PETALING JAYA: Cabotage in the shipping industry is quite prevalent, with 91% of UN member states that collectively account for 80% of the world’s coastlines having some form of restriction against foreign-flagged vessels.
“For example, China practises a strong regime of cabotage, which means they do not allow Malaysian ships to trade in the Chinese coast.
“Indonesia, which for many years never had a cabotage policy, decided to impose the policy in 2014, which resulted in a staggering 140% increase in merchant fleets and tonnage between 2014 and 2019, ” said Tan Sri Halim Mohammad, chairman of the Malaysian External Trade and Development Corporation (Matrade).
Speaking at a webinar on the subject of shipping cabotage, organised by Tuaran MP Datuk Seri Wilfred Madius Tangau on Monday, Halim said Malaysia had a lot of catching up to do when it comes to grabbing a slice of the commercial shipping pie, despite being located next to the Malacca Strait.
The webinar also featured Penampang MP Datuk Darell Leiking, Sabah Skills & Technology Centre chairman Datuk Seri Wong Khen Thau, and Malaysia Shipowners’ Association executive councillor James Ong.
Claiming that Malaysia only shipped 0.5% of the world’s trade, Halim said the reason is because its “merchant fleet has been regressing and sleeping”.
“As we know, 65% of the world’s trade is on container ships, and sadly, Malaysian participation in this trade is almost zero, ” said Halim.
Pointing to Sabah as an example, he said it should put its focus on how to grow its maritime industry, in view of its extensive coastline that is close to 4,000km in length.
This feature offers so much potential that has yet to be unlocked, said Halim, who is also the founding director of the Halim Mazmin Group, a conglomerate whose core business revolves around operating cargo ships, other than ship brokering and chartering, including tankers and container vessels.
“From Sepanggar Bay to Lahad Datu, Sandakan and to Tawau and then onwards to the Philippines, this is a huge opportunity for ships coming into Sabah in future, ” he said.
He also challenged Sabah businessmen to form a consortium to ship palm oil, claiming there are no Malaysian-flagged ships doing the job currently, despite palm oil being the country’s critical commodity.
“So, can you imagine, when there is international hostility, and no foreign ship can come to load your palm oil to Europe, what are you going to do?
“As you know, palm oil can’t keep for too long. I used to carry 500 tonnes last time, and today, tankers are carrying 30,000 to 40,000 tonnes into Europe.
“So, I urge them to take up this challenge, because I think this is a golden opportunity for Sabah. For as long we grow and export palm oil, we should take this first step, ” said Halim.
On the higher prices of goods in Sabah, he said a study by the Maritime Institute of Malaysia (Mima) and the World Bank found there has hardly been any reduction in the prices of goods in Sabah since Malaysia liberalised the cabotage policy in Sabah, Sarawak and Labuan effective June 1,2017.
With the liberalisation, foreign vessels can ship goods directly to Sabah, Sarawak and Labuan from Peninsular Malaysia, and vice versa, without the need for a domestic shipping licence.
Halim cited a study titled “The Influence of Cabotage Policy on Price Disparity Between Peninsular Malaysia and Sabah” published in 2018, which said weak distribution channels, including the inefficiency of ports there, high handling charges, and inefficient inland transportation and other factors, had caused prices in Sabah to be higher than Peninsular Malaysia.
Halim also commented on the issue of national sovereignty, especially when it comes to submarine cable repair and maintenance in Malaysian waters.
He said caution should be exercised when foreign ships are here to perform the job, as national security could be jeopardised if authorities are careless.
“We don’t know what they are doing. They can be mapping our seabed under the pretext of doing cable repairs.
“So, this is something we have to be serious about – our maritime security, ” he added.