The question of high prices of consumer goods in Sabah and Sarawak is a trade-related issue and should not be conveniently attributed to high shipping cost, in particular as problems created by the implementation of the cabotage shipping policy.

 
Making this point the Chairman of Malaysia Shipowners Association, Ir Nordin Mat Yusoff, said if high shipping cost was the only reason for high prices of consumer goods, then it is only reasonable to assume that when shipping cost declines, consumer goods prices must decline likewise.

 
“But this has not been the case; total ocean freight rates declined by about 41 percent (%) in the last 6 months in the Peninsular-Sabah/Sarawak trade but this has not been reflected in the landed prices of consumer goods,” he noted.

 
Ir Nordin said total freight rate, composed of basic freight rate and Bunker Adjustment Factor (BAF) has actually fallen quite dramatically – basic freight by about 10 percent (%) and BAF by more than 300 percent (%) - “but it is unfortunate to note that consumers are not beneficiaries of our lower prices.”

 
“We as shipowners are also concerned over the high prices of consumer goods because we expect our reduced freight rate to be reflected on prices of consumer goods. But this has not been the case,” he said, adding “there is a need to find answer to this instead of blaming the cabotage policy as being responsible for the high prices of the consumer goods.”

 
The Cabotage shipping policy reserves the domestic trade between any two ports in the country to be served by only Malaysian owned shipping companies with Malaysian-flagged ships. There are about 3,400 Malaysian-owned ships engaged in the domestic trade.

 
Ir Nordin, said it is evident that the high prices of consumer goods have not been elastic and the cause for this must be investigated scientifically by relevant government agencies in the state, including the Domestic Trade Ministry and MIDA.

 
“We have always maintained that shipping cost is only one component of the total transportation and logistics cost and that it makes up 46 percent (%) of the total. It is therefore unfair to assume, and certainly no way to claim that the 46 percent (%) of the shipping cost is indeed the final arbiter of the landed cost of consumer goods,” he said.

 
MASA has identified 8 other cost components in the transport chain from the exporter to importer and the charges includes among others, port charges, forwarding, trucking, storage and terminal handling charges.

 
MASA was responding to recent complaints by the Federation of Sabah Manufacturers urging the Government to remove the cabotage policy on account of its adverse effects on prices of goods in Sabah.

 
Ir Nordin said MASA would resist any attempts to remove the cabotage policy, a move which could cause huge collateral damage to the Malaysian shipping industry and also undermine national interests.
 
Ir Nordin noted that if indeed the prices of the consumer goods had come down in tandem with the recent declining shipping freight cost, then the argument against the cabotage policy may be strengthened because the nub of the complaint is that protection under cabotage is the cause for the high prices.

 
“But we all know this has not been the case….” he said.

 
The Chairman of MASA also said it was also extremely misleading, and indeed callous, for anyone to suggest that shipping charges from Kota Kinabalu to Southampton as being twice that of similar charges from Port Klang to Southampton because of the cabotage policy.

 
“In fact the argument against cabotage policy cannot be more wrong because cabotage does not prevent any ship from calling between Kota Kinabalu and Southampton much as it does not between Port Klang and Southampton,” he said.

 
Laying the blame squarely on the protection given to Malaysian shipowners under the cabotage for the high prices of exports from Sabah to international markets is basically and fundamentally flawed because any shipping lines, including foreign, are free to call between Kota Kinabalu and any foreign port, Ir Nordin said.

 
Alluding it to as “barking up the wrong tree”, he explained the removal or relaxation of the cabotage policy would in no way change this position because the question of shipping lines serving between Kota Kinabalu and a foreign port of export destination would be influenced by, among other factors, volume of cargo, remoteness (geographical) of the market and port infrastructure and performance.

 
“The fundamental issue is how to bring prices of consumer goods in Sabah and Sarawak down and in our view of shipping, or more specifically the cabotage policy, should not be made the whipping boy,” Ir Nordin said.

 
He said it was also wrong to give the impression the cabotage trade was controlled by shipping cartel.

 
“There is no such thing as cartel; MASA is not a cartel and neither are shipping companies serving the cabotage trade in a cartel. There is an open market out there for shippers (importers/exporters) to shop around for freight rates which suit them from the several shipping companies providing the shipping services,” he said.

 
Urging the manufacturers and producers not to confuse the central issue, he said MASA was willing to sit down with relevant government agencies as well as with manufacturers and producers in Sabah and Sarawak to help jointly identify and examine related costs in the transportation pipeline together with other players in the link, Ir Nordin said.

 
The MASA Chairman further elaborate, the larger national interest of Malaysia as a Maritime Nation must also be served with the Cabotage Policy as it is employed by several developed and developing countries like, the US, Japan, Indonesia, India, the Philippines and many more countries.