KOTA KINABALU: The Federation of Sabah Manufacturers (FSM) is not asking the Government to abolish the cabotage policy but to fully liberalize the sector between Kota Kinabalu and Port Klang, said its president Datuk Seri Panglima Wong Khen Thau.
He said the federation is not a political organization and only requests that its grievances be addressed.
Wong said FSM is not against effort to promote the growth of the shipping industry but there must be an amicable solution, a win-win solution, for both the shipping companies and the industries in Sabah.
“We hope the Federal Government, especially the Ministry of Transport, will be impartial and consider Sabah industries to be as important as the shipping industry,” he said at a press conference here yesterday.
Wong pointed out that Malaysia was recently ranked the 12th most competitive economy for doing business in the world by the 2013 edition of The World Bank’s ‘Doing Business’ report.
“Why are we so afraid of opening up? Shipping industry has to compete,” he said.
Countries like Singapore, Taiwan, Japan and the United Kingdom do not have cabotage policy, yet their shipping industries are better, he said.
“The minister (transport) said he feared that if foreign ships come in, eventually foreign companies will dictate the (shipping) price,” he said, adding however that it will be difficult for foreign shipping companies to form a cartel in Malaysian waters.
In fact, a cartel is already in existence among local shipping companies in the country, Wong asserted.
He said Malaysia Shipowners’ Association (MASA) has admitted that shipping costs contributed at least 40 per cent of the logistics costs.
The remaining 60 per cent of the costs include forwarding, port charges, land transportation and insurance, he said.
“Don’t you think 40 per cent is substantial as a single item, as other factors such as transportation, port changes and many more account for the rest?.
“Or are you telling us all Sabah entrepreneurs are high profiteers? If so, what is the authority doing?” Wong asked.
Despite the highest road tax in Sabah (road tax for a prime mover in the state is RM2,000, Sarawak none, Peninsular Malaysia RM200), Wong said land transport here is the cheapest, even cheaper than shipping costs.
Stressing his point, Wong said fuel charges for a 40-foot container from Port Klang to Sabah is RM2,800, while the charges for the same container from Shanghai, China to Europe is RM3,800, a mere RM1,000 difference for a distance more than 60 times greater.
“FSM’s stand is very clear. We feel that this is a social problem that affects the livelihood of people and the industry,” he said.
Wong said FSM has discussed the issue multiple times with the Transport Ministry, the latest was two weeks ago with MASA, Transport Ministry and Pemandu representatives. Another was held in Sarawak chaired by the secretary-general of the Transport Ministry in Kuching.
“Cabotage policy aims at protecting local ships, ship owners and those who have vested interest.
“If it is protecting the welfare of the people especially those in Sabah, we want to know after more than 30 years of the implementation of the policy, how many of us can claim we have benefited from this policy except that we have been continuing to pay more,” he said.
Wong said politicans should talk to FSM to get the real picture of cabotage policy.
He said some ministers and politicians who spoke about cabotage did not seem to understand the policy, and FSM was never consulted by the politicians who spoke on this matter.
Cabotage policy does not mean that foreign vessels are banned from coming into Sabah and bringing goods out of the State, he said.
Since British colonial times, foreign vessels from any countries can come to Sabah and take goods out of Sabah directly, he said.
Cabotage policy, which was introduced in 1980, entails barring foreign ships from picking up goods from one port within Malaysia to be transported to another domestic port within the country.
“This means that foreign vessels are not allowed to pick up goods from Port Klang and come to Sabah, or vice versa.
“Only local shipping companies with Malaysian licenses are allowed to carry goods within the country,” he said.
“In essence, cabotage policy means foreign vessels cannot pick up goods from domestic ports and transfer them to another port within Malaysia.
Foreign vessels which enter the country can actually enter Sabah, unload in Sabah, or go to Sarawak and unload in Sarawak; but they just cannot pick up goods from one port and bring them to another port within the country, he said.
Wong said a lot of people and politicians do not understand why businesses in Sabah could not just import directly from other countries since foreign vessels could unload in Sabah.
For foreign vessels to come to Sabah directly, they must have enough load and in this case, the ships most likely did not have sufficient load due to our smaller population to justify a trip to the state as it would cost more.
Hence, the foreign vessels would enter Port Klang, and let local vessels carry the goods to Sabah.
Goods from Peninsular to Sabah are substantial, Wong said, adding that Sabah import 70 per cent of the goods from Peninsular.
If there is no cabotage policy, foreign vessels would have a higher chance to stop by in Sabah even though only 30 per cent of the cargoes or goods on board are destined for the state because they could pick up goods from the state and bring them to Peninsular Malaysia.
Due to the cabotage policy, exporters have to pack their goods into a container in Sabah, and use a local shipping company to send the container to Peninsular Malaysia.
As international shipping companies have their own containers, the said container from Sabah has to be opened up and repacked into another container owned by an international company.
This process not only incurs double handling charges, but also risks having goods stolen or damaged, Wong said.
If there is no cabotage policy, there is potential for international shipping companies to leave their containers here, he added.
At present, Wong revealed that some of the entrepreneurs in Sabah have to resort to importing an empty container at a cost of USD500 to Sabah and send a full container back to Port Klang to be exported to another country.
Also present at the press conference were FSM vice presidents Datuk Ng Lai Su, Datuk Mary Ling, Richard Lim and other committee members.