Liow: Cabotage policy to be reviewed to bring down cost of goods in east Malaysia

KOTA KINABALU: The Federal Government is set to review the cabotage policy that has been widely blamed for higher cost of goods in Sabah and Sarawak.

Transport Minister Datuk Seri Liow Tiong Lai said the Government is reviewing the policy even though the higher cost of goods in Sabah are due to other factors.

The review will enable further liberalisation "to ensure affordable cost of goods and services", he said in his welcoming remarks at the Sabah Ports Forum opened by Chief Minister Datuk Seri Musa Aman here on Thursday.

(The cabotage policy requires all domestic transport of goods to be conducted by Malaysian vessels, and as such goods bound for Sabah will have to come in via Port Klang, thus increasing costs. Sabah businesses want ships to come in directly.)

Liow said there is a long-standing debate on why goods in Sabah and Sarawak cost more than in Peninsular Malaysia, and many attributed it to the cabotage policy.

However, he said that a World Bank study on national port strategy found that cabotage and shipping costs are not the main reasons for the higher price of goods in Sabah.

"According to the study, the high costs are a result of weak distribution channels, high handling charges and inefficient inland transportation," Liow said.