Lee said this will also protect the domestic shipping operators and shipbuilding industries.
KUCHING (March 2): The reinstatement of the cabotage policy will reduce the outflow of foreign exchange earnings of ocean freight and instead will contribute greatly to the savings and earnings for Sarawak, said state Transport Minister Dato Sri Lee Kim Shin.
He said this will also protect the domestic shipping operators and shipbuilding industries.
“This will create more spin-off effects to the economy by supporting the domestic shipping eco-system and increasing the involvement of local shipping companies and related services as well as providing more jobs for local seafarers and other logistic supply chain services,” he said in a statement today.
Federal Transport Minister Anthony Loke announced on March 1 said that the Cabinet has agreed to implement again the cabotage policy for ships operating cargo services from the peninsula to Sarawak, but it will be maintained in Sabah.
He said the decision was made following the Sarawak government’s request to support the local shipping industry’s growth which has been under pressure due to the cabotage policy exemption since June 1, 2017.
On that note, Lee said the imposition of cabotage policy in Sarawak means that the transportation of goods and passengers from any part or place in Malaysia including the exclusive zone shall only be transported by ships registered in Malaysia with valid Domestic Shipping Licence (DSL).
He revealed that in May 2020, the issue regarding the cabotage policy in Sarawak was raised by the Sarawak Manufacturers Association to Sarawak’s Special Task Force to facilitate business and later directed to the state Transport Ministry.
Since then, Lee said his ministry has conducted several discussions and meetings with various stakeholders, with the last meeting held on March 3, 2021 which was attended by 68 participants.
He added the Maritime Institute of Malaysia (MIMA) was also invited to that meeting to deliberate on their findings of their study on the cabotage policy in Sarawak.
According to him, all members in the meeting supported the implementation of the cabotage policy.
“The key reasons are as follows – the rise in price of goods is not due to the imposition of the cabotage policy but it was contributed by other components of the transportation cost such as land, bunkering and port handling charges which needed to be addressed.
“The liberalisation of cabotage policy has no impact on reducing the cost of doing business in Sarawak. The liberalisation of cabotage policy also has led to the decline in the demand of cargo for Sarawak shipping companies to transport which resulted in loss of revenue that forced them to downsize their operations, shipping fleet and number of employees,” he said.
He added that the liberalisation of cabotage policy has allowed foreign ships free passage on Malaysia waters including Sarawak without restrictions hence poses a risk of compromising the national security; and this impacts the local shipowners with higher expenses due to the difference in operating cost, route coverage and the economy of scale.
“The imposition of the cabotage policy will create more spin-off effects to the economy by supporting the domestic shipping eco-system and increasing the involvement of local shipping companies and related services as well as providing more jobs for local seafarers and other logistic supply chain services,” he said.
As such, Lee said he had, with full support from the industry players and after consultation with Premier Datuk Patinggi Tan Sri Abang Johari Tun Openg and the state Cabinet, officially conveyed the state government’s decision in implementing the cabotage policy for the state to Loke in August last year.
Regarding Loke’s other announcement that Cabinet has decided to reinstate the cabotage policy exemption for non-Malaysian vessels to conduct undersea cable repairs, Lee said Malaysia including Sarawak are promoting the development of digital economy including attracting foreign investment in the industry of data centres.
For this to materialise, he said it is critical to have sufficient number of sub-sea cable repair ships.
“Currently, Malaysia has only limited numbers of this type of ship thus the exemption of the cabotage policy on foreign ships involved in sub-sea cable repair work is required in order not to hamper our aspiration on the development of digital economy and establishment of data centres,” he said.