Kota Kinabalu March 21, 2012: The Federation of Sabah Manufacturers (FSM) wants the Federal Government to provide 25-year tax exemption to the State's industrial sector, in lieu of its reluctance to scrap the shipping cabotage policy that is blamed for the higher cost of living in the State.
Its President Datuk Wong Khen Thau (pic) said their request should not be treated as being too much or overboard since the Government cannot do anything to help the State's industries on the cabotage issue.
"We are requesting this from the Government since it cannot help us on the cabotage policy, which by all means it can keep Éthe State's industries have been suffering since 32 years ago and are now at the crossroads and in a dilemma. So I think this is a very fair request," he said.
"After all, we have been helping out the shipping industry for 25 years.
The industry has been enjoying protection from the cabotage policy and a 100 per cent free tax exemption for 27 yearsÉthis (the FSM request) is to compensate whatever we have contributed to the nation's development during the said period," he told a media conference at Sabah International Dairies Sdn Bhd (SID) in Kolombong, Tuesday.
Wong said the State manufacturing industry has contributed more than the shipping industries, by way of the amount of taxes they have paid and that the shipping industries never paid a single tax, as they have been 100 per cent tax exempt since 27 years ago.
"What have they (shipping companies) contributed, as government revenue comes from the taxes which are used for the country's development.
I don't think we are asking for too much, as 25 years is not that long compared to 32 years of our suffering," he added.
He said this at least will help the State manufacturing industry go up to the same level as at the national level's contribution of about 33 per cent of the Gross Domestic Product (GDP), adding the State's industries only contribute about 10 per cent to the State GDP.
The press conference was held in response to Transport Minister Datuk Seri Kong Cho Ha's recent statement on the cabotage policy.
He had said there is a misconception and misperception among the people in Sabah on the country's shipping cabotage policy.
The opposition SAPP immediately called for his resignation for coming to and insulting the intelligence of Sabahans.
FSM was not happy with the Minister's response to this problem which has not only caused the high cost of doing business in Sabah compared to the peninsula, but also the high cost of living in the State.
"We do not need the Minister to come here and tell us about the cabotage policy in other places. Like in United States, China or Australia, they have cabotage policy but it must be realised that in these places they have alternative modes of transportation like railways and road transport for transferring goods," he said.
"But between the peninsula and Sabah, what other kind of transportation have we to transfer goods, it is only via seaÉit is different, we should look at the geographical differences. Unfortunately they (Ministry) do not look at it that way," he said.
"That is why I said there is nothing wrong about the cabotage policy, but just make sure they understand the scenarioÉwhy do we need to suffer for over 30 years just because of this policy.
"When the Transport Minister was here he should have realised that we have been talking for over 30 years, asking the Government to seriously look into this problem (cabotage) which is causing the cost of doing business in Sabah to be very high," he said.
This has contributed to the high living cost in the State, he said, adding that the Government should solve these problems first before talking about other things like improving employee's salaries.
Apart from that, FSM also asked the Government to form a monitoring body to look at the amount of freight and other shipping related charges imposed by the shipping industries, which the association claimed were being introduced without control.
"They (shipping companies) decide on their own when to come up with the freight charges, including the latest one on March 15.
When they want to increase the prices, they increase it as they like.
When we protest nobody cares," he said.
He said the shipping companies have been protected by not only the cabotage policy, but also the 100 per cent tax exemption all the while, until recently when the Government decided to end this and impose 40 per cent tax on the revenue of a shipping company.
"Which industries in the world have enjoyed such a privilege of unlimited tax exemption.
In Malaysia, the shipping industry is the only one to enjoy such a privilege," he said.
But the 40pc taxation is only on the revenue and not the profit, he said, adding even after this the shipping industry is still enjoying a 70 per cent tax exemption.