Iran Conflict Sparks Southeast Asian Debate on Charging Ships for Malacca Strait Transit

(SeaPRwire) –   Developments in the Strait of Hormuz—specifically Iran’s move to levy transit fees, which has received a degree of support from U.S. President Donald Trump—are creating ripples in a vital maritime corridor located 4,000 miles away.

On April 22, Indonesian Finance Minister Purbaya Yudhi Sadewa proposed that his nation might implement charges for vessels navigating the Strait of Malacca, a critical artery linking the Indian Ocean to the South China Sea. As one of the world’s most active shipping lanes, the strait facilitates roughly 30% of global trade, with 200 ships passing through daily—twice the volume seen in the Strait of Hormuz.

“Iran is currently planning to collect fees from ships using the Strait of Hormuz,” Purbaya remarked at a Jakarta symposium. “If we divide the revenue among Indonesia, Malaysia, and Singapore, the figures could be quite significant.” He noted that Indonesia would likely be the primary beneficiary, as it controls the longest and largest portion of the waterway.

Purbaya subsequently tempered his remarks, acknowledging that any such policy would necessitate the agreement of Singapore and Malaysia, which also border the strait.

Nevertheless, even as a preliminary suggestion, Purbaya’s proposal highlights how rapidly the discourse surrounding freedom of navigation has shifted in the two months since the conflict in Iran began.

Iran is currently collecting tolls from vessels in the Strait of Hormuz—often accepting payment in Chinese yuan or cryptocurrency—and intends to establish a formal regulatory framework for this control post-conflict. President Trump has occasionally expressed support for Iran’s tolling policy, even suggesting that the U.S. and Iran could jointly oversee the waterway as part of a peace agreement.

Indonesia, Malaysia, and Singapore

The Indonesian archipelago’s position across key waterways connecting the Indian Ocean to East Asia has not gone unnoticed by its leadership. President Prabowo Subianto has highlighted that 70% of Asian trade transits through the Indonesian straits of Lombok, Sunda, and Malacca.

Indonesia’s neighbors have reacted to the tolling proposal with varying perspectives.

“The right of transit passage is guaranteed for everyone,” Singaporean Foreign Minister Vivian Balakrishnan stated during a CNBC event. “We will not participate in any attempts to close or interdict or to impose tolls in our neighborhood.”

Singapore has previously maintained that it would not negotiate with Tehran for passage, characterizing the closure of the Strait of Hormuz as a breach of international law. Under international maritime law, vessels are permitted free transit through straits like Hormuz that do not fall within a single nation’s territorial waters.

Conversely, nations including India, Thailand, and Pakistan have negotiated with Iran to ensure safe passage for their vessels.

“I cannot engage in negotiations for safe passage of ships or negotiate on toll rates,” Balakrishnan clarified during an April 7 parliamentary session.

Singapore’s economy is heavily dependent on open navigation. As the world’s premier trans-shipment and bunkering hub, the city hosts over 130,000 vessel calls annually, making any restrictions in the Strait of Malacca a major economic risk.

Malaysia has also voiced caution regarding the tolling proposal, though it has not dismissed the concept entirely.

“Any action taken in the Strait of Malacca must involve the cooperation of all four nations,” Malaysian Foreign Minister Mohamad Hasan stated on Wednesday, referring to Malaysia, Indonesia, Singapore, and Thailand. “It cannot be done unilaterally.”

However, some in Malaysia have taken issue with Singapore’s stance on the Iran situation. When Balakrishnan stated in early April that he would not negotiate with Tehran for access, Nurul Izzah Anwar, daughter of Prime Minister Anwar Ibrahim, remarked that “Malaysia will not be lectured on the merits of engagement.”

Thailand sees an opportunity

Thailand, the only other nation bordering the Strait of Malacca, is pursuing its own strategy. On April 20, Deputy Prime Minister Phiphat Ratchakitprakarn announced that the country would accelerate plans for a land bridge connecting the Strait of Malacca to the Gulf of Thailand. By linking seaports via road and rail, the project aims to reduce transit times by four days and shipping costs by 15%.

The land bridge, estimated to cost 1 trillion Thai baht ($31 billion), is a more moderate alternative to previous proposals for a canal across the Kra Isthmus. While past governments have conducted feasibility studies for a canal, they have consistently been deterred by the prohibitive costs.

Nevertheless, with maritime trade security now a global priority, Bangkok appears to be positioning itself for a strategic advantage.

“The Middle East conflict has demonstrated the advantage of controlling a transport route,” Phiphat said. “Thailand will have a great advantage by operating the link between the Pacific Ocean and the Indian Ocean.”