Some Malaysian local shipping companies are looking to shift their bases out of the country in order to avoid potential losses from the removal of the cabotage policy.
The Malaysian government announced removing the cabotage policy on Sabah, Sarawak and Labuan from June 1, giving foreign ships the green light to transport cargo domestically.
According to Ooi Lean Hin, chairman of Malaysian Shipping Association, a few local shipping companies have been considering relocating their businesses to Singapore.
“Although we will need to submit our application to run a tax-free domestic trade in Malaysia periodically, in Singapore we don’t need to do that and we are free to use any nationalities as our crew,” Ooi said to local media.
The Malaysian government said the exemption of cabotage policy for East Malaysia will help to reduce the price difference of goods in rural and urban areas.
“The decision was made by the Prime Minister Datuk Seri Najib Tun Razak after research was done on the policy and it will surely benefit the people in East Malaysia,” said Malaysia’s Minister of Works Datuk Seri Fadillah Yusof.
However, Ooi disagreed assertions that cabotage is responsible for the rising cost of consumer goods in the region. He said the government’s Economic Planning Unit had also disproved such claims.
Ooi said it is hard to forecast the losses for local shipping companies and he urged the government to reconsider the decision.