Tuesday, May 4, 2010

Sabah re-ignites cabotage policy row

The Federation of Sabah Manufacturers (FSM) wants Sabah to be made the hub port for the Far East, much like what Dubai is to the Middle East.

However, the FSM sees the National Cabotage Policy (NCP) as an impediment since this designates Port Klang as the National Load Centre at the expense of Sabah and the nation.

“Sabah has all the necessary ingredients to be the hub port for the Far East,” said FSM president Wong Khen Thau in pitching for the state.

“It is the centre of this region, within five to six hours flight to all major Asian capital cities."

Sabah is also central to the large populations of India, Indonesia and China besides being in the right location vis-à-vis Tokyo, Seoul and Sydney.”

Wong was lamenting the failure of the partial liberalisation of the NCP since May last year.

The failure has been attributed to the limited scope of the liberalisation, which only allows direct carriage of containerised trans-shipment cargo to Sabah and Sarawak by foreign vessels without the need for a domestic shipping licence.

Wong noted that Deputy International Trade and Industry Minister Jacob Dungau Sagan's admission in recent days that the liberalisation has had little impact is a good reason for doing away with the NCP.

Wong, taking up the cudgels again, pointed out that 70 percent of Malaysia's imports come from China, Japan, Korea and other countries that are in close proximity to Sabah.

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This, he argued, gives Sabah an advantage over Port Klang as the natural hub for the country.

“Sabah can also present a better alternative and challenge to Singapore than Port Klang or Tanjung Pelepas in Johor,” he claimed.

He also said the state could make the quantum leap in per capita income if the hub port is located in Sabah.

The FSM has estimated a minimum US$15,000 in per capita income for Sabah by 2020, a huge improvement from the current US$3,000-4,000.

'Pump in funds'

FSM is calling for the federal government to pump in the necessary funds to build up the state's infrastructure in addition to dismantling the NCP.

“There would be a need to develop industries and promote revenue-oriented sectors such as tourism, education and aquaculture for Sabah to make a leap in its economic standing. A lot of money would be required from the federal government to increase such economic activities.”

port kota kinabalu aerial view 260209
The FSM sees Sabah bargaining for state-of-the-art industrial and other infrastructure as a better alternative to pressing for a bigger oil royalty, adding, “we have enough gas reserves which can feed the industries”.

For starters, said Wong, the federal government should set up petrochemical industries in the state while considering an upward review of the oil royalty, which has been frozen at 5 percent since the late 1970s.

Infrastructure improvements envisaged by the FSM include building up rail transport services and improving roads linking Kota Kinabalu to main regional towns along the east coast like Sandakan, Lahad Datu and Tawau. This will mean upgrading 9,825km of gravel roads to add to the 6,000km of sealed roads.

There is also a need to focus on courier services, sea transport services, shipping and forwarding agencies, cargo handling, stevedoring services and port services, bunkering services, water and power.

State Industrial Development Minister Raymond Tan is hopeful that the NCP will be done away with in the near future, but prefers to use the term “further liberalisation”.

raymond tan
“The state government is requesting the federal government to fully liberalise the Cabotage Policy. At the same time, we are undertaking a study on the high cost of logistics services in Sabah,” he said.

The liberalisation of the NCP, he said, is among the 'Strategic Changes Initiative' study being undertaken by his ministry.

“We need a freight equalisation scheme through affirmative action - read subsidies - to settle the high shipping cost in Sabah,” added Tan.

Sabah's moves are likely to invite flak from shippers based in Peninsular Malaysia who are dependent on carriage to Sabah and Sarawak.

In the past, these shippers have resisted any plan to do away with the NCP. This has led to the charge that the federal transport ministry is in the pockets of the shippers.

The higher cost of living in Sabah and Sarawak, compared to the peninsula, is also attributed to the NCP.

Source: Malaysiakini

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