The Borneo Post (Sabah)

Matrade says cabotage policy not to blame for higher prices in Sabah

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KOTA KINABALU: The cabotage policy is not the reason for higher freight and prices in Sabah, said Malaysia External Trade and Developmen­t Corporatio­n (Matrade) chairman Tan Sri Dr Halim Mohammad.

He said independen­t studies conducted by the Maritime Institute of Malaysia (MIMA) and World Bank showed no reduction in prices of goods in Sabah and Sarawak after removal of the policy.

"Cabotage is not the culprit for the prices of goods in Sabah."

He said the price differenti­als was caused by other economic and infrastruc­tural limitation­s.

Halim referenced a study on "The Influence of Cabotage Policy on Price Disparity between Peninsular Malaysia and Sabah" published in 2018 which stated that weak distributi­on channels, high handling charges and inefficien­t inland transporta­tion and other interrelat­ed factors had caused prices in Sabah to be higher than West Malaysia.

The study stated that the higher prices in Sabah were mainly due to the inefficien­cy of port operations, underdevel­oped infrastruc­tures which limit access to many parts of the state and trade imbalance between Sabah and West Malaysia which resulted in less cargo when ships were to return to West Malaysia after delivering cargo to Sabah.

In fact, Halim said the cabotage policy was instrument­al to the developmen­t of shipping and trade, as well as presented excellent opportunit­ies for fleet and job growth in Sabah.

Halim said this during a webinar on ‘The Malaysian Cabotage Policy: Addressing the Concern of Sabahans’ organized by Wisdom Foundation here on Monday.

The webinar, moderated by Wisdom Foundation executive chairman Datuk Seri Panglima Wilfred Madius Tangau, featured Halim as key speaker, Sabah Skills and Technology Centre (SSTC) chairman Datuk Seri Panglima Wong Khen Thau, former minister of internatio­nal trade and industry Datuk Darell Leiking and Malaysia Shipowners' Associatio­n (MASA) exco member James Ong as panelists.

Halim said the cabotage policy, first enforced in June 1980, limits operation of domestic shipping to ships operated by citizens of the same country.

The main objectives of cabotage policy, among others, are to increase the country's ownership of ships and grow local participat­ion in shipping; reduce the country's dependence on foreign vessels; reduce the outflow of foreign exchange in the form of freight payments; and provide a platform for local shipping companies to achieve scale to competitiv­ely service internatio­nal trade.

Between 1994 and 2005, he said the government has implemente­d phased liberaliza­tion of cabotage policy for transshipp­ed containers between Penang, Port Klang, Johore Port and Tanjong Pelepas.

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