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Masa: Review removal of the cabotage policy
Published on: Friday, August 10, 2018

Kuala Lumpur: The decision to liberalise the cabotage policy in Sabah, Sarawak and Labuan, effective June 1, 2017, should be revisited as it has not only failed to bring down the price of goods but is also hurting local shippers, said the Malaysia Shipowners' Association (Masa).

Chairman Datuk Abdul Hak Md Amin said that the liberalisation of the cabotage policy, which has been blamed for the higher cost of goods in Sabah and Sarawak, was aimed at bringing down the prices in both states which unfortunately has remained unchanged.

"In some cases, the price situation had worsened.

"We can see its negative impact on the local shipping industry and domestic shipping companies, as foreign ships, namely from Singapore, China, Thailand and Indonesia, have started crowding Malaysian waters," he told Bernama in conjunction with the Maritime Week 2018.

He said a number of local shipping companies were struggling and some ended up winding up their business due to unfair competition.

"Our members in Sabah/Sarawak are the most affected. We can see shipping companies from China ferrying cargo from East Malaysia to West Malaysia, filling the vacancy left by Malaysian companies that closed shop," he said.

Abdul Hak said low minimum salary and weak regulations onboard the ship and vessel specification in the countries of origin also played a role in the flood of foreign ships in Malaysian waters, some of which were unsafe and not seaworthy.


In 2017, Malaysia recorded a freight loss of RM25 billion, as cargo was transported by foreign vessels.

"If we manage to secure 30 per cent of these deals, it is good enough due to the depletion of the national fleet which is now at about ten million deadweight tonnage (dwt) from 15 million tonnes dwt and concurrent with the declining number of vessels," he said.

Effective June 1, 2017, Sabah, Sarawak and the Federal Territory of Labuan were no longer bound by the cabotage policy imposed on all cargo shipping services between Peninsular Malaysia, Sabah, Sarawak and Labuan.

Among other things, he said the liberalisation of the cabotage policy had led to more foreign ships moving freely in Malaysian waters as domestic shipping licence were no longer needed.

It was also closely connected to other issues clouding the industry, such as the lack of jobs for local players and reduction in vessels, leading to a shortage of training berths for cadets.

"It is sad that these aspiring youths have no place to do their ship training as required by the law," said Abdul Hak.


He said the issue not only impacted the domestic scene but also the country's footprint on the global map, as the declining number of ships bearing the national flag meant reduced Malaysian presence in international waters.

"We used to have local ships ferrying containers to Europe. Moreover, Malaysia is the world's second-largest palm oil producer and (we) should be leveraging on that.

"But, local vessels are no longer carrying this commodity from Malaysia to China or India and the business is now being conquered by foreign ships, leading to foreign exchange losses," he explained.

Meanwhile, on the RM3 billion transportation development fund announced by the previous government in Budget 2018, Abdul Hak said no details on the fund have been divulged to the maritime fraternity.

"It (funds) has not been disbursed yet, the fund is supposed to give shipowners cheaper interest rates for vessel purchase," he said, hoping that the government would consider continuing the fund to spur the industry.

However, he said imposing application guidelines for the fund, like building the ships locally which will lead to job creation for the local shipbuilding and ship repairing industry, should be considered.


On the Malaysia Shipping Master Plan (MSMP) 2017-2022, Abdul Hak said more concerted effort was needed to ensure its progress.

"To be honest, since MSMP's launch by the former transport minister last year, we have not sat down to discuss the matter and we need to (do so to) speed up things," he said.

Abdul Hak urged the government to look into expanding corporate tax exemption to include offshore vessels, tugs/barges, and also the definition of 'ship' to be consistent with all agencies, as provided for under the Malaysian Shipping Ordinance.

"The definition of a ship varies among government agencies, and this needs to be addressed because it is directly related to the seafarers' income tax and the ship owner's corporate tax," he added. – Bernama

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