The Malaysia Shipowners’ Association (MASA) recently held a press conference to provide a response to the revocation of cabotage exemption. The move had raised concerns among the tech industry players as it could affect Malaysia’s internet speed and quality. Supporting the decision made by current Transport Minister Dr Wee Ka Siong, the MASA Chairman Datuk Ir Abdul Hak Md Amin said that the cabotage will not create a monopoly for Malaysian companies as foreign vessels are still able to conduct repair works after applying for a domestic shipping license exemption.
Abdul Hak told the press that MASA wants to reinstate the cabotage policy to its original form similar to what other countries are currently practicing. He said the revocation will allow fair competition for Malaysian providers of undersea cable maintenance and supply services. It is reported that Malaysian companies own 4 out of 50 qualified and certified cableships worldwide that are being used for undersea cable installation and maintenance.
All repair works undertaken by one Singaporean company during exemption period
Abdul Hak said after the cabotage exemption was introduced by former Transport Minister, Anthony Loke in April 2019, a Singaporean registered company had undertaken all undersea cable repair works in Malaysian waters, which is counterproductive in stimulating competition.
The former Transport Minister said that it took up to 27 days for undersea cables repairs in Malaysia which is wasn’t up to par and has negative impact towards Malaysia’s ability to attract foreign investors. The exemption was decided after requests were made by Telekom Malaysia and Time Dotcom, with the support from the Ministry of Communications and Multimedia. With the cabotage exemption, the former Minister claims that the move has helped reduced the time required to repair by almost half.
However, the MASA Chairman said repair works actually took longer during the cabotage exemption period and claims that the Singaporean company took 48 days to conduct the repairs. During that time, he added there were no major disruption to Malaysian internet services.
When asked about the investments from telcos, he added that he’s not in the position to answer and it’s up for the policy makers to address the issue. He emphasised that MASA wants to encourage more competition when it comes to undersea cable repair works.
He also explained that if telcos require a vessel for repair works, the process only takes 2 to 3 days after MASA informs the Ministry of Transport there are no Malaysian ships available to do the job. Abdul Hak also said that the cabotage policy will have no impact on the cost of repairs as it was governed by maintenance zones. He said pricing is driven by competition between zones and the revocation will help stimulate the required competition.
Does Malaysia have the right vessels?
It was reported that Malaysia doesn’t have a DP2 (Dynamic Positioning Class 2) repair vessel which is required by tech giants for undersea cable repairs. At the moment, there’s a Malaysian-flagged vessel capable of doing the job but it’s only equipped with DP1 capabilities.
Following the revocation, the Transport Minister had a discussion with Facebook, Google, Microsoft and MyIX to provide clarity on the revocation. He said with the eDSL, the application process to exempt foreign ships will be reduced from 30 to 5 working days.
However, it was reported that one of the tech giants have told him that they may review its cable investments in Malaysia. The lack of DP2 vessel is one of the main factors and a sighted MDEC report had mentioned that permit delays have accumulate to almost 100 days annually for submarine cable repairs in Malaysian territorial waters and exclusive economic zones.
During the press conference, MASA Chairman said that it is prepared to improve and expand capabilities to meet the requirements by the industry to international standards of compliance. Abdul Hak also encourages its members to actively avail themselves to the latest technologies in order to be given the opportunity to take part in the technology-driven industry.