IDS executive director Datuk Dr Yaakub Johari said, at the moment, protectionism for Malaysian-flagged ships was considered a short-term agenda and in principle, not healthy to continue for too long.
"We believe it's part of the global trend. Liberalisation in the long term helps to reduce cost," Yaakub said.
"Definitely, in the long run we have no choice, it's an open economy. Eventually, if we do not open up, our neighbours (countries) will do something against us," he said on the sidelines of the Gabungan Badan Ekonomi Masyarakat Bumiputera Sabah convention.
He was asked to comment on repeated calls by various local bodies here for the cabotage policy for Sabah to be abolished to do away higher shipping costs.
Yaakub, who presented a paper on "Sabah Development Corridor: Development Concept and Strategies" at the convention, said one of the challenges faced by the corridor was the cost of doing business due to high shipping costs.
He said the high cost of doing business in Kota Kinabalu was compounded by the existing cabotage policy, which was a factor impeding economic growth.
The progressive removal of cabotage policy, leading to forging of alliances with other major ports and shipping liners and liberalising shipping licences to increase competition among local operators, will contribute to lower freight costs, according to Yaakub.
The Federation of Sabah Manufacturers recently reiterated the need to abolish the policy, saying that the move could also pave the way for the Kota Kinabalu Sepangar container port to become a hub for the BIMP-EAGA region.
Its president Datuk Wong Khen Thau said if the policy was lifted, some industries would be able to compete better, with direct impact on the exports market and growth of business volume.
Sabah, he said, needed to rely on shipping for transporting goods from the peninsula due to the absence of road links and railways.
Besides the federation, various other parties have been asking the government to do away with the cabotage policy and the government last year announced an independent study to review the mechanism but so far the results have yet to be released.
Source: Business Times