Singapore says transit passage must stay "open" and "secure", but other mechanisms could be explored. File Image. Image Credit: Ship & Bunker

• Port Klang Authority chief K. Subramaniam proposes permanent fund financed by a levy on trade through the straits at Kuala Lumpur conference
• Singapore's MPA says transit passage must stay "open" and "secure", but other mechanisms could be explored
• Japan's Malacca Strait Council also cool on the idea; UNCLOS bars tolls on transit passage
• User states have put around $26 million into the voluntary Aids to Navigation Fund since 2007

Barely a week after Indonesia, Malaysia, and Singapore recommitted to keeping the Strait of Malacca free and open at their 17th Co-operation Forum, the head of Port Klang Authority has floated the idea of a common fund financed by a levy on trade through the strait to help maintain the key route.

K. Subramaniam, the authority's general manager and a fellow at the Maritime Institute of Malaysia, made the case at the institute's 11th International Conference on the Straits of Malacca in Kuala Lumpur on September 2-3, Lloyd's List reported, arguing that voluntary contributions from user states no longer cover the rising cost of maintaining the waterway.

"Why can't we have a common fund, similar to the liability funds [established under the International Maritime Organization conventions], such as the International Oil Pollution Compensation Funds?" he asked.

Under the UN Convention on the Law of the Sea, littoral states may not impede transit passage through international straits or charge for it, and the three states' Cooperative Mechanism instead relies on a voluntary Aids to Navigation Fund, into which the international maritime community has put around $26 million since 2007, according to the Maritime and Port Authority of Singapore (MPA).

The MPA's director of strategy and policy, Chua Yeng Hian, told the conference that Singapore's position was unequivocal, pointing to the joint statement the three states had issued at the forum.

"Categorically, from Singapore's position, we want to make sure that as a responsible member state, transit passage should be safe, should be open, should be secure," he said, while allowing that other mechanisms aligned with international rules were something the states could explore.

Japan's Malacca Strait Council, the largest user-side contributor to the fund, was cool on the idea, with executive director Haruhiko Kono saying concrete proposals would have to come before any discussion of common funds if user states were to be persuaded, and a researcher at Indonesia's Centre for Strategic and International Studies warned that a levy would push cargo towards alternative routes.

Some 4,364 vessels a month transited the straits in the first half of the year, according to Lloyd's List Intelligence, and Malaysia has long argued that Singapore, the world's largest bunkering and transhipment port, takes most of the commercial gain.

With Iran charging ships to transit the Strait of Hormuz, the MPA said in July, after US press reports compared the two straits, that contributions to the fund "should not be misconstrued as fees, tolls or payment imposed on transiting ships", and the World Shipping Council has called Iran's Hormuz charges a misuse of UNCLOS Article 43 that could spread to other waterways.