KUALA LUMPUR― Sabah, Sarawak and the federal territory of Labuan will be exempt from cabotage policy starting June 1, Prime Minister Datuk Seri Najib Razak announced today.

He said the exemption would be for the transshipment of goods from the peninsula to Borneo Malaysia, but not the transshipment of goods within the two states and the eastern federal territory, Malay news portal Astro Awani reported.

“This means, from any port in peninsular Malaysia to any port in Sabah, Sarawak and Labuan and vice-versa.

“However, the exemption does not apply to ships operating among Sabah, Sarawak and Labuan.

“That means, there is no more increased prices in Sabah, we exempt the enforcement of this cabotage policy,” he was quoted saying in his speech during a programme in Sandakan, Sabah.

In a separate statement, Transport Minister Datuk Seri Liow Tiong Lai said the decision to exempt Sabah, Sarawak and Labuan from the cabotage policy proved the federal government’s efforts to improve the “liveability” of its people.

“The Ministry of Transport and I are committed to continuously conduct engagement and discussion sessions with relevant stakeholders and take into consideration the need of the industry to ensure East Malaysia transport industry’s growth,” he said.

He also clarified that the exemption does not affect services other than freight transport  services.

The cabotage policy, implemented in the 1980s, required the transshipment of goods to first pass through Port Klang on the west coast of peninsular Malaysia.

Politicians and industry players have largely blamed the cabotage policy for higher prices in Borneo Malaysia compared to peninsular Malaysia and in recent years, have increasingly called for Putrajaya to abolish it.

The policy has little adverse effects prices in the Malay peninsula where rail and highways over shorter distances provide other means of transport for goods.

The cabotage exemption announcement is timely with Sarawak to showcase its timber products involving its small and medium enterprises at an exhibition later this month, from May 18 to 21.

National news agency Bernama previously reported that 230 exhibitors have confirmed their participation in the Sarawak Timber and SMEs Expo 2017 at the  Borneo Convention Centre Kuching.

Sarawak Deputy Chief Minister Datuk Amar Awang Tengah Ali Hassan who is also the state industrial development and entrepreneurship, trade and investment minister was reported saying on May 2 that doing away with the cabotage policy would boost the local export market as the domestic one was rather small.

“In the long term it is good for Sarawak because there will be a direct shipment from other countries, for example, if we are to import construction material from China, it will come direct to us without having to stop at Port Klang.

“And now I think we have enough volume especially in the timber industry and products for example, plywood can be shipped directly to our buyers like China from Kuching or Bintulu without having to stop at Port Klang,” he was quoted telling a news conference in Kuching then.