Local shippers, port authorities, consumers and
manufacturers in Sabah and Sarawak are keeping their fingers crossed to
see the free movement of goods between Peninsular Malaysia and Malaysian
This would become a reality if the federal government abolishes the
Cabotage Policy - which allows a cartel to control the transport of goods
across South China Sea - following a just completed study by the Transport
Minister Lajim Ukin has said that "the ministry would be discussing it
(the Cabotage Policy) soon with the relevant departments and agencies and
the report will be submitted to the federal cabinet.
"Since it is a policy, only the federal cabinet can decide,"he said
responding to calls in recent days by the Federation of Sabah
Manufacturers (FSM) and local chambers of commerce to abolish the policy.
The Cabotage Policy, basically to protect the local shipping industry,
allows Malaysian shipping companies to form a cartel.
This has allowed them to control the movement of goods between
Peninsular Malaysia and Malaysian Borneo, allowing them to dictate
shipping charges, which leaves consumers at their mercy.
Sabah and Sarawak point out that there is no cartel in the aviation sector
and this has allowed Kota Kinabalu International Airport to emerge as the
second busiest in Malaysia after the Kuala Lumpur International Airport.
Minister Ong Tee Keat has blamed other freight charges and inland
transport for the price differences between Peninsular Malaysia and
Malaysian Borneo and has so far only hinted at a progressive
liberalisation of the Cabotage Policy.
His remarks have not gone down well with the general consensus of public
opinion in Sabah and Sarawak.
Transport Ministry is MCA territory
"The Transport Ministry is MCA territory. When issues involving the
ministry are brought up at the federal cabinet level, the recommendation
of MCA ministers carry more weight than all the other federal cabinet
ministers combined,"said an industry analyst.
"We have ministers like VK Liew, Dr Maximus Ongkili, Shafie Apdal and
Bernard Dompok from Sabah who have proven that they cannot be relied on to
represent Sabah's interests (in shipping). They are more interested in
apple-polishing, cutting ribbons, gas projects and church publications,"he said.
is well known that freight charges from Hong Kong to Port Klang are far
cheaper than from Port Klang to Kota Kinabalu. Imagine, for more than 20
years, Sabah and Sarawak have been left behind in Malaysia's drive for industrialisation, modernisation and development just because of freight
charges,"the analyst added.
Shipping companies involved in the Port Klang-Kota Kinabalu traffic say
that while the freight charges from Hong Kong to Port Klang is RM1,500
minimum, the Port Klang to Hong Kong freight charges is RM200 minimum.
The Cycle and Motor Parts Traders Association (CMPTA) of Kota Kinabalu add
that the freight charges from Port Klang to Kota Kinabalu are even higher
than the freight charges from Japan to Port Klang.
One source in a shipping company which plies the Port Klang-Kota Kinabalu
route, who simply gave his name as Khairidy, claimed that "the present
port structure even in Kota Kinabalu, productivity and efficiency are less
than satisfactory and therefore not attractive for shipping lines to
"There is not even a gentry crane in the Kota Kinabalu Port. Furthermore,
the equipment is old and worn-out. There are only 18 moves per hour at the
Kota Kinabalu Port compared with 30 moves per hour at Port Klang.
Kota Kinabalu Port is also closed on weekends unlike Port Klang which
works everyday,"he added.
Khairidy swears that ports in Malaysian Borneo would not be able to
attract the larger international shipping lines, and even if they did,
"there's no guarantee that they would not dump their rates so low that
local shipping companies would be driven out of business”.
The pro-Cabotage Policy lobby says that "high freight rates mean higher
cost of living in Sabah is a myth"and use Maggie Mee to get their point
The price difference between Port Klang and Kota Kinabalu for Maggie Mee
should be RM0.04 sen per packet based on the fact that a 20-feet container
can load 33,120 packets of Maggie Mee and given present freight charges
i.e. RM 1,050 plus EBS (Emergency Bunker Surcharges) of RM709.
Hence, ocean freight is said to contribute to only 46 percent of the price
difference between Port Klang and Kota Kinabalu and "there are other
factors that result in the higher cost of living in Sabah”.
The best thing is to open up
However, FSM president Wong Khen Thau begs to differ.
"In Sabah, the prices of goods are 20 to 30 percent higher than in
Peninsular Malaysia because of the Cabotage Policy. This is not fair to
consumers. The best thing to do is open up so foreigners can also
"It is good for us to export. Competition will bring down prices. It is
for the whole industry to survive,"he said.
and the various chambers of commerce have since sent a joint memorandum to
the federal government pleading for control of the EBS, among others.
Last September, they sent a memorandum to the federal government on the
Cabotage Policy, suggesting "an open policy to prevent monopolisation and
manipulation of prices by shipping cartels and which in turn would benefit
Sabah in terms of competitiveness in the export market and the consumers
as a whole."
The FSM however is willing to back the Cabotage Policy provided it is
confined to within Peninsular Malaysia or within Sabah and Sarawak”.
"But not between Peninsular Malaysia, Sabah and Sarawak which are
separated by a vast sea distance. There is no other way ... it must be
opened up,"said Wong.
CMPTA president Yong Chen Lip sees prices falling further with the
abolishment of the Cabotage Policy.
Already, he pointed out, "the wholesale prices of some of the parts in Sabah are much cheaper than in Peninsular Malaysia"and attributes this to
the stiff competition in Sabah among the Peninsular Malaysia-based cycle
and motor parts distributors.
The Sabah People's Progressive Party (Sapp) sees Port Klang operating as a
national load centre at the expense of Sabah and Sarawak and wants the
Cabotage Policy abolished.
"The Sepanggar Bay Container Port Terminal should also be made a national
load centre,"said Sapp treasurer-general Wong Yit Ming.
"This can be done by giving Sabah a special exemption from the Cabotage
Policy (if not abolished),"he added.
Jul 20, 2010 -
FSM dares shipping firms: Prove Cabotage Policy benefited Sabah
Jun 27, 2010 -
Cabotage Policy is no good: FSM
Jun 04, 2009 -
Abolish Cabotage Policy
Jun 04, 2009 -
Cabotage findings for Cabinet
Apr 15, 2009 -
Reconsider implementation of Domestic Hubbing Services
Mar 27, 2009 -
Ministry said high costs of materials due to high surcharges in
Mar 20, 2009 -
MCA faulted for Cabotage policy woes
Feb 28, 2009 -
international shipment to disembark directly in Sabah: Shareda
Feb 26, 2009 -
reiterates support to abolish cabotage
Feb 26, 2009 -
'Allow free movement of goods across South China Sea'
Feb 26, 2009 -
Cabotage must go: FSM
Jan 12, 2009 -
Traders support abolishment of Cabotage Policy
Jan 03, 2009 -
SAPP supports the call for the abolishment of Cabotage Policy