The Malaysia Shipowners’ Association (Masa) has expressed regret over what it said were unfounded accusations and misinformation being reported by shippers’ bodies in Sabah, alleging that the association has hidden agenda in protecting the Cabotage Policy and blaming the policy for the high cost of goods in the East Malaysian state.

"We have no hidden agenda in protecting the Cabotage Policy and the myth that the Policy is a creation of MASA should stop.

"The Cabotage Policy was introduced by the Ministry of Transport in 1981 as part of a policy instrument to foster the development of the national shipping industry which was identified as a critical sector and also to protect the domestic trade from domination by foreign shipping lines," said Masa chairperson Nordin Yusoff in a statement.

He called on shippers to support the government’s aspiration to make Malaysia a maritime nation, and said that they should have nationalistic values.

He also urged the Federation of Sabah Manufacturers (FSM) to be rational and not make anecdotal comments and sensationalise the issues, but be more evidence-based so that policy planners and the public are not confused or misled.

The business community in Sabah, including FSM, have called for the policy to be liberalised or scrapped, claiming that it does not benefit the domestic shipping lines.

Right to protect our members

Under the Cabotage Policy implemented on Jan 1, 1980, domestic trading between two domestic ports can only use the services of local shipping lines in order to reduce prices of consumer goods.

Nordin said local shipping companies and entrepreneurs are encouraged by the government, with the offer of tax incentive in view of the highly capital intensive nature of the industry, to invest in the development of the domestic shipping industry, which today has grown into what it is because of the Cabotage Policy.

There are more than 200 shipping companies with over 4,500 ships which have taken advantage of the opportunities because of the Cabotage Policy, he said, adding that many of the container shipping companies serving the domestic trade had invested heavily in recent years to serve the increasing demands of the trade.

"Masa as the national body of the shipping industry is duty-bound to protect its member shipping lines since these companies had invested heavily.

"Our right to protect our members is an open secret and we only feel it is not right for rules of game to change midstream after decades of hard work and billions of ringgit invested.

"We can assure that we have no hidden agenda whatsoever in this

regard," he said.

No role in fixing prices

Masa, he said, is neither a shipping company nor a cartel but merely an association representing shipowners interests, just as the Federation of Sabah Manufacturers which is a body representing interests of manufacturers and plays no role in fixing prices of goods sold by its members.

"In fact, the shipping lines compete among themselves and their rates/charges differ from one shipping line to another, and shippers (importers and exporters) are free to choose which shipping line they prefer," said Nordin.

He said reports by FSM quoting a study on the high cost of shipping in Sabah as being sanctioned by the Malaysia Investment Development Authority (Mida) was totally inaccurate.

He said Masa was aware of the "Study to Address the Problems of High Cost of Logistics Expenses in Sabah" but this was commissioned by the State Ministry Industrial Development and Research, Sabah.

"While we are also aware that the report may have been submitted to federal ministries and relevant agencies, including Mida, we are not aware that Mida or for any government agencies have concurred with the findings of the study," he added.

"We hope a copy of the study will be extended to Masa for our views against findings based on which baseless accusations," he said.

Nordin said there was a great deal of misinformation over what constitutes ocean shipping costs, total transportation or logistics costs and shelf prices of goods.

"While we have pointed out that ocean shipping costs make up about 46 per cent of the total transportation cost which involves eight other intermediaries (which account for the 54 per cent of the total transportation costs), this does not mean that the shelf price of goods is a burden with 46 per cent shipping costs," he explained.

Identify additional costs

According to a survey carried by Masa, the shipping cost in a 5-packet standard instant noodles is only 0.02 sen (per 5-packet) but sells in Kota Kinabalu higher by 0.40 sen than the average price in Peninsula Malaysia.

Similarly, the shipping cost is only 0.05 sen in the shelf price of per kilo of sugar and flour sold in Kota Kinabalu, which is higher by 0.10 sen and 0.31 sen respectively in comparison to Peninsula Malaysia.

Nordin said it was obvious that there are other components of the total transportation costs which need to be looked into and addressed than merely attributing the whole thing on shipowners.

"Who is gaining? Definitely, not the shipowners," he stressed.

He also asked why and how Masa or the Cabotage Policy could only be blamed for this.

"We do not want to point fingers but it is obvious there are other than shipping costs which make the shelf price of goods in Sabah high and we are willing to work together with shippers, including the FSM to identify where these additional costs come from," he said.

"Masa has been open on this matter. I think the time has come for all the intermediaries, and also the shippers perhaps, to do so and come out clean on components of the cost structures of each party as we shipowners have done in our earnestness to be transparent and open," Nordin said.

- Bernama