The closure of the Strait of Hormuz and the first- and second-order effects of supply chain disruptions – not just to oil, gas and fertiliser, but to the industries reliant on those products – means that, rarely has so much attention been paid to shipping lanes, maritime law, and the need for alternative routes, as Hadley Gamble wrote in these pages last week.
There is another famous strait, possibly even more well-known than that of Hormuz, and one through which a massive 25 to 30 per cent of global maritime trade is shipped: the Strait of Malacca. There is little to no fear that it could end up being blockaded, unless a catastrophic and unlikely regional war broke out, but what has been going on in the Gulf has been closely noted.
Last month, following the Iranian example, Indonesia’s Finance Minister Purbaya Yudhi Sadewa briefly floated the idea of a charge being levied on vessels transiting the sea lane. The very next day his colleague, Foreign Minister Sugiono, squashed the idea, saying that his country supported freedom of navigation and the UN Convention on the Law of the Sea. Malaysia and Singapore, the other two littoral states, are also firmly opposed to tolls, so this is not a discussion that is likely to go any further.
But in terms of alternative routes, not only are plans well advanced, but one project that would entirely bypass the most congested parts of the Strait of Malacca is due to become operational early next year.
The most ambitious proposal is to build a “land bridge” in Thailand, connecting the Gulf of Thailand – and thus the South China Sea and the Pacific – in the east, with the Andaman Sea – and the Indian Ocean – in the west. This would cross the Isthmus of Kra, the thinnest point of the peninsula that stretches from southern Thailand and Myanmar, down through Malaysia to Singapore. Over 90km, a four-lane highway, double-track railway and pipelines would link two deep-water ports. This would shave 1,200 km off the journey and is estimated to save four days from tanker passage times. The Thai government believes this could add 1.5 per cent to annual GDP growth and create nearly 300,000 jobs.
The land bridge project could cost around $30 billion, and the government is just about to start a 90-day feasibility study, but it is serious about the idea. “The Middle East conflict has demonstrated the advantage of controlling a transport route,” said Deputy Prime Minister Phiphat Ratchakitprakarn last month. “Thailand will have a great advantage by operating the link between the Pacific Ocean and the Indian Ocean.”
The land bridge replaces earlier proposals to dig a canal across the Isthmus of Kra, which have a long history: the idea was first raised by Narai the Great, king of the Thai predecessor state of Ayutthaya, in 1677. It has been brought up again many times since, including in the present century, although costs, engineering difficulties, and the fear of being seen to literally divide the country in two led to it repeatedly being shelved. Given the long-running insurgency in Thailand’s Malay-Muslim south, leaving a potentially separatist section of the state on the other side of a physical boundary raises genuine fears. The land bridge avoids that.
In neighbouring Malaysia, the East Coast Rail Link (ECRL), which links the northeast and the east-coast port of Kuantan with the west coast’s Port Klang, is due to be open for business next January. The shipping time saved will be less than the Thai land bridge – one or a maximum of two days, perhaps – but it is shortly to become a reality, and the gains and efficiency of the super-fast logistics necessary to make the project viable will be put to the test.
The ECRL is as much about connecting peninsular Malaysia’s rural northeast with the industrial south and west as it is about providing an alternative route to the Strait of Malacca. But one thing it has in common with the land bridge is that China is seen to be supportive of both developments – indeed, the ECRL has been described by Chinese officials as a “landmark cooperation project” under Beijing’s Belt and Road Initiative.
Certainly, both offer a solution to the “Malacca dilemma”, as then Chinese President Hu Jintao described his country’s reliance on the strait in 2003. Some profess to be worried about this, but the only people who could feel disturbed are those who actively wish to contain and block China. Southeast Asian states want to be beholden to no one, but they don’t share the increasingly absurd knee-jerk reaction of some in the west that if China is in favour of an infrastructure project there must be something suspicious about it.
Nor does either the land bridge or the ECRL spell the end of Singapore as a port. The city-state’s Pasir Panjang Terminals and Tuas Port are so advanced and have shown themselves so capable of handling multiple times the amount of shipping and freight as nearby ports, that they will continue to be the destination of choice for many. In any case, traffic in the Malacca Strait is rising – it was up nearly 10 per cent year on year in 2025: extra capacity will be needed. The ECRL may be opening at just the right time, while the first phase of the Thai land bridge – if it is approved – is not anticipated to be operational until 2030.
Diversification can be a benefit to all. And if the Malacca Strait ever were to be closed, it wouldn’t just be China that would be grateful that alternatives had been created to keep trade flowing.
