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Malaysian Shipowners
Association (Masa) does not support the removal
of the cabotage policy in order to lower the
high freight rates between Peninsular and East
Malaysia.
Masa said freight rates made up only a fraction
of the total cost in the supply chain.
Chairman Nordin Mat Yusoff said they only
accounted for about 25% of the charges involved
in shipping goods from Peninsular to East
Malaysia. “Another 25% comes from port handling
charges while the remaining 50% is from land
transportation,” he told a press conference last
week.
“Thus we need to look from a bird's eye view of
what really constitutes the high sea
transportation cost from East to Peninsular
Malaysia.”
Last Wednesday, Masa had a meeting with
representatives from the Ministry of Transport
regarding the matter. MOT will conduct a study
to review the issue and will come out with a
solution. The cabotage policy reserves the
carriage of cargo and passengers between any two
ports in the country to only Malaysian-flagged
and owned or operated ships. Currently, there
are about 15 local shipping companies that serve
the trade route.
The lifting of the policy will open the door of
the trade route to foreign-flagged vessels and
shipping companies.
The higher freight rates of shipping goods to
East Malaysia compared to shipping goods between
ports located in the peninsula are also a result
of trade imbalance.
The majority of containers shipped to Sabah and
Sarawak constitute manufactured goods and the
container ships often come back empty as they
cannot load the raw materials that are usually
shipped from East to Peninsular Malaysia.
But the basic freight rates between ports in
Peninsular Malaysia and Sabah/Sarawak have
remained largely unchanged for more than 10
years.
He said the cabotage policy was also adopted
universally by governments throughout the world
as an instrument in the national development
policy aimed at protecting specific national
interests.
“It must be emphasised that the cabotage policy
which Malaysia adopted since 1981 is neither its
own invention nor peculiar to Malaysia,” he
said.
Nordin said developed countries like the US,
Japan as well as several countries in Europe and
Africa had adopted cabotage policy.
“By comparison, the cabotage policy implemented
in Malaysia is very much a diluted version
compared to what is adopted by the US, for
instance, which demands ships trading in its
domestic waters must not only be flagged, owned
and manned by US nationals but must also be
built in a US shipyard.
“Some countries even provide direct subsidy or
indirect subsidy to national lines in their
desire to protect the domestic trade. Malaysian
companies do not enjoy such benefit,” he said.
He said that despite the policy, extensive
dispensations were being given by the Domestic
Shipping Licensing Board to foreign ships to
serve the trade meet any shortfall in national
flag vessels.
“Dispensation is also being given to employ
non-national crew, and it must also be noted
that for certain sectors covered by the cabotage
policy, the policy has already been liberalised
or restrictions (on use of non-national flag
vessels) have been removed.
“Any attempts to further liberalise or remove
the cabotage policy can adversely affect the
development of the Malaysian shipping industry.
“In our view, there are other corrective
prescriptions that could be considered to remedy
the situation,” he said.
Such policy measures, he added, would include
appropriate financial and fiscal incentives, as
well as suitable legislative and wider
administrative measures aimed at satisfying the
need to reduce freight charges. |
