The local shipowners, represented by the Malaysian Shipowners’ Association (MASA), said the decision to partially liberalise the cabotage policy and allow foreign shipping lines in the domestic trade should be held back at least until the economy, now in technical recession, recovered.
“It is bad enough that the national cabotage policy was relaxed to allow foreigners in the transhipment trade between Port Klang and Tanjung Pelepas in Peninsular Malaysia and that of Kota Kinabalu, Kuching and Bintulu to compete in a limited market but it will be worse if the policy is relaxed immediately when the shipping market is in the doldrums,” said MASA chairman Nordin Mat Yusoff.
Under the cabotage shipping policy, implemented since 1980, domestic trade between any two ports in the country can only be served by Malaysian-owned shipping companies with Malaysian-flagged ships.
The partial relaxation of the cabotage policy took effect on June 3.
Nordin said most of the Malaysian operators in the domestic trade faced severe financial and operational problems as well as low freight rate and excess capacity in the market as a result of the collapse of the freight market.
MASA, representing more than 85% of the shipowners in the country, felt let down by the Government, as it had a duty of care for Malaysian shipowners and to protect national interests since cabotage was even recognised by the World Trade Organisation as an instrument of national policy.
MASA said the Government must also give the market players sufficient notice of its intention to relax the cabotage policy and not change such a key national policy overnight in the mid-stream and placing local operators under dire straits and severe consequences.
Adequate notice would at least prepare local players in the trade to take up position by reviewing their operational strategies or strengthen and build up capacity to compete “instead of unceremoniously pulling the rug under our feet,” said Nordin.
Several MASA members, especially those who have just ordered new ships to be deployed in the domestic trade, could face severe financial losses, the association pointed out.
“While we are perplexed with the dramatic manner the policy is being relaxed, we are also disturbed to note that there is lack of details in the Government’s decision, particularly in the need for continuous monitoring and feedback mechanism on how the relaxation of the cabotage policy works,” said Nordin.
He felt that the Transport Ministry should hold a dialogue with the Customs and port terminal operators at the specified ports to ensure that there would be no abuse or deviation following the relaxation of the policy.
Nordin also called on the Government to invite MASA to help monitor and assess the achievement and if the targets were not met the Government should reinstate the policy. He urged the Government to address current problems faced by the local shipping industry following the economic meltdown by introducing remedial measures in the economic stimulus package.
“Such measures should also include subsidy on port charges for domestic operators, financial assistance to help overcome cashflow problems and assistance to overcome loan repayment problems,” he said.