Indon counsellor: Malaysia’s cabotage policy hindering trade

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Malaysia’s cabotage policy hinders a large volume of trade between Sabah and Indonesia, says a counsellor at the Indonesian consulate-general in Kota Kinabalu, Sabah.

Economic affairs consellor Muhammad Muhsinin Dolisada said trade conducted off Tawau’s waters and Kalimantan, Indonesia, was currently done with wooden hull ships and smaller vessels, which were not recognised under the International Maritime Organization’s (IMO) regulations.

“This situation is not unique to Sabah but also happens between Johor and Batam (an Indonesian island).

“The restrictions have to be resolved between the federal government of Malaysia and our central government,” the Daily Express quoted him as saying.

Muhsinin said the issue had been brought up many times over the years but remained unresolved, adding that the consulate-general could only urge the two governments to settle matters.

He believed that Sabah and Indonesia were both ready to resolve the issue but were awaiting action from Putrajaya.

Cabotage refers to the right to operate vessels in a particular territory, with laws largely meant to protect domestic industries from foreign competition, ensure the safety of a country’s borders, and regulate activities in a country’s waters.


Under cabotage limits, the IMO restricts trade to be conducted with steel hull vessels.

The Pakatan Harapan government had approved the cabotage exemption which allowed foreign vessels to perform undersea repair jobs off the Malaysian coast.

However, in November 2020, transport minister Wee Ka Siong revoked this exemption for submarine cable repair and dismissed claims that it would affect investments.

In April last year, then Malaysia Digital Economy Corporation (MDEC) chairman Rais Hussin warned that the revocation of the cabotage exemption might scare off potential investors.

Wee and former finance minister Lim Guan Eng had even held a debate on the issue on national television. – FMT