Discrimination and Disfranchising Sabah – The Cabotage Policy


Overview of the Cabotage Policy

The Cabotage Policy

The Effect of Cabotage Policy to Sabah Economy

Beneficiaries to the Cabotage Policy

Cabotage Policy and the BIMP EAGA

Circumventing the Cabotage Policy

The Effect of Cabotage Policy to Sabah Economy

Perhaps the Cabotage Policy is good for national prestige or the success of the Export Oriented Industrialization in Malaya; for Sabah the same policy is constraining Sabah from realizing its true economic potentials.  With hindsight the policy which has been carried on for the last 27 years is not showing any effect aspired by the Federal government.  After 27 years Port Klang still could not overtake the Ports in Singapore in terms of the number of ships and volume of containers that is using their facilities.  Even with Tanjong Pelepas development in Johor did not make any impression in Singapore’s port operations.  Therefore, the Federal government must now realize that competing with Singapore in this manner is a futile exercise.

In Sabah the Cabotage policy is one single cause for in prices of goods between Sabah and Malaya.  Imagine the United States a country which has 8 time zones have standardized the price for goods from one coast to the other.  A double Cheeseburger in New York will cost the same in Los Angeles.  Sabah and Malaya is within less than 1 time zone, yet the goods having huge price difference.  This can only mean that there is no serious and concerted effort to integrate the economy between Sabah and Malaya even after being independent for 47 years.

It also means that spending RM1.00 in Kuala Lumpur gets goods value at RM1.00 but the same RM1.00 spend in Kota Kinabalu is only worth RM0.70 cents.  The price of goods between Sabah and Malaya differ between 20 to 30% – a very good example the price of News paper such as the New Strait Times, Berita Harian and the Star.

In some consumer packages it is always printed the peninsular price and the East Malaysia price.  The price difference is not a fantasy or the result of some frustrated mind, it is real.

At the heart of this price difference is the Cabotage policy.  It is no secret that a container from Port Klang to Hong Kong only cost RM200.00 similarly from Hong Kong to Port Klang.  The excuse that there are not enough containers going to Kota Kinabalu or that container coming out of Kota Kinabalu is mostly empty is lame and over used.  This is because all that is needed is the Federal government to recognize and serious to tackle the problem.  All the Federal government need to do is to allow ships from Hong Kong to stop over in Kota Kinabalu before proceeding to Port Klang and vice versa.  The price of container can drop from RM2,436.00 to less than

RM200.00 which means Sabah can cut the price of its goods and have money left for other productive activities.

Apart from the price of daily consumer goods, the Cabotage policy has single-handedly stopped the industrialization process in Sabah.  It is not surprising therefore, foreign investors are unwilling to come to Sabah and open their factories.  Their products which are assembled in Sabah will be 4 times more expensive than the same product assembled in Malaya.  This has nothing to do with the higher land price in Sabah, or more expensive labor cost or the higher rate imposed by the utility companies.  The main cause for a higher cost of living in Sabah is because higher price of goods specifically consumer goods.  Goods in Sabah cost higher is because the cost of transporting these goods into Sabah is too expensive.  The main part of the transportation cost is the sea freight charges.

It is really sad, Sabah produces most of the Tropical hardwood in the world market today, yet whatever effort that Sabah did to develop its downstream industry to value add timber products will always fail.  Sabah cannot even develop its own furniture industry because Sabah cannot compete with the price Vietnam offered in the US and European market.  Most of the timbers for the Vietnamese factories are actually imported from Sabah.  It is cheaper to export timber than to value-add it through downstream process and export as furniture.  This is because the price difference in the transportation cost.

On the 13th May 2010 Daily Express, again made calls to the Federal government to do something about the high freight charges.  After more than 27 years of asking, the answer remain the same, the Federal government is still studying it.  The plights of the Sabah Furniture Association show the plight of Sabahans:

“…shipping one 40ft container from Sabah to Europe costs approximately USD700 and is more expensive than exporting from Port Klang or Ports in China or Vietnam to Europe.  The cost of shipping 40ft container from Sabah to Port Klang is RM1,000.00 (USD300.00)  this is one of the reasons foreign buyers view products manufactured in Sabah as very expensive….”

Sharon Tsang, President Sabah Furniture Association, Daily Express 13th May 2010

Typically, it will cost a Sabah factory more than RM4,000.00 to transport a container from Sabah to Europe or the US.  The same container will cost less than RM2,000.00 if it were transported from Vietnam to Europe or the US.  As the result, it is cheaper and makes more business sense to sell the timber to Vietnam and let them sell the furniture to Europe and US.

Assembly line factories will not make business sense to locate in Kota Kinabalu.  Apart from the frequent black out plaguing Sabah, the Cabotage Policy is also the culprit that makes it impossible to run a profitable assembly line factory in Sabah.  This is because components have to be imported and finish products need to be exported.  A similar product made in Klang Valley will cost four times cheaper.  It is due to this one simple reason that Sabah cannot even compete with states such as Melaka or Negeri Sembilan which have no natural resource compared to Sabah.

Therefore in the heights of the Export Oriented Industrialization frenzy between mid 80’s to mid 90’s, Sabah was never a priority state to carry out any Export Oriented Industrialization strategies.  As the result, no such industries exist in Sabah till this.  Similarly the downstream industries that are currently being implemented in the Palm Oil Industrial Cluster (POIC) in Sandakan and Lahad Datu will meet the same fate as the Furniture industries in Sabah – because of the Cabotage Policy.


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About sifusiber
A husband & a father who wants his children to have a better future

8 Responses to Discrimination and Disfranchising Sabah – The Cabotage Policy

  1. Pingback: Response to Messrs Vidal Yudin Weil – legalandprudent.blogspot.com | Knowledge is Empowerment

  2. Pingback: Gaji Minimum Sabah Sarawak: Tindakan Penganak-tirian Kerajaan BN? | Kajian Politik untuk Perubahan (KPRU)

  3. lderple says:

    Saya yakin asalkan semua pihak bersatu, bekerjasama dan mengamalkan nwin-win situation, Sabah pasti akan lebih maju:)

    • sifusiber says:

      Ini lah yang selalu di amalkan oleh orang Malaya keatas Sabah – win-win situation. They win dan di Sabah hanya talibarut mereka saja yang win, rakyat merana. Di minta kita bersatu, ini bukan masalah Sabah, perpaduan masalah Malaya. Mungkin menjadi kenyataan kepada orang Sabah yang mengamalkan ideolgi Malaya. Bilangan mereka terlalu kecil dan kebanyakan mereka adalah talibarut dan dalang.
      Sabah sepatutnya maju sejak USNO lagi, namun kemajuan ini telah oleh pemimpin Malaya dengan dalang dan talibarut mereka di Sabah. Perkara ini perlu diperjelaskan kepada semua rakyat negeri Sabah supaya mereka boleh membuat keputusan sendiri. Knowledge is Empowerment, di perkasakan dengan Ilmu.

  4. analyst06 says:

    I have just read today’s Daily Express (Tues, 8th June 2010) and what caught my attention was the Gerakan Special Eight-Point 10th Malaysian Proposal for Sabah in a memorendum to the Prime Minister. Most of the points that Gerakan has given to the Prime Minister is actually the points that you have been raising all these years in Seminars, newspapers and blogs (even this blog). It is sad no one acknowledge you and your struggle. This is unfair for Gerakan just to take things for free.

    • sifusiber says:

      simmer down analyst06,

      The whole point in establishing this Blog is to empower the people through spreading of knowledge. This is whole point of our existence. That is why we must always remain faceless and nameless.

      People may speculate, we let them. Speculation is part of reflection, it induce the Brain juices.

      What we write in the Blog is for all to share, what Gerakan has done will be good for Sabah, for that I am content. All of you should be content.

      The government or the opposition may share whatever we have to give, but they must do it for the sake of the people not for their own political influence.

      Please do not forget, there is always the implementation part, they will continue reading our blog because we shall always be watching them.

  5. ikangelama says:

    bersimpati dengan Sabah yang harta dan kekayaan telah dibahagi samarata dengan seluruh negeri-negeri di SM. Masalahnya Sabah mempunyai keluasan geografi yang besar so, segala peruntukan yang disalurkan sukar tersebar ke seluruh kawasan.

    • sifusiber says:

      Terima kasih, sekiranya harta dan kekayaan dibahagi sama rata, orang di Sabah tidak akan bersungut. Namun harta dan kekayaan tidak diberikan sama rata bermulalah sungutan, apabila sungutan tersebut tidak dipedulikan sehingga 27 tahun seperti dasar kabotaj ini, sungutan akan menjadi kemarahan dan ini tidak memberikan faedah kepada sesiapa pun. Terkecuali mereka yang terlibat dalam sektor perkapalan. Mereka mengaut untung yang lebih, sama besarnya dengan subsidi toll lebuhraya. Sekiranya kerajaan sanggup membayar RM50 billion untuk membeli kembali lebuhraya. Kenapa tiada usaha menggunakan wang kurang daripada RM1 billion untuk membeli kapal kontena?
      Ini bukan permintaan yang tinggi atau boleh melemahkan Negara. Namun ia mungkin boleh melemahkan MCA dan sekutunya. Sanggupkah BN membiarkan Sabah untuk menghidupkan MCA?

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