CABOTAGE POLICY KEEPING SABAHANS POOR

By: FMT STAFF

THE unresolved cabotage policy imposed on Sabah (and Sarawak) has been blamed for the high cost of living and soaring prices of good and services in the states.

“In Sabah, the cabotage policy is the reason for the difference between prices of goods and services here and in the peninsula.

“Whatever you buy for RM1 in Kuala Lumpur, you pay at least RM1.30 in Kota Kinabalu. The prices are higher in the rural areas,” said a transport company employee.

Imposed in 1980 by the federal government in a bid to integrate all Malaysian maritime laws under the Ministry of Transport, the policy, according to industry players, has ‘discriminated and disfranchised’ Sabah for the past 30 years.

They said the cabotage policy, aided by the existing leadership, could “jeopardise” the future of the state.

Speaking to FMT recently, the Federation of Sabah Manufacturers (FSM) said the federal government must abolish the cabotage policy if it hoped to achieve Prime Minister Najib Tun Razak’s aspiration to see “an exponential growth” in the national economy.

FSM president Wong Khen Thau said past promises made by the ruling administration to ‘liberalise’ the policy were never kept.

Under the existing policy, only Malaysian-flagged ships are allowed to transport locally-manufactured goods from the peninsula to Sabah.

“This means only a small segment, probably less than 200 containers a month, may be coming into the state. I do not think it is going to benefit us very much,” Wong said.

Still the fact that the federal government had made promises to “liberalise” the policy and has done little to keep them is a sore point with the industry here.

Unkept promises

According to Wong, the federal government had agreed in 2009 to liberalise the cabotage policy for containerised transshipment cargoes for sectors between Sepanggar, Bintulu, Kuching and Tanjung Pelepas and vice-versa.

The ‘selective liberalisation’ would have allowed foreign vessels to carry these cargoes between the sectors without the need for a domestic shipping licence.

But the full-scale implementation of the liberalisation never took place.

“The government promised to liberalise the cabotage policy in 2009 but it never took off. Then Transport Minister Ong Tee Kiat had promised to come back to FSM for more dialogues but it never materialised. The 30-year-old cabotage policy has adversely affected Sabah,” he said.

Wong said that so far the ‘only partial liberalisation’ was done on containerised transshipment cargoes arriving in Kota Kinabalu from foreign countries but via Port Klang.

“So far only partial liberalisation has been implemented. And this too only on foreign-registered container cargoes arriving in Kota Kinablau via Port Klang,” he added.

Wong said that a ‘full liberalisation’ of the cabotage policy would give importers and exporters in Sabah and Sarawak an opportunity to enjoy low fare due to competition in the shipping transport sector.

This in turn would translate into cheaper consumer goods, he said.

Currently, foreign vessels (foreign shipping companies) are not allowed to transport Malaysian goods produced in the peninsula to Sabah.

“Likewise, foreign vessels are not allowed to take goods produced in Sabah to Tanjung Pelepas or Port Klang because this so-called domestic trade was only for local/Malaysian-owned vessels.

“In other words, (partial) liberalisation of the policy only covers transshipment of goods which come from overseas and land in Port Klang, and not locally manufactured goods from the peninsula,” Wong said.

NKEAs relevant in Sabah

He said that FSM had in 2009 pointed out to the federal government that if such a cabotage policy continued, not many foreign vessels would want to come in to only take goods to Sabah or Sarawak, unless they are allowed to carry locally-manufactured goods from the peninsula to Sabah, and vice-versa.

“But there has been no response. We know the government’s intention is to take care of the Malaysian shipping industry and help ensure its survival, but it should not forget the industries and consumers in Sabah,” he said.

In August last year, Federation of Chinese Association Sabah president Sari Tan had also urged the federal government to abolish the cabotage policy, which he said was ‘affecting Sabah’s ability to grow’.

While supporting Prime Minister Najib Tun Razak’s aim to turn Malaysia into a high-income generating nation by 2020, he said this goal was only possible if liberalisation of policies was in place.

He said the National Key Economic Areas (NKEA) Laboratory has identified 12 NKEAs, under the 10th Malaysia Plan, and these include petroleum, gas, energy, palm oil, financial services, tourism, business services, electric and electronic, wholesale and retail, education, communication, agriculture and Greater Kuala Lumpur.

Of the 12 NKEAs, Sari said, nine were relevant to Sabah.

“Since 92% of the NKEAs will depend on the participation of the private sector, there is still a lot that needs to be done to facilitate private sector investment specifically for Sabah,” he said.