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2009 Jan 3 - SAPP supports abolishment of Cabotage Policy

SAPP supports the call for the abolishment of Cabotage Policy

Kota Kinabalu (Jan 3, 2009): Sabah Progressive Party (SAPP) supports the call by the Federation of Sabah Manufacturers (FSM) to abolish the Cabotage Policy which is designed to protect the local shipping industry to grow and be competitive.

SAPP Treasurer General Datuk Wong Yit Ming in a statement said that the policy hinders the growth of the manufacturing industry in Sabah and Sarawak. Sabah will always have to "play catch up" with those from peninsular and this will pose a major challenge to the success of the Sabah Development Corridor.

The policy deprives Sabah Industries, the competitive abilities to survive let alone compete with her peninsular counterpart. Unless the policy is abolished, there is no where for us to compete fairly, openly and ideally due to the unlevel playing field.

"The cost of doing business in Sabah will be higher due to the high freight charges especially for raw material imported from overseas as they would have to be transshipped via Port Klang contributing to double handling cost," adds Wong, "even if Sabah is nearer to most of the trading nations such as China and other Far East countries."

Wong says, "Currently consumers’ goods including food products (such as rice being a staple food) in Sabah are very much higher than those in Peninsular. Why do poor people in Sabah have to pay more and subsidized the rich in peninsular? The cabotage has contributed to the high price of essential goods."

"Adding salt to the hardship faced by the people of Sabah, even pharmaceuticals products such are more expensive than peninsular. A simple headache relief such as panadol would cost higher here than in peninsular. This make a mockery of the State Government’s plan to achieve zero poverty level by 2010.

The lopsided policy benefits majority shipping companies based in peninsular, while Malaysians in Sabah are made to pay more to satisfy the needs of the so called shipping industry. A majority made to help the minority, this policy should not have been there even from the beginning.

It has been exploited to form cartel which is a way to monopolize the business. Thus, benefits only the major players in the shipping industry.

The Sabah State Government is obligated to use their influence with the Federal Government to open up the ports around Sabah. This can be done by granting a special exemption from the Cabotage Policy for Sabah. The Sepangar Bay Container Port Terminal should be made a National Load Centre in Sabah. They should also resolve the high costs of imports and exports in Sabah to a reasonable level by the providers of port services.

In their intention to develop, protect the port and shipping services and industry, the Government should subsidize vessels plying between East Malaysia and Peninsular Malaysia in order to the lower the freight charges and benefit the people of Sabah. The government should not do it at the expense of East Malaysia through the lopsided cabotage policy.

Related News....

FSM says again: Cabotage policy protects shippers, not consumers
03 January, 2009
Kota Kinabalu: The Federation of Sabah Manufacturers (FSM) again called on the Federal Government to abolish the Cabotage Policy to stop monopolisation by shipping cartels in the country.

Its President Datuk Wong Khen Thau suggested an open policy that would allow foreigners to "do business with Sabah".

According to him, the Cabotage Policy is basically to protect the local shipping industry.

It allows Malaysian ships to form a cartel, thus allowing them to control the shipment of goods from Peninsular Malaysia to Sabah and Sarawak.

Such monopoly allows them to dictate shipping charges which is unfair to consumers.

Wong also described the Cabotage Policy as a basic hindrance.

"In Sabah the price of goods is 20-30 per cent higher than in the peninsula as a result of this. This is not fair to the consumers. The best thing to do is open up so foreigners can also participate.

"It's good for us to do export. Competition will bring down prices. It is for the whole industry to survive, " Wong said.

In September last year, the FSM voiced their grievances about the cartel's intention, citing escalating fuel prices, to increase the emergency bunker surcharges (EBS) for 20-feet and 40-feet containers.

In a joint declaration with Chambers of Commerce and trade associations, the FSM urged the government to stop the plan and to set up a body to control the surcharge price stressing.

They argued that the shipping lines had only in June the same year increased the EBS. For sometime, the EBS for a 20-ft container was RM1,253 while for a 40-ft container, RM2,506.

As the price of fuel went down, the shipping companies in a joint statement announced through the Press in Labuan that it had revised the EBS and effective Nov. 15, the rate for a 20-ft container will be slashed down to RM709 while that for a 40-ft container to RM1,418.

Wong, while acknowledging the revision, said this was not enough.

"Because on the other hand they have increased other charges. At the end of the day it still adds up to over RM2,000, " he said. He said the FSM was not against the Cabotage Policy.

"Other countries like the US and Australia have the Cabotage Policy, because they have competition. They have a choice, to go by land, for instance. Similarly in the country, it is okay if it is from Penang to Trengganu or Tawau to KK or to Kuching.

"But not between Peninsula Malaysia, Sabah and Sarawak, which are separated by sea. There is no other wayÉit must be opened up, " Wong said.

Deputy International Trade and Industry Minister Datuk VK Liew promised to make an announcement on the policy after a six-month study and it is due anytime now.

Federal Government was seriously considering suspending the policy.

Meanwhile, Daily Express attempts since before Christmas to get shippers to publicly confirm if the recent lowering of the charges announced in Labuan also applied to Sabah received poor response.

The Cabotage policy must go, says FSM
27 January, 2008
Kota Kinabalu: The Federation of Sabah Manufacturers (FSM) said the Cabotage Policy should be scrapped to lure more foreign investments to the country and in particular, Sabah.

Its President Datuk Wong Ken Thau said with the Sabah Development Corridor (SDC) due to be launched later this month, the current policy could potentially scare investors away due to the high cost of doing business in the State and hinder the export sector.

He also said the policy was a burden to the people of Sabah as they had to pay 20 to 30 per cent more for items compared to their counterparts in the peninsula.

Wong stated that the policy is not relevant anymore and called for an open sea policy to enable foreign-registered ships to enter the domestic market.

He said the move would mean Malaysian ships have to be competitive and as a consequence of which freight charges would be lower.

The Cabotage Policy, which was implemented on January 1980, was a move by the Government to reserve the transportation of goods in domestic trades to ships flying the Malaysian flag.

It was deemed necessary then as only a small number of Malaysian-registered ships were plying the coastal routes as well as to encourage local registering of ships and incorporation of local companies participating in domestic shipping.

The policy came into effect under the Merchant Shipping Act 1952, which provided for the appointment of a Domestic Shipping Licensing Board (DSLB) to regulate and control the licensing of ships engaged in domestic shipping between any port in Malaysia.

With the implementation of the policy, foreign vessels or those without licences from DSLB were prohibited from moving cargo from one port to another in Malaysia.


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