Monday, August 2, 2010

No hidden agenda, says Masa

Malaysia Shipowners' Association says it has no hidden agenda in protecting the Cabotage Policy and the myth that the policy is a creation of Masa should stop

The Malaysia Shipowners' Association (Masa) expresses its regret over unfounded accusations and misinformation being reported by shippers' bodies in Sabah alleging that the association has hidden agenda in protecting the Cabotage Policy and blaming the policy for the high cost of goods in Sabah.

We have no hidden agenda in protecting the Cabotage Policy and the myth that the policy is a creation of Masa should stop. The Cabotage Policy was introduced by the Ministry of Transport in 1981 as part of a policy instrument to foster the development of the national shipping industry which was identified as a critical sector and also to protect the domestic trade from domination by foreign shipping lines.

We want shippers to support the government's aspiration to make Malaysia a maritime nation and they should have nationalistic values.

We urge the Federation of Sabah Manufacturers (FSM) to be rational and not make anecdotal comments and sensationalise the issues but be more evidence-based so that policy planners and the public are not confused or misled.

Local shipping companies and entrepreneurs are encouraged by the government, with the offer of tax incentive in view of the highly capital intensive nature of the industry, to invest in the development of the domestic shipping industry, which has grown into what it is today because of the Cabotage Policy.

There are more than 200 shipping companies with over 4,500 ships which have taken advantage of the opportunities because of the Cabotage Policy. Many of the container shipping companies serving the domestic trade had invested heavily in recent years to serve the rising demand of the trade.

Masa, as the national body of the shipping industry, is duty-bound to protect its member shipping lines since these companies have invested heavily. Our right to protect our members is an open secret and we only feel it is not right for rules of game to change mid-stream after decades of hard work and investment of billions of ringgit. We can assure that we have no hidden agenda whatsoever in this regard.

Masa is neither a shipping company nor a cartel but merely an association representing shipowners interests, just as the FSM, which is a body representing the interests of manufacturers and plays no role in fixing prices of goods sold by its members.

In fact, the shipping lines compete among themselves and their rates/charges differ from one to another and shippers are free to choose which line they prefer.

Reports by the FSM quoting a study on the high cost of shipping in Sabah as being sanctioned by the Malaysia Investment Development Authority (Mida) is totally inaccurate.

Masa is aware of the "Study to Address the Problems of High Cost of Logistics Expenses in Sabah", but this was commissioned by the Sabah State Ministry Industrial Development & Research.

While we are also aware that the report may have been submitted to federal ministries and relevant agencies, including Mida, we are not aware that Mida or any government agencies have concurred with the findings of the study.

We hope a copy of the study will be extended to Masa for our views against findings based on baseless accusations.

There is a great deal of misinformation over what constitutes ocean shipping costs, total transportation or logistics costs and shelf prices of goods.

While we have pointed out that ocean shipping costs make up about 46 per cent of the total transportation costs which involves eight other intermediaries (which account for the 54 per cent of the total transportation costs), this does not mean that the shelf prices of goods are burdened with 46 per cent shipping costs.

According to a survey carried by Masa, the shipping cost in a five-packet standard instant noodles is only 0.02 sen (per five packet), but sells in Kota Kinabalu higher by 0.40 sen than the average price in Peninsular Malaysia. Similarly too, the shipping cost is only 0.05 sen in the shelf prices of per kilo of sugar and flour sold in Kota Kinabalu, which is higher by 10 sen and 31 sen, respectively, compared to in Peninsular Malaysia.

It is obvious that there are other components of the total transportation costs which need to be looked into and addressed than merely attributing the whole thing on shipowners. Who is gaining? Definitely not the shipowners.

Why and how Masa or the Cabotage Policy could only be blamed for this?

We do not want to point fingers, but it is obvious there are other than shipping costs which make the shelf prices of goods in Sabah higher and we are willing to work together with shippers, including the FSM, to identify where these additional costs come from.

Masa has been open on this matter. I think the time has come for all the intermediaries, and also the shippers to do so and come out clean on the components of the cost structures of each party, as we shipowners have done in our earnestness to be transparent and open.


On 19/07/2010 Business Times reported:

Malaysia willing to look into Cabotage Policy

The federal government is willing to look into the problems faced by the business community in Sabah, particularly the Cabotage Policy.

"We will see whether we can review this (Cabotage Policy) so that you can export directly from Sabah ... it makes sense, but let me see whether there are other implications," Prime Minister Datuk Seri Najib Razak said in his speech during a luncheon with Sabah Chinese community leaders in Kota Kinabalu yesterday.

The business community in Sabah, including the Federation of Sabah Manufacturers, had called for the policy to be liberalised or scrapped as it did not benefit the domestic shipping lines.

Under the Cabotage Policy implemented on January 1 1980, domestic trading between two domestic ports can only use the services of local shipping lines in order to reduce prices of consumer goods.

Last Friday, Deputy Minister of Transport Datuk Abdul Rahim Bakri said the increase in prices of consumer goods was due to several factors including excessive profiteering by certain groups, and inefficient loading and unloading services at ports.

Exorbitant marine insurance fee, land transport cost and economy of scale were the other reasons, Abdul Rahim said.

He said the National Shipping Policy, which gave priority to domestic shipping services, was actually to protect the nation in the long run.

If the government allows foreign shipping lines to dominate or control the country's transportation system, "our local shipping companies will go bankrupt and eventually the nation will have to depend on foreigners forever", he said.

Abdul Rahim said many shipping companies that had received incentives under the National Shipping Policy were those from Sabah and Sarawak such as Johan Shipping, Hubline, Shin Yang and Chong Fui Shipping.

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