Tuesday August 1, 2006

Malaysia says war risk rating on Malacca Straits could hurt funding for security patrols

KUALA LUMPUR: Malaysia said Tuesday the declaration of Malacca Straits as a war-risk zone by British-based insurer Lloyd's could hurt the region's ability to fund increased patrols there just as it is beginning to reduce piracy in the busy waterway.

Attacks in the Malacca Straits, a 600-mile (965-kilometer) narrow waterway between Indonesia's Sumatra island and peninsular Malaysia on the other, have decreased drastically since coordinated sea patrols began in 2004, Malaysia's Transport Minister Datuk Seri Chan Kong Choy said.

Air patrols over the straits began the following year.

"The increased insurance premiums would inevitably impact on the littoral states' economies,'' said Chan at a conference hosted by Maritime Institute of Malaysia.

"This will in turn hurt their ability to continue funding the enhancement of the safety and security of navigation in the straits.''

In June 2005, the Joint War Committee of the British-based global shipping insurer Lloyd's Market Association heaped a war risk rating on the Strait of Malacca, adding to transport costs for vessels passing through the sealane - one of the world's busiest.

Besides conflict areas, the "war risk'' rating can be attached to areas considered at threat from maritime piracy or terrorism.

Companies and government officials in Malaysia, Singapore and Indonesia, the three states bordering the straits have protested the war risk rating.

"We are confused,'' said Chan at the conference, attended by international maritime security and environmental officials.

"At the very least, it should provide clearly what are the requirements for the delisting instead of keeping the littoral states guessing,'' he added.

The International Maritime Bureau said last week that attacks in the waterway dropped to three in the first six months of 2006 from eight the previous year.

Attacks have been dropping since the patrols were launched, the piracy watchdog said.

More than 60,000 vessels ply the route yearly, Chan said. They transport half the world's oil and more than a third of its commerce.

The pinch will be felt when traffic - and costs of transportation - increases in the straits.

Governments will then be forced to bear a certain portion of the burden to keep costs from being passed to consumers, Malaysian officials said.

Malaysia projects traffic in the waterway will double by 2020.

"More ships and congestion could also mean more insecurity. Ships will have to navigate at slower speed,'' the minister said.

"This simply means security measures in the straits have to be beefed up in tandem with its increasing traffic volume,'' Chan said. - AP

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