Cabotage Policy...What is it?

Guong

First, let me enlighten you about Cabotage Policy. (Just in case you don't know)

Cabotage refers generally to the transport of passengers and goods. Originally, it referred specifically to shipping, but cabotage also applies to airlines, trucking, and trains. Many nations have cabotage laws which dictate the terms which carriers must follow when transporting people or materials within their borders. Many of these laws are designed to promote the development of domestic transport companies, and some cabotage laws have been criticized because they can restrict free trade. source

So, why did Malaysia government implemented this policy?

The Malaysian Government has implemented a policy which reserves the transportation of goods in the domestic trades to ship flying the Malaysian Flag. This policy was necessary because only a small number of Malaysian registered ships were playing the coastal routes. The policy which reserves the domestic trade to its own flagged vessels is known as Cabotage Policy. It was implemented in Malaysia on 1 January 1980. To implement the policy, the Merchant Shipping Act 1952 (MSO 1952) was amended.source

It is kind of similar with NEP concept since this policy is protecting certain group (in this case Malaysian vessel) in the domestic shipping business. So, what seems to be the problem?

Kota Kinabalu: Sabah is unlikely to achieve its ambition to become a leading port hub in this region, despite its great potential to take over the role of Port Kelang and even Singapore port, if the cabotage policy for East Malaysian states continues to exist.DE

If this is the reason, I bet our federal government wouldn't even bother since it will jeopardize the already established Port Kelang and also their business. Or will it?

"We are not totally against the cabotage policy because in other countries there are also such policies. We are just hoping for the cabotage policy between the peninsula and Sabah and Sarawak be lifted or abolished," he said.DE

In other words, it will only effect their business domestically between peninsula and Sabah and Sarawak. So, what's in for Sabah and Sarawak?

He said the other main benefit expected from the abolition of the cabotage policy in Sabah is the reduction of the trade imbalance between Sabah and the peninsula resulting from the cargoes generated from manufacturing growth as manufacturing will be more competitive due to the elimination of the shipping barriers.DE

Hmm, in other word, foreign shipping company can directly ship imported goods to Sabah and Sarawak.

It works like this, a foreign vessel carrying imported goods cannot sail directly to Sabah and Sarawak port due to this policy. Every imported goods must be ship with a Malaysian vessel. So, the foreign vessel have to empty their ships at Port Kelang. From there, Malaysian vessel will then ship these goods to Sabah and Sarawak. This cause the price of these goods to rise. The goods can be anything from raw materials to finish products.

Will the federal government listen and take any action? Let's wait for a while and see.. the respond might not be a positive one.