KUCHING, March 2 — The state government’s decision to request the federal government to reinstate the cabotage policy was made after consulting the various stakeholders, state Transport Minister Datuk Lee Kim Shin explained today.

He said his ministry has conducted several discussions and meetings with various stakeholders, with the last meeting held on March 3, 2021, which was attended by 68 participants.

He added the Maritime Institute of Malaysia (Mima) was also invited to deliberate on their findings of their study on the policy in Sarawak.

“All members in the meeting supported the reinstatement of the policy,” he said when responding to an announcement by the federal Transport Minister Loke Siew Fook yesterday.


According to Loke, the federal Cabinet had agreed to Sarawak government’s request to reinstate the policy which was halted in 2019.

“With full support from the industry players and after consultation with Premier Tan Sri Abang Johari Openg and supported by Sarawak Cabinet, I officially conveyed the latest Sarawak government’s decision in implementing the Cabotage Policy for Sarawak to the federal Minister of Transport in August last year,” Lee said.

He said according to the Sarawak Manufacturers Association (SMA), the rise in the price of goods was not due to the imposition of the policy but due to other components of the transportation cost such as land, bunkering and port handling charges.


He added the liberalisation of policy has no impact on reducing the cost of doing business in Sarawak.

“The liberalisation of policy also has led to the decline in the demand of cargo for Sarawak shipping companies to transport, which resulted in loss of revenue that forced them to downsize their operations, shipping fleet and number of employees.

“The liberalisation has allowed foreign ships free passage on Malaysia waters including Sarawak without restrictions, hence poses a risk of compromising the national security,” Lee said.

He added the liberalisation impacts the local shipowners with higher expenses due to the difference in operating cost, route coverage and the economy of scale.

“The reinstatement of the policy will reduce the outflow of foreign exchange earnings of ocean freight and instead will contribute greatly to the savings and earnings for Sarawak,” he said.

He said the reinstatement will protect the domestic shipping operators and shipbuilding industries.

“The imposition of the policy will create more spin-off effects to the economy by supporting the domestic shipping eco-system and increasing the involvement of local shipping companies and related services as well as providing more jobs for local seafarers and other logistic supply chain services,” Lee said.

The cabotage policy was introduced in 1980 and aimed at developing local shipping and minimising dependence on foreign vessels and the outflow of foreign exchange in the form of freight payments.

In 2019, the then-Pakatan Harapan government revoked the cabotage policy for cable repair work, which exempted submarine cable maintenance vessels from applying for domestic shipping licences (DSL).

The policy requires all foreign vessels to unload at Port Klang, the designated national port, after which only Malaysian-flagged vessels can carry cargo to other ports in Malaysia.

The policy was criticised for creating additional freight costs to importers and for allowing domestic shippers to monopolise the market.