Economist: Remove cabotage policy to lift Sabah, Sarawak economy


KUALA LUMPUR: An economist has urged Putrajaya to abolish the cabotage policy to boost Sabah and Sarawak’s economy.

In an interview with FMT, Hoo Ke Ping said the cabotage policy, which affects Sabah and Sarawak, was discouraging the growth of the marine economy and marine services industry.

The cabotage policy emphasises that only vessels registered in Malaysia are allowed to load and unload cargo in the ports of Malaysia. The whole idea behind this policy is for Port Klang to be the container hub port in Malaysia.

Hoo said the marine economy and marine services industry included activities such as trade, logistics, ship and rig building, bunkering and port services.

“It pushes up the cost of freight charges because everything has to go through Port Klang. This also affects the time spent to go to Port Klang, which in turn affects the frequency of trips which can be made.

“Imagine how much faster and cheaper it would be if ships, especially those from China, Taiwan, Hong Kong, Japan and South Korea, could go direct to Sabah.”

Hoo said this would have a catalytic effect for the growth of other industries, which would benefit from a cheaper and faster alternative to Port Klang. This, he said, included industries such as manufacturing and retail.

“Smaller cargo ships, those in the range of under 10,000 TEUs can actually go direct to the main ports in Sabah and Sarawak without needing to go through Port Klang, because ports such as the Sepanggar Bay Port in Sabah and the Kuching Port can handle such container ships.”

TEU or Twenty-foot equivalent unit is the most common international standard for describing a ship’s cargo carrying capacity.

“So what’s happening is that the people of Sabah and Sarawak are unnecessarily paying more for goods because the goods have to come from Port Klang. Why aren’t we stopping this?”

Hoo said, based on his calculations of marine tracking websites, over 120,000 ships passed the seas near Sabah and Sarawak annually, including near Sandakan and Tawau, where marine traffic was heavy in the waters between Philippines and Malaysia, with ships from Indonesia, Australia and New Zealand passing through.

This, he said, was further boosted by the opening of a new shipping line between Davao City in Southern Philippines and Bitung in North Sulawesi, Indonesia. The shipping line – which will cut down transportation time between the two countries – was opened by Indonesian President Joko Widodo and his Philippine counterpart Rodrigo Duterte.

Hoo said presently most ships passing through the region would head towards Singapore, rather than Port Klang for marine services – such as refuelling, ship cleaning, ship-to-ship transfers and bunkering services – due to the Tuas Port’s efficiency, though this was costly.

“If we remove the cabotage policy, we encourage more ships to go directly to Kota Kinabalu, Kuching, Sandakan and Tawau, and these ships will need marine services.”

Hoo said Putrajaya should develop the marine services industry in Kuching and Tawau because these ports had the potential to grow due to lesser competition, compared with ports in Peninsular Malaysia which had to compete with Singapore.

“Port Klang is one of the best ports in the world due to the infrastructure and talent, thanks to the federal government’s support. It’s high time that Sabah and Sarawak also get the same support.”

In January, the Port Klang Authority said it expected to move up one spot to 11th in the World Container League.

Recently, Sarawak Chief Minister Abang Johari Openg called on Putrajaya to abolish the cabotage policy to help lower the costs of goods in the state, and this was backed by Parti Warisan Sabah vice-president Junz Wong.