Hormuz, which has been largely closed since the beginning of the Iran war on February 28. Hormuz is a crucial conduit of the global energy trade, handling about a quarter of the world’s seaborne oil shipments – and the negative impacts of its closure have since ramified across the globe, particularly in Asia, which is heavily dependent on imports of Gulf oil.
The minister said that a similar approach in the Malacca Straits, one of the world’s busiest maritime chokepoints, could generate significant economic value, but would have to be implemented cooperatively among the three states bordering the Strait. “If we split it three ways – Indonesia, Malaysia, and Singapore – it could be quite substantial,” he said, noting that Indonesia’s stretch of the Strait was “the largest and the longest.”
According to the Jakarta Globe, Purbaya acknowledged that the proposal is unlikely to be implemented anytime soon, given the complexity of securing agreement with Singapore and Kuala Lumpur and potential resistance from the global shipping industry.
It is unclear just how serious Purbaya was being. One report suggested that he made the remarks in jest, and Indonesian ministers have a long track record of........