Sunday, August 16, 2009

KL under pressure again over cabotage policy

Manufacturers, traders and shippers in Sabah are bringing renewed pressure to bear on the federal government to further liberalise the National Cabotage Policy (NCP).

The policy keeps out foreign vessels from the movement of goods between Port Klang, the designated national load centre, and ports in Malaysian Borneo.

Federation of Sabah Manufacturers (FSM) president Wong Khen Thau warned that the federal government must complete the liberalisation of the policy without any further delay and not continue to indulge in cosmetics.

"The opening up of the policy is an issue that Sabah has been pursuing all this while," stressed Wong on the sidelines of the weekend opening of Wisma FSM at the Kota Kinabalu Industrial Park (KKIP) in Sepanggar Bay.

"If the policy is further opened up, then I think it (liberalisation) will be complete," he added.

Wong was commenting on the renewed public debate on the pros and cons of the NCP but he has so far refused to get into the polemics.

The Transport Ministry, not so long ago, announced some "piece-meal measures" aimed at easing the policy and deflecting increasing public criticism of the federal government over the higher cost of living in Sabah and Sarawak compared with Peninsular Malaysia.

The NCP is being blamed for the price difference in consumer perishables, among others. At the same time, salaries in Malaysian Borneo are very much lower than that in Peninsular Malaysia.

If the NCP has heated up again in recent days as a political hot potato, it is with good reasons too. One result of the policy is that job-seekers shun the numerous jobs available locally and still make for greener pastures in Brunei, Peninsular Malaysia and Singapore.

Association says no to liberalisation

Executive secretary of the Malaysian Shippers Association (Masa), Imtiaz Hussein, poured fuel on the fire in recent days when he launched a pre-emptive strike against further liberalisation by issuing a media statement on the issue.

Basically, it was a feeble attempt to deny that Masa members are behind the comparatively higher cost of living in Malaysian Borneo.

Briefly, he claimed that members of Masa are charging reasonable prices; the prices imposed by Masa are not the only cause - there are other parties that are causing the higher cost of goods in Sabah and Sarawak.

"It is important to point out the flawed arguments of shippers who blame high shipping costs and want the federal government to relax the National Cabotage Policy," said Imtiaz, who vowed that Masa would strongly oppose any further liberalisation of the NCP.

Masa's aggressive defence of the NCP in Sabah and Sarawak has sent the hackles up among people from all walks of life in Sabah and Sarawak and caused them to see red on the issue.

Trading community spokesperson John Lo, among those vociferous on the issue, begs to differ with Masa and has been picking at what he sees as the flaws in the association's arguments.

He points out that Masa has not mentioned collusion practices by its members on price-fixing; whether there is free and fair competition among its members for the South China Sea routes between Peninsular Malaysia and Sabah/Sarawak; and that Masa has not revealed facts and figures which the public can use to benchmark their prices vis-à-vis other similar routes.

"In this logistics supply chain, ocean freight charges (paid to the shipping line) for imports into Kota Kinabalu, for example, from Port Klang constitute about 40 percent, it is claimed," said Lo.

"In any business environment where cost reduction is a constant worry, a cost component of 40 percent is already a very significant item and should be examined in the minutest details."

Lo added that it was not for Masa to decide whether other components in the cost scenario were high or low.

Cartel overrules people's need

Shipping industry watcher Loong Chai, who has examined the cost structure closely, points out that except for freight charges which are determined by the ship owners, all other cost components are controlled by the government.

"The port charges, for example, in Sabah have not changed since it was introduced in the 1970s. So, how is it that port charges takes a major portion of the cost?" asked Loong.

"The forwarders fees as well as for haulage is less than RM500 per container. So, how can this portion be the cause of the higher logistics cost?" he asked.

Their places continue to be taken by illegal immigrants flooding in from the Philippines, Indonesia, Timor Leste, Pakistan and Bangladesh, among others.

Whether Masa accepts or otherwise, it cannot be denied that their cost per 20 foot container is not less than RM2,000 and this cannot be only 40 per cent of the total cost, continued Loong.

Loong is well armed with other figures on the carrying capacity of ships on the South China Sea run, their cruising time between ports in Malaysian Borneo and their fuel usage.

He thinks such figures serves little purpose whatsoever in the debate over the NCP.

"After 30 years of making appeal after appeal, it is obvious that the needs of the shipping cartel are much stronger than that of the people of Sabah and Sarawak," said Loong.

"There is no point arguing with the ship owners because the NCP gives them complete monopoly in domestic shipping. There is no point in appealing to the government as well because it will make endless studies with no clear solution."

The NCP has caused a lot of people in Sabah and Sarawak much frustration and numerous lost opportunities in business and trade, added Loong.

Having injected a note of pessimism and hopelessness into the debate, Loong thinks that "not all is lost".

He refers to a little known debate taking place in local circles on restructuring Sabah's trade pattern away from Peninsular Malaysia to beat Masa at its own game.

The 'Muara School of Thought'

Statistics tell the story. Sabah, for example imports 58 percent of its requirements from Peninsular Malaysia while sending only 13.2 percent of its exports there and 17 percent, for example, to China.

The suggestion being seriously considered is that Sabah import more goods from China, Hong Kong and Taiwan via the international container port of call in Muara, Brunei.

Muara, the only port in Borneo that is not affected by the NCP, is just a hop, step and jump away from Menumbuk, Labuan, Kota Kinabalu and other places along the west coast of Sabah.

The 'Muara School of Thought' is expected to take off, as Bruneiseeks to diversify its economy, even as the pressure continues for the lifting of the NCP.

Lo is among those who concede that the total cost scenario should be looked at once again "to expose the flaws in the Masa arguments and the findings made public".

Source: Malaysiakini

No comments: