Cabotage policy reinstatement ends years-long debate
Published on: Sunday, March 10, 2024
By: Bernama
For illustrative purposes only.
KUALA LUMPUR: The government’s decision to reinstate the cabotage policy exemption brings an end to the years-long debate over allowing foreign ships to undertake undersea cable repairs locally.
Malaysia OSV Owners’ Association (MOSVA) and Malaysia Shipowners’ Association (MASA) have warmly welcomed the government’s decision.
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MOSVA president Jamalludin Obeng said the decision would ensure the sustainability of the capital-intensive offshore service vessels (OSVs) segment.
This also comes as a relief after the industry endured a long, challenging period, starting with the onset of the oil price plunge some 10 years ago and the Covid-19 pandemic, which severely affected the shipping industry.
It also demonstrates the government’s flexibility to undertake measures to attract more foreign investments in the data centre industry and grow the digital economy.
For context, the reinstatement of cabotage policy has its own complexities.
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Previously, it merely focused on the limitation of shipment of goods from Peninsular Malaysia to Sabah and Sarawak.
Now, in the era of technology and fast information, issues surrounding the cabotage policy are more centred on who has permission to conduct undersea cable repairs, the expertise of which continues to be sourced from outside the country.
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The different needs of Sabah, Sarawak, and industry players made it more complicated.
This was why the Cabinet made a distinct ruling for Sarawak, which demanded that the cabotage policy be reinstated to protect domestic shipping operators and shipbuilding industries.
For Sabah, the policy would be liberalised further to allow repairs by non-Malaysian vessels, demonstrating that the policy can be designed to meet the needs of the particular states.
This development bodes well with the royal address of His Majesty Sultan Ibrahim, King of Malaysia, at the Parliament, in which he said that the government should also familiarise itself with the conditions in every state, as each state is different.
“We also hope that enforcement will be stricter as the increase in the Malaysian oil and gas offshore activities in the past year has attracted many foreign owners to reflag their vessels Malaysian through local proxies.
“It leaves the genuine Malaysian vessel owners in a quandary as the competition is not 'apples to apples',” Jamalludin told Bernama.
Jamalludin, who is also Perdana Petroleum Bhd’s managing director, said that there are about 250 Malaysian-owned and operated OSV vessels, which employ some 6,000 experienced seafarers and another 3,000 onshore personnel.
A relieved body is the MASA, which said since the inception of PU (A) 275/2017, titled Exemption under Section 65U, the Malaysian shipping community has endured challenging conditions within the domestic market.
“This is due to the unfavourable condition that the Exemption has put the industry into, resulting in the alarming reduction of companies to five companies from 12 previously serving the Malaysian East-West shipping trade,” it said.
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