ASEAN is a quagmire of chokepoints – and in a region in which shortages abound. Unfortunately, nothing concrete has been done to head off the inevitable. Today’s risks were never unforeseeable. Alternatives to the Malacca Strait – a canal or a land bridge across Thailand’s Kra Isthmus – have been argued over for nearly three centuries, and the latest version has sat on a drawing board since 2023. It took an actual war closing an actual strait to move it, however marginally, toward execution.
On Wednesday, as ASEAN’s foreign ministers wrapped their meeting in Manila, US Secretary of State Marco Rubio accused Tehran of reneging on last month’s Hormuz arrangement, insisting Iran has no legal right to control traffic through the strait. It was a telling venue for the comment. ASEAN is no longer a distant observer of the US-Iran war. Its top diplomats this week openly voiced serious concern about the toll the conflict is taking on regional trade and energy security. For a bloc built on studied neutrality, that’s a notable shift.
The immediate picture is bad and getting worse. The war entered its fifth month this week. US Central Command completed a 12th consecutive night of strikes on Iranian military and maritime targets, and Tehran retaliated with drone strikes on US positions in Kuwait, Jordan and Bahrain. The Pentagon has confirmed 18 American service members killed since the war began on February 28. Defense Secretary Pete Hegseth told Congress this week it has already cost USD 37.5 billion, with another USD 67 billion requested. A brief ceasefire earlier this year restored partial transit through Hormuz, but Iran has kept firing on tankers it says failed to coordinate with its authorities. The strait remains, in practice, a war zone rather than a shipping lane.
This week brought an ominous second front. Yemen’s Houthis declared a naval blockade of Saudi Arabia through the Bab al-Mandeb strait, and tankers carrying Saudi crude have already begun reversing course in the Red Sea rather than risk the passage. That matters, because Bab al-Mandeb has been Riyadh’s relief valve throughout this crisis: roughly 4-5 million barrels a day have been rerouted overland to the Red Sea port of Yanbu specifically to bypass Hormuz. RBC Capital Markets has warned that closing both chokepoints at once would tip the region into what it calls a “no way out” scenario.
Southeast Asia is already paying for this. ASEAN needs roughly 5 million barrels a day but produces only about 2 million domestically, and that shortfall has translated into a USD 3.36 billion monthly premium above pre-crisis import costs, according to Observer Research Foundation research published this month. A separate IEA analysis this year frames Hormuz as having exposed structural vulnerabilities the region had been able to postpone addressing. The exposure is wildly uneven: the Philippines, which sources nearly all its crude from the Middle East, has seen pump prices jump 76%. Laos, dependent on Thai and Vietnamese resupply, now reviews fuel prices every two to three days and has cut its school week to three days.
Centuries of drawing-board diplomacy
The idea that Thailand’s peninsula could offer a way around Malacca is not new. The first version – a canal through the Kra Isthmus – was proposed in 1677 by King Narai of Ayutthaya. It has resurfaced every few decades since, only to be shelved each time over cost, engineering difficulty, and fear of physically dividing a country with a long-running separatist insurgency in its Muslim south.
The land bridge has long been the more politically palatable option. Instead of a waterway, it proposes two deep-water ports at Chumphon and Ranong, linked by a four-lane highway, a double-track railway and – in the latest version – a pipeline. Cargo would be unloaded, trucked or railed across the isthmus, then reloaded – a full handling cycle each way rather than one continuous voyage.
The numbers have always been debatable. The project is currently costed at roughly USD 31 billion (THB 1 trillion), with backers projecting it would shave about 1,200 km and four days off a Jeddah-to-Shanghai run compared with the full Malacca transit. Ian Storey of the ISEAS-Yusof Ishak Institute, the region’s most persistent skeptic, has noted the idea resurfaces almost every time Thailand’s economy needs a headline, and a Dubai World-commissioned study previously found the double-handling cost would run well above the all-sea route on most major lanes. None of that skepticism has gone away, and this week’s second chokepoint closure doesn’t change the project’s economics – only the political case for it.
Since Thai Prime Minister Srettha Thavisin revived the push in 2023, the project has moved through a 90-day feasibility review and ministerial roadshows to Washington, Beijing and Gulf capitals in search of anchor investors.
A review under Deputy PM Ekniti Nitithanprapas post April this year has been widened to model Middle East shipping disruption scenarios and now includes a new pipeline corridor. Transport Minister Phiphat Ratchakitprakarn has said the conflict has demonstrated the advantage of controlling a transport route. The committee’s final study is due to reach the prime minister in August, with the project on hold until then – and even that is optimistic: construction is targeted to begin around 2030, not finish by it. Nothing breaking ground in 2030 answers what’s happening in the Gulf right now.
What if this drags on?
Every projection above assumes Hormuz gets resolved on a reasonable timeline. But the past week casts doubt on that. Rubio said Wednesday that Iran is demanding the right to manage strait traffic – something Washington considers illegal under international law, and precisely the sticking point that broke the earlier ceasefire.
Eleven consecutive nights of strikes, a new blockade on a second strait, and a diplomatic position that has hardened rather than softened are not the signs of a war nearing its end. If this is the region’s own forever war – five months in, with no clear offramp – then the delays that made the land bridge look absurd a year ago now look like ordinary caution that simply ran out of clock.
Time is the one construction input that’s there or isn’t. Planning matters on its own terms: the region cannot keep debating alternatives at the same leisurely pace it has for three centuries, when the chokepoint that matters most can now shut for months, not days. What ASEAN needs is not a solution to Hormuz – nobody has one – but a credibly-costed, honestly-timelined plan to reduce its own exposure to the next one. That is a lower bar than fixing the Middle East, and the region has still not cleared it.
An energy-hungry future
As AAG has pointing out for some time now, Southeast Asia’s next decade of growth is being planned around an energy-hungry, AI-driven future that assumes power on demand. The region’s data centre market is on track to reach roughly USD 30 billion by 2030, but generation capacity is growing at less than half the rate demand requires.
Tellingly, the same crisis driving Thailand’s land bridge pitch is now pushing several Southeast Asian governments back toward nuclear power for the first time, specifically to insulate sovereign AI ambitions from imported-energy shocks. A region that needs indigenous AI capability cannot build it on energy supplied on someone else’s as-available basis – and Hormuz has just shown, in real time, what happens when the supply isn’t available at all.
Meanwhile, if this is the year that China’s “Malacca Dilemma” and Thailand’s Khra land bridge both shift from becoming abstract chokepoints to becoming get-it-done challenges, we should have at least have learned by now that a neglected chokehold is a choke on hold.