Amcham fears cabotage exemption repeal will lead to investors losing confidence in Malaysia

KUALA LUMPUR, April 7 — The recent repeal of the cabotage exemption for submarine cable repair vessels is a worrying sign for the American-Malaysian Chamber of Commerce (Amcham), which said regulatory barriers that do not support efficient management of digital infrastructure is worrisome to investors.

Its chief executive officer Siobhan Das said the cabotage exemption repeal comes at a particularly critical time when Malaysia seeks to compete for digital infrastructure investments and drive economic recovery.

“The Chamber urges the Malaysian government to reinstate the cabotage exemption to accelerate Malaysia’s progression towards becoming a digitally-enabled and technology-driven high income nation by 2030, in line with the Malaysia Digital Economy Blueprint (MyDIGITAL),” she said in a statement.

Das added that Amcham's membership includes not only cable investors but a wide range of businesses that are investing heavily in digital innovation and digital talent.

“These companies depend on fast and reliable internet connectivity, and any regulatory impediment that delays the repair of critical internet infrastructure can cause considerable business disruption.

“Furthermore the revocation of the exemption is likely to impede Malaysia’s digital economy from reaching its full potential, which would mean a lost opportunity for incremental productivity, job creation and skill development,” she said.

Das added that Amcham is ready to support Putrajaya's efforts in reviewing its legislative and regulatory measures relating to digital infrastructure under the MyDIGITAL initiative, by facilitating substantive industry consultation and proposing solutions that support the realisation of its objectives.

On March 29, tech giants Facebook and Google announced a joint partnership to construct two underwater cables to increase Internet connectivity between Singapore, Indonesia and North America. Malaysia's exclusion from the project has been blamed on the cabotage exemption repeal.

Transport Minister Datuk Seri Wee Ka Siong has defended the cabotage exemption repeal, which was finalised on November 18 last year, as necessary to reduce the outflow of foreign currency through freight charges, and to reduce dependencies on foreign vessels by promoting participation from local shipping industry, among others.

However, he has since been criticised over the repeal, most notably during a Dewan Rakyat session on November 25 when his predecessor Anthony Loke and former communications and multimedia minister Gobind Singh Deo argued against his rationale.

The heated debate saw Loke saying that the repeal of the exemption will have detrimental effects and result in a loss of confidence among investors, as the exemption would not have just benefited a handful of companies but the entire nation as well.

Gobind reminded Wee that faulty cable highlight repairs take an average of 27 days to complete, indicating that Malaysia faces problems when it comes to conducting undersea cable repairs.

He added the cabotage exemption was decided upon by the former Pakatan Harapan administration after requests were made by tech giants to resolve the issue.