KUALA LUMPUR (Jan 24): The ‘Malacca Dilemma’, which refers to China’s over-reliance on the Straits of Malacca for trade, will benefit Malaysia, according to MIDF Research.

“The genesis of Malaysia’s railway and port infrastructure largesse has its roots in China’s export and import pattern to feed on its population as well as avoiding chokepoints,” the research house said in a special report today.

The report highlighted that the Straits acts as China’s main artery for shipping traffic, with the cost of rerouting shipping traffic in the Straits if it is closed for a week would be US$64.5 million.

“China’s economic security is closely tied to the South China Sea as over 60% of its trade in value travels by sea,” the research house said.

As such, it said the country’s interests lie in increasing logistic efficiency and ensuring a stable supply of materials from Africa, the Middle East, and South Asia.

Comparatively, MIDF Research pointed out that the cost of rerouting through other sea lines of communication such as Lombok or Sunda Straits for one week is US$119.0 million and US$64.5 million respectively – with the worst cases going through Australia for a hefty US$650.9 million weekly cost.

The 890km long Straits of Malacca account for nearly one-third of global trade traffic, according to the United Nations Conference on Trade and Development.

However, its narrowest point of 2.8km makes it vulnerable to being a choke point, MIDF Research highlighted.