Malacca Strait : Who's to pay for smooth sailing?

By Vijay Sakhuja
The Strait of Malacca was the center of tension in 2004 between the waterway's littoral states and US Admiral Thomas Fargo, commander in chief of US Pacific Command, who announced that under the Regional Maritime Security Initiative, the US was planning to deploy marines and special forces in and around the strait to combat terrorism, proliferation, piracy, gun-running, narcotics-smuggling and human-trafficking.
The following year, Lloyd's Market Association's Joint War Committee (JWC) declared the Strait of Malacca, along with several maritime areas in West Asia and Africa, as highly prone to piracy, war, strikes, terrorism and related perils. It was feared that al-Qaeda could exploit piracy in the Strait of Malacca to attack ships, and the JWC declaration resulted in the imposition of higher insurance premiums for ships transiting through the strait.

At the time, Malaysia and Indonesia were averse to the US initiative, positing that such a deployment raised serious sovereignty concerns. The littoral countries - Malaysia, Singapore, Indonesia and Thailand - responded through the so-called "Eyes in the Sky" initiative, and the International Maritime Bureau acknowledged that the sea and air patrols undertaken by the littoral states had proved effective and incidents of piracy had reduced drastically.
Today, however, there is a shift in the way the strait is viewed by the international maritime community. Significantly, as a result of considerable improvement in security, issues of safety of navigation in the strait have taken priority and begun to dominate discussions.

In the coming years, traffic density is projected to increase from 94,000 ships in 2004 to 141,000 in 2020. Given this projected phenomenal increase in traffic, the quality of navigational aids in the strait will have to be enhanced for a smooth flow of traffic and to prevent accidents. Under Article 43 of the United Nations Convention on the Law of the Sea, it is the responsibility of the littoral states to maintain navigational aids in the strait, as it is to prevent pollution.
The littoral states have held several Track I and II interactions on improving the safety of navigation in the strait, including an August 2005 ministerial-level tripartite meeting of the Strait of Malacca littorals and International Maritime Organization (IMO)-sponsored discussions in Jakarta in 2005 and in Kuala Lumpur in 2006.
The recently concluded Symposium on the Enhancement of Safety of Navigation and the Environmental Protection of the Straits of Malacca called for sharing the cost of maintenance of navigational aids and preventing environmental hazards that could severely impact on the livelihood of coastal communities - including the fishing and tourism industries. The littoral states have vehemently argued that with a manifold increase in traffic, the costs of maintenance are expected to be as high as US$300 million in the next decade, and they should not bear this burden on their own.
Japan has long contributed financially to the upkeep and maintenance of the strait, and in recent years India, South Korea and the United States have also pledged assistance. China has offered to restore and repair navigational aids damaged during the 2004 Indian Ocean tsunami. Over and above these voluntary offers, the Nippon Foundation of Japan has suggested that all ships transiting the strait contribute a voluntary fee of 1 US cent per deadweight ton of cargo. This contribution could generate $40 million a year and would help support and upgrade navigational aids in the strait. Another approach suggested is for shipping companies to make contributions based on the practice of corporate social responsibility (CSR).
Footing the bill
The "all users pay" suggestion has been gathering momentum, but has received a mixed response from the shipping community. The International Chamber of Shipping, the Association of Independent Tanker Owners, and the Baltic and International Maritime Council have agreed to discuss the issue of voluntary contributions.
The Singapore Shipping Association, a group consisting of 300 members, has urged the Asian shipping industry to participate in discussions but has noted that ships visiting ports in the littoral states pay so-called "port and light" dues, and this money should be used for the maintenance and upkeep of the navigational aids in the strait.
It is of interest that most of the shipping traffic transiting the strait is classified as "long-haul through traffic" - that is, most vessels do not call at any ports of the littoral states and thus do not pay any port charges. It is also evident that there are several stakeholders involved in the safety of navigation in the strait: littoral countries, user states, shipping companies, insurance agents and, above all, the IMO, the top maritime body under the UN.
The littoral countries are desperate to seek support from other stakeholders, but user states and their companies are not forthcoming and argue that the responsibility should lie solely with the littorals. There are also fears that the "all users pay" demand could set a new precedent, and would naturally tempt other littoral countries that straddle narrow sea passages and choke points through which global shipping transits to impose similar charges.
These overriding issues notwithstanding, the ongoing discussions at both the Track I and II levels have raised the issue of safety of navigation in the Strait of Malacca as a top priority. The proposal by littoral states of burden-sharing will clearly not be smooth sailing, but could yet yield results. The IMO could become a central repository of an international fund with contributions made by flag states to extend disbursements to needy countries.

This approach is bound to be very slow, time-consuming and peppered with politics and bureaucratic hassle. For their part, the flag states could raise such funds from registered shipping companies whose vessels are engaged in international shipping. Since this burden is not likely to be very large, the shipping industry could pass it to suppliers and end users.
But all stakeholders must appreciate that a safe and secure environment in the Strait of Malacca cannot be achieved by the efforts of littoral countries alone, but instead requires mutual understanding and cooperation from all parties. For that, it is necessary to start by sharing common values on the benefits of burden-sharing, to be provided for and enjoyed by the entire maritime community.