How countries exercising economic sovereignty impacts Singapore, the ‘little red dot’ 

Over the past few months, the narcissistic and tyrannical US President Donald Trump has captured everyone’s attention, especially after the tariff war bomb he dropped on “Liberation Day”. It is baffling to see him boasting that many countries have been making phone calls and “kissing my ass”. However, Trump’s unique brand of absurd logic and his disregard for facts is rather entertaining, adding colour to the news.

Recently, I had dinner with a distinguished mathematics professor. This usually stoic individual surprisingly commented that he would feel restless if a day goes by without reading any news about Trump. The remark caused everyone to burst into laughter — even this serious scholar has caught the “Trump addiction”.

Of course, not all news is negative. For instance, the impressive victory of Singapore Prime Minister Lawrence Wong’s fourth-generation leadership team in the recent elections and the smooth transition is the talk of the town, and was naturally discussed at our dinner.

Now that our new government has taken office from a position of strength and armed with great ambition, while Trump — who is prone to backing down at the last moment — has temporarily halted the tariff war declared against the world, it is time to focus on a few matters that have a direct impact on Singapore.

Let us first talk about a recent issue. According to a report in The Jakarta Post quoted by Lianhe Zaobao, Indonesia’s Minister of Energy and Mineral Resources Bahlil Lahadalia abruptly announced on 8 May that in order to strengthen national sovereignty in geopolitics and geostrategy, Indonesia would stop importing fuel from Singapore for the next six months, and instead source up to 60% of its imported fuel from the US. This is part of Indonesia’s broad response to Washington in relation to the tariff issues, which also involves a plan to purchase US$10 billion worth of energy from the US.

This is clearly a hasty agreement made by a helpless Jakarta following Trump’s announcement of a 32% tariff on Indonesia. Indonesia’s capitulation under pressure is understandable (even as the additional infrastructure and transportation costs of importing fuel from the US might be higher), but at the same time Bahlil also made some unpleasant remarks about Singapore, which is puzzling. 

He commented, “[Singapore] does not have oil, but we buy from there. 34% [of Singapore’s fuel exports] is [sold to] Indonesia. The price is the same as in the Middle East. This is a shameful strategy.” 

He added that continuing to import fuel from Singapore would only demonstrate Indonesia’s low intelligence and poor decision-making capability. He lambasted, “It’s like our brains don’t know, did we not finish school? I’m confused too.”

Bahlil’s words revealed a deep sense of frustration and disappointment at his country’s intelligence and decision-making capability, as well as its inability to improve its oil refining capacity, leading to a situation where a major oil-producing nation has to import petroleum products from a small neighbouring country devoid of oil resources. 

His frustration at his country’s inability to do better is understandable — but why the need to drag Singapore down and blame it for the “shameful strategy” of selling fuel to Indonesia at a similar price as the Middle East? (The South China Morning Post’s headline on the same story was the starkly worded “Indonesia Slams Singapore’s ‘Shameful’ Fuel Prices, Plans Pivot to US imports”.)

This is truly bewildering. Singapore’s fuel prices are set by businesses, not the government. They must follow international market rules and adhere to the principle of fair and uniform pricing. What grounds does Bahlil have to label the practice “shameful”? Does Indonesia believe that as the “big brother” of the region, it deserves preferential prices?

Several decades of history showed that Indonesia indeed harboured a “big brother” mentality towards our little red dot, expecting Singapore to actively cooperate or accommodate its interests. 

The most blatant example was during the 1997-1998 Asian financial crisis, when Indonesia hoped to receive substantial support from Singapore, only for the country to decline due to its adherence to market forces and fiscal discipline, along with its limited capacity. This left Indonesia extremely dissatisfied. Other examples include transboundary haze and airspace disputes.

Another reason could be that Singapore is being used as a punching bag.

Singapore is an easy target for its neighbouring countries, and is often used as a scapegoat to divert domestic attention. This is something Singapore must always be mindful of.

In any case, this incident clearly illustrated the essence of international relations. Under the pressure of US tariffs, Indonesia capitulated and thoughtlessly took it out on a small country like Singapore. Fortunately, the blow was not severe enough to harm Singapore’s status as an important international refining centre and an oil and gas trade hub — but it did teach us a valuable lesson.

This is just one instance of how the tariff war has indirectly affected Singapore. Beyond oil, there are numerous other goods and services, and as a nation whose trade value is three times its GDP, the ripple effects of the tariff war would undoubtedly have a significant impact on us. 

I cannot help but feel troubled at the thought of how, during the Singapore election campaign, some opposition parties accused the government of “fear-mongering” the perils of the tariff war and its harmful impact on our country.

Besides the direct and indirect impacts of the tariff war, this matter also reminds us to be keenly aware of our surroundings, and recognise that harmonious neighbourly relations are not a given — especially with a large and complex country like Indonesia that is entangled in various interests.

Another issue that could affect Singapore as a result of neighbouring countries exercising “economic sovereignty” is the Kra land bridge project in southern Thailand.

This project, which was formally put on the agenda two years ago, has gained new geopolitical significance because of India’s recent expression of interest, and is worth paying attention to.

We must first talk about the Kra Canal. As early as the 17th century, there were talks to dig a canal through the Kra Isthmus in southern Thailand to connect the Andaman Sea with the Gulf of Thailand, thus shortening the journey from the Indian Ocean to the Pacific Ocean. However, due to technical and financial reasons, coupled with economic benefits that were much lower than those of the Suez Canal and the Panama Canal — both of which cut tens of thousands of kilometres of travel — it did not attract much interest and hence remained a dream for centuries.

Fast forward to 2005, then Thai Prime Minister Thaksin Shinawatra proposed replacing the canal with a land bridge, by building deep-water ports at Chumphon on southern Thailand’s eastern coast and Ranong on the western coast, and constructing a 90-kilometre land transport corridor comprising highways, railways and pipelines to connect the two ports. This would partially substitute the shipping function of the Malacca Strait, and enhance Thailand’s strategic position in regional logistics.

While a land bridge is not as grand as a canal and is less economically significant and impactful, it is politically less sensitive (at least it would not symbolically sever the three southern provinces threatened by Muslim separatism), and more affordable and easier to build, making it relatively feasible. However, Thaksin’s ouster in a military coup the following year effectively shelved the proposal.

With the return of an elected government in 2023, the new Thai prime minister, Srettha Thavisin, enthusiastically revived the project. Although he was also removed from office in August 2024 by the Constitutional Court for breaching ethical rules, the succeeding prime minister, Paetongtarn Shinawatra (Thaksin’s daughter), remains committed to advancing the land bridge initiative.

The entire project is estimated to cost 1 trillion baht (US$30.6 billion) and is projected to save two to four days of shipping time and 15% in costs upon completion. However, some experts argue that the process of unloading cargo at one end of the land bridge, transporting it overland, and reloading it at the other end may not offer significant time savings compared with direct passage through the Strait of Malacca, and could even increase transportation costs.

The Thai government has thus proposed the Southern Economic Corridor Act to establish a legal framework for the project, given its scale. The parliament is expected to pass the bill within the year, allowing tendering to commence immediately after legislation. The project will be implemented in three phases: the first phase will begin in 2026 and be operational by 2030; the second phase will run from 2031 to the end of 2034; and the third phase will run from 2035 to the end of 2036.

This geopolitically significant project has naturally attracted international interest, including from China, Japan, India and Middle Eastern countries. Currently, about 80% of China’s oil imports pass through the Strait of Malacca, and the Kra land bridge would partially address the longstanding “Malacca Dilemma”.

In an April article published on ThinkChina titled “Bypassing Malacca? China, India and the UAE Vie for Thailand’s Land Bridge”, Charhar Institute research fellow Hao Nan opined, “For China, the land bridge provides a remedy to its ‘Malacca Dilemma’ — the fear that in a conflict scenario, the US or its allies could choke China’s energy lifeline at the Malacca Strait. Beijing’s Belt and Road Initiative (BRI) already supports alternate corridors like Myanmar’s Kyaukpyu port and China-Pakistan Economic Corridor, but a functioning Thai land bridge connected to China’s southwestern provinces via Laos would be a game changer. In May 2024, Chinese delegations visited Ranong and Chumphon, signalling clear interest.”

Meanwhile, Indian Prime Minister Narendra Modi also expressed interest in the land bridge project during his official visit to Thailand in April. According to a Bloomberg report, following a meeting with Modi in Bangkok on 3 April (almost coinciding with Trump’s “Liberation Day”), Paetongtarn expressed that the two countries agreed to play vital roles in promoting connectivity between South Asia and Southeast Asia, with Thailand specifically highlighting its flagship land bridge project.

Hao also pointed out in the aforementioned article: “India, on the other hand, sees the land bridge as a potential threat to its strategic grip over the Indian Ocean. With increasing Chinese presence in ports across South Asia — from Gwadar in Pakistan to Hambantota in Sri Lanka — the fear of encirclement is real. New Delhi’s recent moves to engage Thailand and explore joint participation in the land bridge project signal a desire to dilute Chinese dominance and assert its own vision for Indo-Pacific connectivity​.”

For Thailand, India’s involvement would prevent over-reliance on China. However, to avoid the land bridge project from becoming a direct arena for China-India competition, Thailand is also actively courting the UAE, a Middle Eastern country with both financial resources and port management expertise, to provide a buffer. This demonstrates the diplomatic acumen of a nation that has never been colonised or occupied.

Some worry that a Thai canal or land bridge would threaten Singapore’s port status. However, Singapore does not rely solely on its advantageous geographical location to attract major global shipping and logistics companies, but mainly on its overall competitive advantages to create a scale effect and maintain its strong position as a hub port. 

These advantages include outstanding management capabilities, cost-effective and high-value services, comprehensive solutions for businesses, end-to-end supply chains, minimal turnaround times, efficient and reliable operations, a stable and secure environment, and excellent connectivity, all of which are not easily replaceable.

Whether it is Indonesia choosing not to purchase fuel from Singapore, or Thailand’s potential “cutting in” of trade routes, these fall under their respective economic sovereignty and are beyond reproach. While these actions are unlikely to undermine Singapore’s position as an international refining hub or maritime centre, their long-term geoeconomic and political implications warrant our attention.

Speaking of the Kra Isthmus, one has to bring up former Malaysian Prime Minister Mahathir Mohamad, a politician past his prime yet persistently seeking relevance. On 29 April, he again took to Facebook to assert that the Malay race originally owned land from the Kra Isthmus to the Riau Islands, but that the breadth of the Malay peninsula has now deteriorated, with Thailand causing the Malays to lose Pattani, Yala, Setoi and Singgora; Indonesia causing the loss of the Riau Islands; and Chinese immigrants causing the loss of Singapore.

This is not the first time Mahathir has brought up this “historical mistake”. In 2022, after losing his seat as a two-time prime minister and witnessing the complete defeat of the Homeland Fighters’ Party he founded in the Johor state election, he made similar remarks in a fit of anger (as detailed in my article published on Lianhe Zaobao in July 2022), and even drew criticism from the Indonesian foreign ministry.

Although his repeated remarks did not provoke much reaction this time, such inciteful narratives thrive in this region where the green wave is surging. It might even become the basis for the actions of ambitious individuals when the time is right. Three years ago, when Russia invaded Ukraine, did they not argue that the latter’s independence was due to “historical errors and crazy decisions”?

This is no longer just about economic sovereignty but also concerns our political sovereignty and must not be taken lightly. 

We must pay attention to the global situation and changes happening around us.

This article was first published in Lianhe Zaobao as “天下事 周遭事 事事关心”.

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