The Republic of Singapore Navy has issued warnings about the
threat of a terrorist incident in the Malacca Straits.
There are several challenges to an international counter-terror
effort: the Malaysian Navy guards a nation of 25 million people;
4700 kilometers of coast and 275 BILLION dollars of trade. The
Indonesian Navy must deal with 17,500 islands (about one-third
are inhabited); a population of 240 million and an incredible
55,000 kilometers of coastline as well as 200 BILLION dollars in
trade. About 40% of the world's trade transits the Malacca Straits
on more than 50,000 vessels annually.
Piracy has been declining: 79 in 2005 to 50 in 2006 to 2 in 2008
according to the statistics from the International Maritime
Bureau. We note that IMB may understate the problem if ships
fail to report pirate attacks. Still, an improvement.
A draconian method for stopping piracy is to issue the equivalent
of airplane friend or foe tokens to ships. Anyone sailing without a
token is subject to boarding if local seaborne infantry are
available and immediate destruction if they are not.  This tends
to eliminate the problem of pirates taking hostages.
That leaves three tactical opportunities for terrorists: blow up
something volatile (LNG tanker, VLCC ...)  in port with mines or
underwater sabotage; assault a high value target in the Straits
with land-based artillery or rockets; and commandeer an
aircraft or other vessel. Historically, predators at sea are dealt
with violently on the water and ultimately on land. We do not
expect terrorists targeting the Malacca Straits will be different.