ASSIGNMENT : CABOTAGE POLICY
Prepared by: Muhammad Azmi bin Majid
Muhammad Aiman bin Salahuddin
Muhammad Syamim bin Samsudin
Adila bt Azmi
About Cabotage Policy
The Malaysian Government has implemented a policy which
reserves the transportation of goods in the domestic trades to
ship flying the Malaysian Flag.
This policy was necessary because only a small number of
Malaysian registered ships were playing the coastal routes.
It was implemented in Malaysia on 1 January 1980
Objective
Making Malaysia a maritime nation.
Reducing the country's dependence on foreign ships by
increasing the level of participation in Malaysia
international and coastal shipping business;
Engaging in shipping commitments through bilateral,
regional and other trade agreements
Training and development of Malaysians in technical,
professional and commercial aspects of shipping
business and high educational institutional.
Shipping route
Issue on Cabotage Policy
The Borneo Post/Use Muara port to circumvent cabotage
policy/ March 7, 2011. United Borneo Front (UBF) cofounder, Zainal Ajamain:
-Business in Sabah can avoid the extra
shipping costs caused by the cabotage policy by taking
advantage of the loophole in the system and ship their
goods into the state using Muara Port Brunei.
The Borneo Post/ Impact analysis on liberalization from
cabotage proposed/ Oct. 26, 2011.
- Industrial Development Minister, Datuk Raymond Tan
An impact analysis on the partial liberalization of the
cabotage policy affecting operational costs in Sabah &
Sarawak needs to be carried out.
Daily Express / No decision yet to abolish cabotage policy / Nov.
23, 2011. Industrial Development Assistant Minister Datuk
Michael Asang
There is no latest development to the proposal to abolish
the cabotage policy. Government is awaiting an assessment report
on the impact of its liberalization by Maritime Institute of
Malaysia.
Terminal Handling Charge (THC) meeting / Nov.30, 2011
The meeting decided to accept the proposed reduction on the
THC to RM70 per container including the transportation and depot
handling cost. The meeting requested Mr.Lo Shu Kiong to bring
this proposed rate to MASA for further consideration.
Law on Cabotage Policy
On 1 January 1980, the Government of
Malaysia implemented a national cabotage
policy with an aim to protect and promote a
strong national shipping-owning industry. The
Merchant Shipping Ordinance 1952 (MSO)
was amended and Part IIB was introduced.
Section 65B of the MSO establishes a Domestic
Shipping Licensing Board (DSLB) with the
power to issue licenses and Section 65L
provides that no ship shall engage in domestic
shipping without a license.
Domestic Shipping
(a) to provide services, other than fishing, in
the Federation waters or the exclusive economic
zone; or
(b) for the shipment of goods or the carriage of
passengers:
i)from any port or place in Malaysia to
another port or place in Malaysia; or
ii) from any port or place in Malaysia to any
place in the exclusive economic zone or vice
versa.
The MSO further provides that only a Malaysian ship may
engage in domestic shipping. Section 11 of the MSO sets
out the requirements of a Malaysian ship as a ship which is
wholly owned bya) Malaysian citizens; or
b) corporations which satisfy the following
requirements:
i)the corporation is incorporated in Malaysia;
ii)the principal office of the corporation is in Malaysia;
iii)the management of the corporation is carried out
mainly in Malaysia;
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iv)the majority of the shareholding including
the voting share of the corporation is held by
Malaysian citizens free from any trust or obligation
in favour of non-Malaysians; and
v)the majority of the directors of the
corporation are Malaysia citizens.
The Malaysian cabotage policy includes ships used
in the offshore industry within its exclusive
economic zone. However, ships under 15 nett
tonnes and licensed boats are excluded.
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Benefits of Cabotage Policy
The shipping market at Malaysia will be improve
because of only the ship with Malaysia Flag State can
be operate in Malaysia.
Improve the number of the shipping company at
Malaysia
Will increase the job opportunity for Malaysia
citizens
Will low the operation cost for the law enforcement
such as customs.
Weakness on Cabotage Policy
The policy will be create a shipping company that
will be monopoly the market
Operation cost to send a certain product to certain
area of Malaysia will be increase.
Create a kroninisme which because the business trade
will be goes to the company that have been recognise
then to the new company.
The price of the product that will be sell far from the
hub will increase.
Opportunities for good trade transport
policies
Sourcing out materials / parts from the cheapest
sources anywhere, anytime and at favorable costs.
Being close to vendors, suppliers, business partners.
Producing on JIT basis & keeping lean supply chains.
Optimizing inventories and transportation load.
Attaining economies of scale.
Freeing capital and resources to focus on R&D and
improving products / services to customers.
Reducing costs & delivery time along supply chain.
Conclusion
Good trade transport policies enable businesses /
nations to buy from anywhere, make products
anywhere, and sell anywhere.
With good transport policies, shippers can
optimize supply chain to gain competitive edge.
Business- and trade-friendly trade transport
policies are a primer to business and trade
competitiveness, efficiency & productivity.
Trade transport policies must keep abreast of
changes in transportation, ICT, industries,
businesses, production, supply chain
management, market structures.
Thank you
