The liberalisation of cabotage policy is to address peninsula-east Malaysia trade imbalance

The recent liberalisation of the cabotage policy is expected to address the trade imbalance between Peninsular Malaysia and Sabah and Sarawak, said Transport Minister Datuk Seri Ong Tee Keat.

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 Malaysia-flagged ships.

Consent for the usage of foreign vessels for the trade route can only be sought from the Malaysian Shipowners’ Association if there is no local vessel to provide the service.

Effective June 3, however, the cabotage policy has been relaxed and foreign vessels are now allowed to carry containerised transhipment goods between ports in the peninsula and east Malaysia.

»Many people blame the cabotage policy for the pricing of goods in east Malaysia, which is generally higher than in the peninsula, when that is not the case« TRANSPORT MINISTER DATUK SERI ONG TEE KEAT

The selected ports are Sapangar Bay Container Port, Kuching Port, Bintulu Port, Port Klang and Port of Tanjung Pelepas.

“The trade imbalance can generally be illustrated in that for every two laden containers bound for east Malaysia, one will return empty,’’ Ong told a media briefing yesterday.

“Hopefully, the presence of foreign vessels that may be larger in size can create the much needed volume,” he said.

Ong said ports in east Malaysia too would be expected to improve productivity in goods handling to cater to the arrival of larger foreign vessels and the projected increase in volumes.

“It’s a chicken and egg situation. We must try to enable them to increase the volume of trade,” he said, adding that he hoped the liberalisation would make the east Malaysia ports take the leading role in the Brunei, Indonesia, Malaysia and the Philippines-East Asean Growth Area regional trade.

According to Ong, the ministry was coming forward to clear any misconception on the cabotage policy.

“Many people blame the cabotage policy for the pricing of goods in east Malaysia, which is generally higher than in the peninsula, when that is not the case.

“Pricing of goods there depends on several other factors that include inland transportation and handling charges. Shipping freight is only one of the cost elements,” he said, adding that the liberalisation would not necessarily lower the prices of goods in Sabah and Sarawak.

Another misconception was that foreign vessels were not allowed to call directly on east Malaysia ports due to the policy, Ong said.

He said the liberalisation was aimed at improving Malaysia’s maritime industry in line with the national port hubbing policy.

“We have been gradually liberalising the cabotage policy that allows the participation of foreign vessels between some ports in Peninsular Malaysia since 2003.

“Since then, we have seen Port Klang as the national load centre and Port of Tanjung Pelepas as the national transhipment centre,” he said.

Furthermore, Ong said the implementation of the cabotage policy had spurred growth in the number of local vessels to 2,321 last year from 380 vessels in 1984.

Source: StarBiz