The federal government has decided to exempt Sabah, Sarawak and the Federal Territory of Labuan from its cabotage policy with effect from June 1.
The move will enable foreign ships to bring cargo directly to ports in the Borneo regions, thereby allowing people there to access goods from international markets without having them brought via peninsular Malaysia as is the practice now.
It is also expected to help reduce the costs of products imported into the region.
In making the announcement today, Prime Minister Najib Razak said while the exemption is applicable to all ports in Sabah, Sarawak and Labuan, it will also allow inter-state cargo to be moved between ports in Sabah and Sarawak.
Speaking at the launch of the Ekspresi Negaraku programme in Sandakan, he said the decision was made following the recommendation of the Sabah government and the state Barisan Nasional (BN).
Also present were Sabah Chief Minister Musa Aman, Communications and Multimedia Minister Salleh Said Keruak, several federal and state ministers and community leaders.
The Malaysian cabotage policy emphasises that only vessels registered in Malaysia are allowed to load and unload cargo in the ports of Malaysia. The whole idea behind this policy is for Port Klang to be the container hub port in Malaysia.
In an interview published on FMT on Tuesday, economist Hoo Kee Ping had explained that the policy pushes up the cost of freight charges because everything has to go through Port Klang.
This also affects the time spent to travel to Port Klang, which in turn affects the frequency of trips which can be made.
“Imagine how much faster and cheaper it would be if ships, especially those from China, Taiwan, Hong Kong, Japan and South Korea, could go direct to Sabah,” he said.
On April 25, Sarawak Chief Minister Abang Johari Openg had announced the state’s proposal to the federal government to abolish the cabotage policy during an interview which was broadcast live on TV1.
He reasoned that it was among the ways to lessen the prices of goods in Sarawak.
He also said Sarawak has established facilities to deal with direct international trade, such as the Bintulu Port and other harbours to enable foreign ships to come in.
The next day, Parti Warisan Sabah reacted by urging parties in Sabah to put aside political differences and back Abang Johari’s call.
Its vice-president Junz Wong told FMT that many Malaysians were struggling with the cost of living, more so in Sabah and Sarawak, where the prices of goods are higher than in peninsular Malaysia.
He said abolishing the policy would help reduce logistics and transportation costs, and lower the cost of doing business in Sabah and Sarawak, which would in turn bring down the cost of living.
On Feb 27, Transport Minister Liow Tiong Lai announced that the federal government was reviewing the cabotage policy for further liberalisation mechanisms to ensure affordable cost of goods and services in the Borneo states.