Indonesia’s Finance Minister, Purbaya Yudhi Sadewa, recently "floated" the idea of charging ships transit fees through the Strait of Malacca as he was inspired by Iran's maneuverer off the Strait of Hormuz. Apparently, the Indonesia government wanted to try their hands on playing ruffians and imposing "protection money" to boost much needed treasury funds to cover their deficits. The Smart Aleck even tried to drag Singapore and Malaysia into the extortion ring by framing the idea as something that would require coordination with Singapore and Malaysia, rather than a unilateral Indonesian move. Any one can tell that Purbaya is just trying to share the political fallout from US, China, EU etc and to avoid Indonesia appearing as the sole wicked nation that is causing another disruption to global trade.
1. Why the Proposal Caused Alarm
The Malacca Strait carries roughly one-fifth to one-quarter of global seaborne trade. Critical examples:
- China’s energy imports;
- Japan and South Korea’s shipping;
- Singapore’s port economy;-
- ASEAN trade
Any toll or restriction would likely:
(a) Raise shipping costs
(b) Increase insurance rates
(c) Trigger diplomatic backlash
(d) Potentially violate international maritime law
2. Regional Response
Our Singapore foreign minister, Vivian Balakrishna, jumped out immediately to oppose this stupid idea. Malaysia also showed little support and reinforced that the Strait is governed by UNCLOS transit passage rules, and not national tolling rights.
Additionally, Australia and major trading nations also quickly voiced their concern. Overall, Global markets viewed this suggestion as a destabilizing precedent.
3. Final Development
However, Jakarta subsequently quickly changed their mind after testing water and finding heavy criticism worldwide. They quickly clarified that Indonesia has no formal plan to impose tolls and remains committed to the United Nations Convention on the Law of the Sea (UNCLOS), which protects freedom of navigation in international straits. It is extremely disappointing that while the US-Iran war remains unresolved, Indonesia has tried to stir up more chaos in order to profit from it.
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