Blocking Thailand’s solution to China’s ‘Malacca Dilemma’

Last month, two vessels struggling to push through the overcrowded Strait of Malacca collided, reviving interest in alternative trading routes to connect the world’s largest commercial centers.

Thailand has seized the initiative by advancing construction of a “land bridge” devised to enable goods to flow from the Andaman to the Gulf coast through a system of railroads, motorways and port infrastructure.

American development agencies cannot pass up on the opportunity to invest in a project that promises to shake up global commerce and offer China a solution to the so-called “Malacca Dilemma” – the possibility that the US or Indian navies would blockade or substantially interdict China’s sea lines at the narrow strait in a conflict scenario.

Recognizing that the United States or India may blockade the Malacca Strait in the particular event of a confrontation over Taiwan, Beijing is embracing Thailand’s invitation to circumvent this key channel.

Accordingly, two Chinese Communist Party delegations inspected the bridge’s evolving building sites in May this year. Since Beijing already benefits from several railways and roads running south into Thailand, it will have more leverage in deciding the volume and composition of the cargo traversing Bangkok.

Washington is not out of the race, however. US ambassador to Thailand, Robert Godec, was briefed on the project last October during the early stages of its conception.

Prominent American companies ranging from Amazon to Oracle expressed interest shortly thereafter. US development agencies will need to bring private companies into the negotiation room before Chinese investors present more competitive offers.

Indeed, one of the reasons why Thailand has pitched the project so broadly likely boils down to its fear that Beijing may not be the most reliable investment partner.

Other Asian countries such as Sri Lanka and the Philippines had catastrophic experiences with China’s Belt and Road Initiative. Investors from Japan and the United Arab Emirates have joined China in undertaking preliminary surveys of the land bridge.

Since the first construction phase for the project only begins in 2026, there is still time for American development agencies to collaborate with their private sector counterparts to take the lead in this initiative.

Recent trends in the Malacca Strait underscore the indispensable role that commercial actors will play in helping to fund Bangkok’s land bridge.

Earlier this year, Kuala Linggi International Port, a private company, launched a US$3.2 billion project to construct a mega port in Malaysia to give the country greater sway in the storage, transfer, and exchange of oil as well as supervision of passing vessels in the strait. The funding for the project principally comes from none other than China.

Furthermore, Malaysia, concerned that it may be losing dominance in the region, proposed another port along the Malacca Strait in June. Meanwhile, Singapore has already begun drilling for the 2040 Tuas Port, which will be the world’s largest automated terminal upon completion.

To fund these ambitious investments, Malaysia and Singapore have been looking to outside funders from the private sector and to advanced technologies, including artificial intelligence.

Thus, the same trend can be expected to take place in Thailand and in other countries that attempt to circumvent established trading hubs. Rather than overstretching their capabilities, American companies should concentrate on the regions over which Washington has less influence.

Therefore, in the next few years, US development agencies should make Thailand more of a strategic priority than the Malacca Strait.

India’s Andaman and Nicobar Islands grant it significant bargaining power over the Strait of Malacca, and Washington’s increasingly close relationship with New Delhi can relieve some of the burden of constantly monitoring this channel.

Moreover, Singapore’s Temasek Holdings, a government-owned investment firm with stakes in port operators, construction companies, and technology services, recently shifted to a more wary China strategy as it steps up its activities in the Americas.

By no means should the United States completely close its eyes on the Malacca Strait, through which a stunning 40% of the world’s commerce travels.

Rather, Washington should recognize that its alliance system (especially with India), China’s slumping economy and the attractiveness of American investments leave it in a stable position with regard to the strait. This is not the case for the upcoming Thailand land bridge, where China conversely has the upper hand with its existing railway infrastructure.

American development agencies and private companies will thus need to get together, coordinate with their Western counterparts and consider making serious investments in Thailand’s land bridge.

Although analysts are skeptical that the project will shorten shipping times as Thai officials claim, this is not what Washington’s primary concern should be. Becoming the land bridge’s primary funder will instead enable Washington to block off a Chinese escape from the “Malacca Dilemma.”

Axel de Vernou is a senior at Yale University studying global affairs and history. He is a Research Assistant at the Yorktown Institute.