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Why not produce cooking oil?
Published on: Thursday, July 03, 2014

Kota Kinabalu: The call for the abolishment of the cabotage policy as a solution to address the disparity in prices of goods between Peninsular Malaysia and Sabah and Sarawak might do more harm than good to the country's shipping industry.

Sabah Bumiputera Chamber of Commerce (SBCC) Honorary Treasurer Datuk Roselan Johar Mohamed said by doing away with the policy, foreign shipping companies would find it an opportunity to get involved in the domestic trade.

"There has never been a sovereign country who has allowed foreigners to ply their domestic waters," he said Wednesday.

The business community in Sabah as well as Sarawak have long been against the cabotage policy, asking for its abolishment in order to address the price disparity of goods between Peninsular Malaysia and Sabah and Sarawak.

Under existing policy, only Malaysian-flagged ships are allowed to transport locally-manufactured goods from the peninsula to Sabah and Sarawak, and foreign shipping companies are not allowed to transport Malaysian goods produced in the peninsula to Sabah and Sarawak.

Roselan Johar said shipping had always been high on turnover and very low on margins and was very sensitive to delays and inefficiencies by third parties and inclement weather.

"We in SBCC have accepted in principle that the main reason for the price disparity is due to the one-way traffic currently experienced in the shipping trade, in which the inbound freight is bound to be higher than the outbound freight," he said.

Therefore, he said if there were enough cargoes for the large amount of empty containers held in Sabah, then the inbound freight could be slashed by at least 30 per cent.

"Fortunately, our present government is going heavy on palm oil and we have at the Palm Oil Industrial Clusters numerous biotech industries designed to promote export," he said.

But the downside to the palm oil industry was that Sabah has no cooking oil factory and still has to import the product from the peninsula, he said.

He pointed out that if there was a cooking oil factory, Sabah could export cooking oil to Peninsular Malaysia in containers, which could reduce the trade imbalance.

In addressing the trade imbalance, Roselan Johar said Sabah's vast arable land could be utilised for corn plantation to reduce importing 15,000 metric tonnes of corn monthly from overseas, which cost RM200 million annually.

"We have to devote our attention towards encouraging more corn plantation for the animal feed mills, whereby the excess corn and excess animal feed can now be exported to Peninsular Malaysia, all in containers...Again reducing the trade imbalance," he said.

Roselan Johar said another remedy to address the trade imbalance was to aggressively promote seaweed cultivation which is highly in demand worldwide and export shipments were all in containers.

"With the Brunei, Indonesia, Malaysia and Philippines East Asean Growth Area's (Bimp-Eaga) heavy commitment towards this endeavour, we are not surprised that soon, Tawau can become a collection and exporting centre for seaweed.

"Tawau is part of Bimp-Eaga's 3T Economic Zone which links the Sabah district to Tawi-Tawi in the Philippines and Tarakan in Indonesia," he said.

Roselan Johar, who is also Chairman of the Bimp-Eaga Business Council Malaysia, also said the relocation of industries to Sabah was encouraged as the Bimp-Eaga territory has a population of more than 70 million.

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