Friday 29 Mar 2024
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Cabotage Policy is a policy of great importance to a nation. It refers to the right of a country to regulate transport of goods and passengers by sea within its territorial waters, contributing towards safeguarding a country’s coastal waters, as well as to maintain sustainability of its domestic shipping market.

Malaysia is a country almost surrounded by sea, with its coastline stretching more than 4,700km. Coupled with that, the country’s land mass is divided into two parts that are connected by the sea: one part being Peninsular Malaysia, which is bordered by the Straits of Malacca, one of the busiest shipping lanes in the world, while the other part, consisting of Sabah and Sarawak in the east, is split from the peninsula by the South China Sea. With this geographical significance, it is important to understand that the size of Malaysia’s territorial sea, including its Exclusive Economic Zone (EEZ), stands at an astounding 334,671 km2, slightly larger than its land size of 330,345 km².

As a nation, Malaysia has been able to capitalise on its strategic geographical importance in global trade, emerging from an agrarian economy and becoming what it is today - an important trading nation. Having a sizeable maritime domestic market, with several ports serving the international trade, it has grown through the import and export of manufactured goods, strategic commodities such as oil and gas, palm oil and many more industries. However, Borneo is located off major shipping trunk routes, and this is where Malaysia’s domestic shipping sector has served as a key link between the Peninsula and East Malaysia.

Due to all these factors, the need for a cabotage policy cannot be overlooked. It serves as a crucial catalyst for the development of a sustainable maritime ecosystem and capabilities in maritime assets, thus making sure that the linkage between East and West Malaysia remains functioning, safeguarding strategic commodities and services while reducing reliance on foreign ships.

According to a survey conducted by the United Nations (UN), 91 UN Member States, amounting to 81% of its members have adopted some form of cabotage policy, although the coverage of the policy may vary. One of the most popular forms of cabotage policy is adopted by the United States, governed by the Jones Act. The Jones Act requires that all shipments between U.S ports be carried on vessels that are built, owned, and crewed by U.S citizens. Similar policies also exist in countries such as Australia, China, Indonesia, Vietnam, Thailand, Brazil and Japan.

With regards to cabotage policy, Malaysia is no exception. Malaysia’s cabotage policy is governed by law, which prohibits non-Malaysian ships from engaging in domestic shipping. Even so, Malaysia has adopted several measures to liberalise this regulation, enabling foreign ships to participate in the domestic shipping market.

It is important to understand that cabotage policy does not prohibit international trade. In actuality, there are international shipping routes that serve East Malaysian ports. For example, there are rice shipments directly to these ports from Ho Chi Minh City, regular container ships calling from Taiwan and Singapore, many foreign tankers loading crude palm oil directly at East Malaysian ports as well as foreign bulk carriers discharging fertilisers and iron ore directly at Sandakan, Tawau and Bintulu. All these examples show that shipping routes have existed throughout the 40-year implementation of cabotage policy.

Secondly, there is also a misunderstanding that the cabotage policy dictates that all ships must make the port call at Port Klang before continuing their journey to Kuching port and Kota Kinabalu port. There are no such conditions imposed on domestic or foreign ships, as both state and federal ports do have foreign ships calling at them directly.

In conclusion, cabotage is a global norm, adopted by 81% of UN countries with coastlines. It is a catalyst for the development of a sustainable maritime ecosystem. Due to Malaysia’s unique geographic features and combined with a vast EEZ area with high potential for blue economy development, cabotage is relevant to Malaysia. Coupled with that, the need to safeguard the linkages between East and West Malaysia, particularly for food security as well as national security justifies the implementation of cabotage.


Mohamed Safwan Othman is the chairman of the Malaysia Shipowners’ Association

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