Friday, 9 March 2012

Stop Monopoly, Liberalize Cabotage Policy before Introduce Minimum Wage Policy in Sabah

Press Statement by DAP Sabah Publicity Secretary Chan Foong Hin on 6th March 2012 in Tawau


DAP Sabah welcomes the news of the Najib's administration's decision to set minimum wage for  the private sector including Sabah. However, DAP Sabah urges State Government should stop monopoly practice and liberalize cabotage policy, before implementation of new minimum wage policy in Sabah.


In Penang which governed by DAP, we have CAT (Competence, Accountable, Transparent) government, while in Putrajaya, we have COPYCAT government. Minimum wage policy is the top priority agenda as highlighted in Pakatan Rakayt Shadow Budget for 2012, Prosperity for All. Barisan Nasional government who once opposed the idea of minimum wage policy (as proven by “Malaysia will bankcrupt due to minimum wage” comment of our Ex Prime Minister Tun Dr. Mahathir recently) now change their mind to follow Pakatan Rakayt's path to win the heart of Rakyat. Even Barisan Nasional does not set the minimum wage at RM1100 as per suggested in our shadow budget, the move by BN government to implement the policy at the end of this month, together with the statement by Human Resources Minister Datuk Seri Dr S. Subramaniam defending on the policy against Tun Mahathir, shows paradigm shift somehow rather among BN leaders, thanks to the competition created by two party system after 308 political tsunami.

According to The Malaysian Insider, federal cabinet has agreed to set a minimum wage of below RM1,000 for the 3.2 million workers in the private sector, with a RM100 difference between states in Malaya peninsular and Sabah, Sarawak. New Straits Times reported that the new rate will have a bigger impact in Sabah as the average salary here is RM577, followed by Sarawak at RM758, and Malaya at RM1131. About 33% of workers in the private sector are said to be earining less than RM700 a month, which is below the poverty line.

Based on the facts and figures, DAP Sabah would like to highlight the possible adverse effect to Sabah following the implementation of minimum wage policy, if State government do nothing on the issue. With the current wage structure in Sabah which average salary RM577 below the poverty line, sudden increment of workers wages is unsustainable without looking into the business operation of the employer. If Sabahan average wage is the lowest, does it mean that our employer earn the most among the countries? Apparently no, then what is the reason behind the lowest average wage in Sabah? Simply because Sabah is the highest cost business environment in Malaysia. Employer in Sabah need to press hardly on the workers wage to counter the impact of high cost business, especially high transportation cost.

It's true for Deputy Chief Minister Datuk Dr Yee Moh Chai's statement on “a win-win approach in settling the minimum wage issue”,  as he spoke during Chinese New Year open house. However, it seems like Dr Yee forgot the responsibility of the State Governmen. They have to transform the high cost business environment to business friendly environment in Sabah! The first thing Datuk Yee need to do, in fact, is to convince state cabinet to table the motion to  Federal Government on full liberalisation of cabotage policy.

Under cabotage policy, foreign vessels (foreign shipping companies) are not allowed to transport Malaysian goods produced in the peninsula to Sabah. If such a cabotage policy continued, not many foreign vessels would want to come in to only take goods to Sabah or Sarawak, unless they are allowed to carry locally-manufactured goods from the peninsula to Sabah, and vice-versa.The cabotage policy has caused high cost of living and soaring prices of good and services in the state. A “full liberalisation” of the cabotage policy would give importers and exporters in Sabah and Sarawak an opportunity to enjoy low fare due to competition in the shipping transport sector. This in turn would translate into cheaper consumer goods.

Secondly, Datuk Yee need to convince state cabinet to stop the monopoly business which operated by the state government itself. Any monopoly on constructions raw materials could hold the industry to ransom, impose arbitrary prices and payment terms, including a lot of hidden costs. As example, developers are not allowed to purchase cement from anywhere else but Cement Industries Sabah (CIS) which owned by state government. Unfortunately, the supply of cement in the state is not consistent and the developers as well as contractors are the the mercy of CIS. There was fail attempt in 2008 to let LPPB to monopolise the scrap metal business.  By end of last year, state government announced the planning to enforce sand mining monopoly through SEDCO. Monopoly of raw materials for construction and cabotage policy is the major cause to high price property here.

Given the high operation cost of business in Sabah, that's why Federation of Manufacturers Sabah (FSM) proposed to implement the minimum wage policy gradually up to 3 years. DAP Sabah concerns on employer's worry and also workers benefits to earn their decent life. It is the responsibility of governement in ensuring good transformation of economy. Therefore, DAP Sabah calls upon state government to stop monopoly business and liberalize cabotage policy, in order to reduce the high cost of business operations. By doing such, employer in Sabah will only afford to absorb higher workers wage, thus reducing our highly reliance on immigrant workers and increase the productivity of business activities. If state government mismanage the implementation of minimum wage policy, increasing of unemployment rate is awaiting for us.