Cabotage 'not reason for costlier goods'
Published on: Tuesday, February 14, 2017
Kota Kinabalu: As the National Cabotage Policy looks likely to be raised by critics in the coming first Sabah Port Forum, local exporter Richard Wong Tzu Piaw once again springs to its defence by debunking what he calls as myths surrounding the controversial issue.Wong reiterated his conviction that the policy has never been the reason behind the higher cost of living in Sabah as compared to the peninsula, contrary to what many critics from the industry and political circles have claimed.While critics have argued that the higher cost in Sabah has been largely attributed to the policy that requires all domestic transshipment of goods be made via Port Klang using Malaysian-registered vessels, Wong said it is far from the truth.
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He said first of all, there has never been any restriction on foreign vessels from calling direct to Kota Kinabalu port."That's one of the myths told to the public and consumers by industrialists and some politicians. The truth is the government has never restricted foreign vessels from calling to Kota Kinabalu port or for that any other ports in Malaysia," he said.Secondly, he argued that the cost of shipping between Port Klang and Kota Kinabalu port is still far cheaper than from other foreign ports.
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"They say shipment from Port Klang to our port is expensive. But cost of shipping between these domestic ports is only RM1,500 (freight charges and bunker) as compared with USD550 from Singapore which is basically almost the same distance to the State from the peninsula," he said.He argued that if local importers were to ship directly from foreign ports, which he said is not restricted by the government, they would have to pay a lot more on shipping costs.
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Critics have complained that Sabah industry players and consumers have been paying up to 30 per cent more for goods due to transshipment costs to Kota Kinabalu from Port Klang, whereas other States in the peninsula are spared from this as they can be transported over short distances using cheaper land transport.Wong insisted however that additional ex-factory costs do not concern the Cabotage Policy."Recently, I requested for a quotation to send goods from Kuala Kangsar to Tawau. The factory quoted me between RM4,000 and RM4,500. Minus the freight charges, there was an additional cost of between RM2,000 and RM2,500 to send the goods from Kuala Kangsar to Port Klang that takes six to seven hours."But they can't blame the Cabotage Policy for the additional cost has nothing to do with it. All the exporters know this," he said, adding that it is also normal practice among exporters to deal with factories located near Port Klang to avoid high transport costs, unless they have no choice.While calling for the policy to be scrapped, STAR Sabah chief and Bingkor assemblyman Datuk Dr Jeffrey Kitingan had blamed it of causing the failure of the State's manufacturing sector and its low GDP contribution, as well as costing the 3.2 million people in Sabah an estimated RM200 each per month.But Wong said Jeffrey should not have put all the blame on Cabotage Policy as shipping costs only contribute a small percentage rise to the price by the time they land in Sabah.Citing the price of imported rice as an example, Wong said Jeffrey should do his own homework how much it rises down the supply chain to consumers. "Shipping cost only adds up about five per cent to its price. But has he checked how much the retailers are selling in stores? Has he checked the price of rice sold in interior areas? So why conveniently put all the blame solely on the policy for obviously there are other factors involved that affect the prices of goods being sent to Sabah from Port Klang," Wong said, insisting that abolishing the policy will not bring down the prices of goods anyway.Still, he wondered how Jeffrey could arrive to the figures as they would be running up to RM7.7 billion annually."That's twice our State budget. I doesn't make sense," he argued.He also said other foreign countries like Australia implement similar policy for the same purpose of protecting and promoting a strong national shipping-owning industry. Malaysia has been implementing it since 1980.Wong said despite his defence of the policy, he understands the sentiments over the higher price of goods between Sabah and peninsula Malaysia."It's something that we can't avoid because of the distance between our State and the places where we get most of the goods from. Unless we can produce most of them in Sabah, we'll still have ship them over and there's always going to be some costs involved. "But I stress that this is not because of Cabotage Policy," he said.Transport Minister Datuk Seri Liow Tiong Lai had reportedly said the Cabotage policy could not be repealed as it is the country's sovereign right to have it under the Malaysian Merchant Shipping Ordinance 1952. He said the policy could not be revoked under Section 65KA (1) of the ordinance which stipulated that 'no ship other than a Malaysian ship may engage in domestic shipping'.Stay up-to-date by following Daily Express’s Telegram channel.
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