Economic Benefits

The economic importance of the Strait of Malacca as one of the world's busiest shipping lanes has long been recognized.

As it is, the strait is already an important global economic conduit.

  • It is one of the busiest straits in the world, an important sea line of communication connecting Indian Ocean and Pacific Ocean
  • More than 50,000 merchant ships passing through each year (2 times of Suez Canal, 3 times of Panama Canal)
  • Carrying 1/3 of world trade and 1/2 of global oil supply transportation
  • Each day, 60% ships passing through the Strait of Malacca head for China - the transportation of 80% oil import and 50% imports/exports of China are via the strait

A link between Malaysia and Indonesia across the strait unlocks even greater potential.

The Indonesian island of Sumatra rich in natural resources will be connected to the Asian continent; opening up to new markets and gaining direct access to the giant Chinese economy.

Peninsular Malaysia with its increasingly service based industry will benefit from an increase in tourism, cross border trade, transport development, and educational investment.

As development takes place on both sides of the crossing, dangerous migration across the straits will disappear and both sides will benefit. Singapore, Thailand, China and the region as a whole will benefit from an increase in trade and commerce as the fertile Indonesian archipelago is connected to the Asian continent.

Population growth to drive demand for infrastructure

With a projected annual population growth rate of 1.5-2.5% between 2014 and 2050, the population in the Peninsula Malaysia and Sumatera is expected to reach 43.4 million and 92.5 million respectively. Greater connectivity is a catalyst and a reliable indicator for development. Increase in population will drive demand for infrastructure.

Tunnel to drive trade between Sumatra and Peninsular Malaysia

Total trades between Sumatera and the three neighbouring countries i.e. Thailand, Singapore, and Malaysia are expected to grow. With the Tunnel that offers better connectivity through rail, it is estimated that the trade volume would increase between Malaysia and Sumatera as the volumes would be siphoned from sea transportation from Singapore to rail transportation that provides quicker connectivity.