Shipowner: "Scrap cabotage policy? No, no, no.."

Guong

Kota Kinabalu: The Malaysia Shipowners Association (Masa) said it will resist any attempts to remove the cabotage policy, claiming that scrapping it could cause huge collateral damage to the Malaysian shipping industry and undermine national interests. DE

Huge collateral damage? Wow, I didn't know that the trade route between the peninsula and Sabah & Sarawak have such impact. What about other domestic trade route? It means they are making huge sum of money with this route to the extent they are willing to resist any attempts to scrap this policy. What about Sabahan and Sarawakian then? Let us keep on suffering just so they can keep doing business?

Masa Chairman Nordin Mat Yusoff said if high shipping cost was the only reason, one could assume that when shipping cost declines, the prices of goods would likewise drop.

"But this has not been the case; total ocean freight rates declined by about 41 per cent in the last six months in Peninsular Malaysia-Sabah/Sarawak trade but this has not been reflected in the landed prices of consumer goods," he said in a statement.DE

Really? But it was just six month ago, one can't expect to feel immediate effect on the declined rate. It would take more than a year since the shipped goods would still be in the local market. No businessman would be stupid enough to drop their price of goods since most of the old stocks (which were shipped before the now declined rate) were probably not yet sold out.

However, Nordin said it is evident that the high prices of consumer goods have not been elastic and the cause for this must be investigated scientifically by relevant government agencies in the State, including the Domestic Trade Ministry and Mida. DE

Investigation again? How long will it take? Sabahan and Sarawakian have waited long enough. Even the Queen Elizabeth Hospital issue is still yet to be solve, let alone this huge issue involving all of West Malaysian.

He also said it was extremely misleading, and indeed callous, for anyone to suggest that shipping charges from Kota Kinabalu to Southampton as being twice that of similar charges from Port Klang to Southampton because of the cabotage policy.DE

Who said the price was being twice? But it's a fact that the price will be higher than what it was supposed to be since they ship it twice.

"In fact the argument against the cabotage policy cannot be more wrong because cabotage does not prevent any ship from calling between Kota Kinabalu and Southampton much as it does not between Port Klang and Southampton," he said. DE

Yes, but that applies only to Malaysian vessels that ship imported goods. Ships from Southampton (or any other part of the world) are permitted to sail to Sabah and Sarawak but not cargo ships. And how many Malaysian-flag ships that dock in Sabah and Sarawak are actually making a direct shipping route outside Malaysia? I can only think of MISC.

Alluding the furore to "barking up the wrong tree", he explained the removal or relaxation of the cabotage policy would in no way change this position because the question of shipping lines serving between KK and a foreign port would be influenced by, among other factors, volume of cargo, remoteness (geographical) of the market and port infrastructure and performance. DE

Yes, but the problem is, all the factors that influencing the price are done twice due to this policy. Why not shorten it into just once?

Urging the manufacturers and producers not to confuse the central issue, he said Masa was willing to sit down with relevant government agencies as well as manufacturers and producers in Sabah and Sarawak to help jointly identify and examine related costs in the transportation pipeline together with other players in the link. DE

Feeling the heat are we.. You guys better do it quickly and come out with an acceptable solution. If not, this cabotage policy between peninsula and Sabah & Sarawak must be scrap.

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.