Jakarta is reportedly exploring the possibility of levying a fee for ships passing through the Strait of Malacca – a strategically vital waterway encompassing the exclusive economic zones of Malaysia, Singapore, and Indonesia.
According to Jakarta Globe, Indonesian Finance Minister Purbaya Yudhi Sadewa said the proposal aligns with President Prabowo Subianto’s directive to position Indonesia as a central player in global trade rather than a peripheral economy.
“Indonesia is not a marginal country. We sit along a key global trade and energy route, yet ships passing through the Malacca Strait are not charged,” Purbaya was quoted as saying during a symposium in Jakarta today.
He reportedly pointed to Iran’s move as a possible model, where it has exercised de facto control over the Strait of Hormuz and imposed a fee on at least some vessels seeking passage through the strait.
He suggested that such a levy would need to be coordinated with neighbouring countries, and pointed out that Indonesia controls the largest share of the waterway.
However, he conceded that it would not be implemented soon, due to the complexity of securing agreement among the littoral states and the potential pushback from global shipping interests.
According to a 2023 article by the Institute for Supply Management, the Strait of Malacca is the shortest route for ships journeying between Europe, the Middle East and Africa on one side and East Asia on the other.
About one-third of global trade flows through these narrow waters, amounting to US$3.5 billion annually.
Parties to UNCLOS
It should be noted that Malaysia, Indonesia, and Singapore are parties to the UN Convention on the Law of the Sea (UNCLOS).
Article 37 of the convention stipulates that “all ships and aircraft enjoy the right of transit passage that shall not be impeded” in straits used for international navigation, such as the Strait of Malacca.
This is provided that, as per Article 38, the passing ships and aircraft do so without delay or prejudicing the sovereignty of coastal states.
The importance of these clauses has come into focus as Iran, which has not ratified UNCLOS, seeks to exert control over passage through the Strait of Hormuz.
It has reportedly charged fees as high as US$2 million per transit for some ships. - Mkini
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