Is the cabotage policy the main driver of high East Malaysian prices?

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The Cabotage Policy is Not the Primary Driver of High Prices in East Malaysia

Federal government subsidies to offset the elevated cost of consumer goods in Sarawak and Sabah are unlikely. While the cabotage policy, established in 1980, has been cited as a contributing factor to these higher prices, Minister Datuk Alexander Nanta Linggi indicated that it is not the main driver. Instead, the government may explore offering concessions to industry players to alleviate business operating costs.
Cabotage Policy's Limited Impact on East Malaysian Prices

Datuk Alexander Nanta Linggi stated that the cabotage policy, which restricts cargo loading and unloading at Malaysian ports to Malaysian-registered vessels, is not the principal reason for the higher prices of consumer goods in Sarawak and Sabah. He acknowledged that the policy has been gradually relaxed over time, including a 2017 amendment allowing foreign vessels to sail directly to Sabah and Sarawak ports, bypassing Port Klang and its associated additional costs. The minister clarified that while the policy contributes to increased costs to some extent, its overall influence on the high prices is not significant.
Historical Blame and Recent Observations

Historically, the business community in Sarawak and Sabah had attributed the elevated cost of goods in the two states to the cabotage policy, which was initially implemented to safeguard the domestic shipping industry. However, recent observations suggest a disconnect between fuel costs and consumer prices. Linggi noted that even when fuel prices decreased, transportation costs did not follow suit, and the prices of goods on shelves remained unchanged, further underscoring that the cabotage policy is not the sole determinant of these costs.
Potential Government Support for Businesses

Instead of direct subsidies for consumer goods, the government is considering alternative measures to support industry players and reduce the cost of doing business in East Malaysia. The Ministry of Domestic Trade and Consumer Affairs is reviewing recommendations and proposals put forth by business associations, such as the Federation of Chinese Associations, Kuching, Samarahan and Serian Division and the Sarawak Chinese Chambers of Commerce and Industry. These discussions aim to identify ways the federal government can assist in mitigating the financial burden faced by businesses in the region.

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Is the cabotage policy the main driver of high East Malaysian prices?

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