Malaysian tech players question Cabinet’s near three-month silence on undersea cabotage issue

KOTA KINABALU, July 22 — The Malaysia Internet Exchange (MyIX) and the National Tech Association of Malaysia (Pikom) today expressed “deep concern” that the submarine cable cabotage issue has yet to be resolved, despite the government’s assurance to look into it in April.

MyIX Chairman Chiew Kok Hin said foreign investors were wondering why the government was taking so long.

“Although the government had publicly stated that the issue would be resolved by end-April 2021, the industry is still awaiting the announcement,” he said in a statement,

He acknowledged that the government has to prioritise the Covid-19 pandemic, but said: “The cabotage policy needs to be addressed immediately”.

The Cabinet reportedly instructed six ministries to look into the matter in April but an announcement has not been forthcoming since then.

“MyIX has learnt that five ministries are in favour of reinstating cabotage exemption for foreign vessels undertaking submarine cable repairs.

“Multinational companies (MNCs) and foreign investors, some of which are MyIX members, are deeply concerned with the silence on the cabotage issue,” said Chiew.

“Some members are starting to believe that the issue would be ‘buried’. This situation does not bode well for Malaysia’s efforts to attract and retain foreign direct investments (FDIs).”

MyIX is an initiative under the Malaysian Communications and Multimedia Commission launched in 2006 and touts itself the country’s only non-profit national internet exchange body operated by industry players.

Chiew said its industry sources claimed that new submarine cables that were planned to land in Malaysia have now been put on hold by foreign investors.

“This is unfortunate, as it further hinders data centre investments by both local and global companies, while also affecting the overall internet experience for Malaysians and local businesses.

“If this were the case – which I hope is not, I must stress – Malaysia would have an international credibility issue with foreign investors,” he said, adding that it would be a serious blow to the objectives outlined within the MyDIGITAL initiative, especially concerning FDIs.

MyDIGITAL, which comes under the National Digital Economy Blueprint, is the government’s strategic initiative to further grow Malaysia’s digital economy. The aim is for the digital economy to contribute 22.6 per cent of Malaysia’s gross domestic product (GDP) by 2025 while creating 500,000 new jobs.

One such strategic thrust under MyDIGITAL is the aim to attract more submarine cables to land into Malaysia to expand global connectivity, with desired outcomes being higher investments and more reliable and faster internet connections.

Last November, a cabotage exemption for foreign vessels to conduct undersea cable repairs was revoked by the Transport Ministry.

In the same statement, Pikom chairman Danny Lee urged the government to reinstate the cabotage exemption policy for foreign vessels undertaking submarine cable repairs.

He said that the current cabotage policy has affected not just the telecommunications and tech industries, but all sectors that rely on internet stability and strong infrastructure.

“A lot has been said in response to the cabotage policy, most expressing concerns that if not exempted for submarine cable installation and repairs, it will impact the economy and have dire consequences on tech investments. We are already beginning to see some MNCs giving Malaysia a miss,” said Lee.

“Failure to take the right action will put Malaysia at risk of losing its attractiveness as an investment destination for global tech companies. In addition to that, data centre investments are also making their way out of Malaysia, as repairs are now taking longer than they used to,” he added.

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