Deputy Chief Minister James Jemut Masing said the exemption from the cabotage policy, effective June 1, 2017, was aimed at bringing down prices in Sabah and Sarawak.

He said the exemption of the cabotage policy in Sarawak had created stiff competition between foreign and local ships.

“Based on an analysis carried out from January to July this year, foreign ships accounted for about 12.4%, or 2,504 TEUs (twenty-foot equivalent units) of local sea containerised cargo transportation, out of a total 20,279 TEUs outbound from Kuching port to Port Klang.

“The passage of foreign ships between our local ports may also pose a threat to our security,” he said in his winding-up speech today.

The cabotage policy is a regulation that does not allow foreign ships to engage in any domestic shipping.

The waiver in 2017 was introduced in response to complaints that the high prices of goods were related to this as international ships could not go directly to the two states.

In August, it was reported that the transport ministry would carry out a six-month study on the impact of the waiver of the cabotage policy,

He said the study is expected to take six months to complete.

Masing said foreign participation in the state’s local sea cargo containerised transportation was expected to increase.

This alarming situation, if not curbed, would erode the state’s shipping and shipbuilding industries in Malaysia and Sarawak, in particular, he added.

Therefore, he urged the federal government to conduct an in-depth study on its impact before it caused permanent damage to the state’s local shipping and shipbuilding industries.

“My ministry has also written to Prime Minister Dr Mahathir Mohamad to raise our concerns over this issue,” he said.