Lifting Cabotage Laws In Sabah, Sarawak And Labuan - Malaysia

In May 2017, the Prime Minister of Malaysia, Datuk Seri Najib Tun Razak announced that from 1 June 2017, Sabah, Sarawak and Labuan will be exempt from cabotage laws insofar as the carriage of cargo between Peninsula Malaysia and East Malaysia, and vice versa is concerned. While this exemption will not apply to cargo shipment within Sabah, Sarawak and Labuan, the implications of the cabotage lift for shipments to and from these ports are far-reaching.

National cabotage laws came into effect in Malaysia on 1 January 1980, and permit only Malaysian vessels to engage in domestic shipping. Foreign vessels are allowed to discharge cargo at any port in Malaysia but are not allowed to move the cargo within the country.

Section 11 of the Merchant Shipping Ordinance defines a Malaysian vessel as being wholly owned by:-

Malaysian citizens; or corporations which satisfy the following requirements the corporation is incorporated in Malaysia; the principal office of the corporation is in Malaysia; the management of the corporation is carried out mainly in Malaysia; the majority of the shareholding including the voting share of the corporation is held by Malaysian citizens free...