KOTA KINABALU August 29, 2012: There is a need to look into the disparity in the prices of goods between Sabah and Peninsular Malaysia, and even those sold in the Kedai Rakyat 1Malaysia, Federation of Sabah Manufacturers (FSM) president Datuk Seri Panglima Wong Khen Thau said.
He said goods in the Kedai Rakyat 1Malaysia in the state capital are offered at about 30 per cent higher than the shops in Kuala Lumpur.
Wong said the cabotage policy is among the contributory factors in the price disparity although the Malaysian Shipowners’ Association (MASA) denied it.
He said a study had been done on how much the cabotage policy affected the prices of goods in Sabah.
“But according to MASA, freight charges contributed 40 per cent in the total logistics cost to the price of goods.
“The other 60 per cent, MASA claims, comprises land transportation, profit clearing and shipping agent’s charges, port charges etc. But to have a 30 per cent price disparity for goods in the state capital does not make sense as there are no transportation charges.
“It would make sense if the shops are located in the interior areas such as Keningau … but the shops are in Kota Kinabalu, where the only transportation required is from the port to the shop,” he stressed.
“If MASA sticks to its reasoning that other costs are the contributing factor, is it saying that the government is profiteering?
“Indirectly they are accusing the government of profiteering. This is something that we need to look into seriously,” Wong opined when met at Senator Paul Kong Sing Chu’s birthday celebration on Monday night.
Wong also said the state EPU (Economic Planning Unit) is doing a research on the cabotage policy issue and will be coming out with a report soon.
According to him, the cabotage policy in China is actually helping the industry as it brings down the prices.
“In the US it is the same. In China, the cabotage policy is allowing the shipping industry to compete with the land and rail transportation. That is why the shipping freight is cheaper than land … it is in favour of reducing the price in China.
“Here in Malaysia we only have the sea (transport), so it is different. The cabotage policy, instead of helping to lower the price, has become a monopoly,” he said.
Meanwhile, former Transport Minister Datuk Seri Ong Tee Keat who was also a guest at the dinner celebration, said the partial liberalization of the cabotage policy in 2009 was not widely understood by the people.
“I think by and large the people also want to know. When you talk about the freight charges, it shouldn’t be deemed as the contributing factor to the price differential, then what percentage does the freight charges constitute in the pricing differential?
“So the Ministry of Transport in June 2009 partially liberalised the cabotage policy during my tenure. We want to know whether or not the partially liberalised cabotage policy was widely publicised within and outside the country.
“Because, until today, much to my surprise and dismay, there are still many parliamentary counterparts posing the same old questions on some of the basic fundamentals in the cabotage policy. This means that the subject matter is not well understood,” he opined.
Ong added that the question was whether the foreign shipping operators have or have not been told sufficiently about the partially liberalised cabotage policy.
“And when I asked the question to what extent have we achieved what we desired when we partially liberalised the cabotage policy, unfortunately, the answer given was totally unrelated to what I asked.
“I wanted to ask the level of effectiveness but unfortunately that was not forthcoming. This is something dear to my heart because that was a painstaking effort to overcome several hurdles before we could ultimately partially liberalise the cabotage policy in 2009.
“So, when we talked about price disparity, in terms of pricing of goods and services in Sabah and Sarawak, among other questions that I raised in parliament, I was glad to learn that the domestic trade responded quite positively by answering that the ministry actually did have allocation to subsidize such disparity.
“But to what extent or rather what is the level of effectiveness, I don’t have the statistics. Perhaps the liberalisation of the cabotage policy should have been better articulated to all the stakeholders within and outside the country, especially the shipping lines, importers and exporters abroad. And at the same time, the so-called subsidy given to arrest the price disparity should also be looked into,” he stressed.
by Nancy Lai