THE SABAH Employers Association has expressed scepticism about benefits arising from the federal government’s discontinuation of its National Load Centre policy, which had centralised cargo shipping activities in Port Klang on the peninsula.
Its president Yap Cheen Boon questioned the impact that this would truly have on Sabah’s shipping industry after the state’s economy was curtailed by federal policies for decades. He said the decision marks a significant shift in the federal policy which had affected other state ports in Malaysia for years.
“Firstly, Sabah’s diminished economy may not attract international shipping lines, limiting its potential to transform into a major transshipment port serving the East Asia region,” he said in comments made to The Vibes.
“Secondly, the shipping trunk route between Sabah and West Malaysia remains restricted under the Domestic Shipping Licence (DSL) requirement, impeding competition and preventing cost reductions for consumers and businesses.
“Moreover, with Sarawak and Kalimantan actively enhancing local manufacturing capacity and port facilities, Sabah faces fierce competition.
“Without proactive measures, it risks playing a subordinate role not only to Port Klang but also to ports in Sarawak or Kalimantan,” he added.
Yeoh said that Sabah must strengthen the local manufacturing industries to ensure sustained export growth.
He stressed that foreign direct investments (FDIs) alone may not be sufficient, as these often result in exports of semi-finished goods to specific countries through global value chains.
Yap explained that this offers limited opportunities for local export factories.
He added that the Sabah government should address and eliminate unreasonable import costs, including the removal of the DSL requirement, monopolistic shipping charges, and inefficient fees associated with unproductive port operations.
As it is, foreign shippers are apparently giving the Sepanggar container port in Sabah a pass, preferring to unload in Port Klang for a slew of reasons.
International shipping companies are avoiding the port largely due to inefficiencies and insufficient volume of pick-ups, a situation exacerbated by the cabotage policy.
The subsequent liberalisation also did not resolve any of the issues even after the cabotage policy was rescinded in 2018, allowing foreign vessels to dock at the ports in Sabah directly.
This has not resulted in a lower cost of living in the state.
As a result, Port Klang experiences a bottleneck, compelling Malaysian shipping companies to pick up goods left destined for East Malaysia.
The Malaysian shippers are thus prompted to impose additional shipping charges.
Last Friday, Transport Minister Anthony Loke had announced that the National Load Centre Policy, introduced in the 1990s to centralise cargo services in Port Klang, is no longer applicable.
Remarking on the move yesterday, Sabah Industrial Development and Entrepreneurship Minister Datuk Phoong Jin Zhe said he sees potential opportunities arising from the decision, but a lot of work is needed to fully capitalise on this new flexibility.
He remarked that Sabah now needs to devise attractive policies for ships to call on ports in the state and to support exports by encouraging local manufacturers to improve trade. – The Vibes, March 3, 2024
