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Cabotage policy keeping East Malaysians poor

 | May 2, 2012

Goods are more expensive in Sabah and Sarawak because of the federal government's cabotage rules, say Pakatan Rakyat MPs.

PETALING JAYA: Pakatan Rakyat MPs have asked for cabotage rules imposed on Sabah and Sarawak – the reason behind the higher price of goods there – to be relaxed.

They said that the policy set in the early 1980s made sure that all the domestic transport of foreign goods could only be done by Malaysian vessels.

This, according to them, led to excessive shipping costs, and ultimately a higher cost of living in East Malaysia.

“This protectionist policy has led to excessive shipping costs. The restrictive cabotage policy has allowed shipping companies to act as a monopoly,” said several Pakatan MPs.

They were Kuala Selangor MP (PAS) Dzulkefly Ahmad, Lembah Pantai MP (PKR) Nurul Izzah Anwar and Bukit Bendera MP (DAP) Liew Chin Tong.

They added that importers and exporters in Sabah had to pay more than RM1 billion for shipping services as a result, causing prices everywhere in East Malaysia to go up.

The MPs estimated that goods in Sabah and Sarawak were 20% to 30% higher than they were in the Peninsula.

“As a result, consumers in Sabah and Sarawak have to bear the burden of a higher cost of living as producers hike up prices to compensate the increase in cost of production.”

“This also poses problems to the local small and medium enterprises (SMEs). They are suffering and suffocating as a consequence of the rising production costs,” they said.

In a quick comparison, a manual-gear Proton Persona 1.6 B-Line model will cost RM46,713 in the Peninsula. The very same type will cost RM49,256 in East Malaysia.

Even foods are not spared. People eating out in East Malaysia can expect to pay RM1 or RM2 more for the same meal if it was served in the Peninsular.

Lower wages

If the higher cost of living wasn’t enough, the Pakatan MPs reminded that East Malaysians also had lower wages than their Peninsular counterparts.

Even the federal government, despite these concerns, does not appear to have taken this into account, as seen by Prime Minister Najib Tun Razak’s recent minimum wage announcement.

On April 30, Najib said that the minimum wage for private sector employees in the Peninsula would be set at RM900, while the same employees in Sabah, Sarawak and Labuan would get RM800.

It has been speculated that these issues have caused a number of young East Malaysians to leave their homes for the Peninsula in search of an easier life.

The Pakatan MPs said that as a result, the country’s cabotage policy needed to undergo a ‘full liberalisation’, which they say, would allow importers and exporters in East Malaysia to enjoy low shipping costs.

“This in turn would translate into cheaper consumer goods, and also provide a boost to the local SMEs,” they said.


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