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The
Cabotage Policy
The
Malaysian Government has implemented a policy which
reserves the transportation of goods in the domestic
trades to ship flying the Malaysian Flag. This policy
was necessary because only a small number of Malaysian
registered ships were playing the coastal routes. The
policy which reserves the domestic trade to its own
flagged vessels is known as Cabotage Policy. It was
implemented in Malaysia on 1 January 1980. To
implement the policy, the Merchant Shipping Act 1952 (MSO
1952) was amended.
With
the amendment to the Merchant Shipping Act 1952, the
Government provide for the appointment of a Domestic
Shipping Licensing Board (DSLB) to regulate and
control the licensing of ship engaged in domestic
shipping between any port in Malaysia. The purpose is
to encourage local participation in domestic by
encouraging local registration of ships and local
incorporation of
companies participating
in domestic shipping.
The
rationale of the cabotage policy can be seen as part
and parcel of the government's policy objectives of;
| i. |
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Making Malaysia a maritime nation; |
| ii. |
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Reducing
the country's dependence on foreign ships by
increasing the level of
participation
in Malaysia international and coastal shipping
business; |
| iii. |
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Engaging in shipping commitments
through bilateral, regional and other trade
agreements; |
| iv. |
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Training
and development of Malaysians in technical,
professional and commercial
aspects
of shipping business, especially in
regard to the Malaysianization of floating staff
and
support to higher educational institutions. |
Domestic
Shipping as
defined under the Merchant Shipping Ordinance 1952
means the shipment of goods or passenger:
| a. |
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from any port or place in Malaysia
to another port or place in Malaysia, or |
| b. |
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from
any port or place in Malaysia to any place in
then exclusive economic zone or
vice
versa, |
and
includes the towing and pushing in the cabotage trade,
a license, per vessel, is required by a
Malaysia
citizen or company. The DLSB issues three types of
license, namely:
·
unconditional
·
conditional; and
·
temporary
Unconditional
license is granted to a Malaysian entity in respect of
a Malaysia flagged vessel on the condition that
it:
| a. |
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is
qualified to own a Malaysian flagged vessel
according to the law stipulated for owning
a
Malaysian ship; |
| b. |
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has 30% bumiputra participation in
terms of equity, directorship and office staff;
and |
| c. |
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employs 75% Malaysian citizen as
ratings on the vessels |
In
order to own a Malaysian ship the person(s) must be a
Malaysian citizen(s) or corporation, which satisfy the
following requirements:
| i. |
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the corporation is incorporated in
Malaysia; |
| ii. |
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the principal office of the
corporation is in Malaysia; |
| iii. |
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the management of the corporation
is carried out mainly in Malaysia; |
| iv. |
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the majority, or if the percentage
is determined by the Minister, then the
percentage so determined, of the shareholding,
including the voting share, of the corporation
is held by Malaysian citizen free from any trust
or obligation in favor of non-Malaysian; and |
| v. |
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the majority, or if the percentage
is determined by the Minister, then the
percentage so determined, of the directors of
the corporation are Malaysian citizen. |
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