Cabotage issue: Tech giants turn to MOSTI and MoF for help

It appears that the Ministry of Transportation led by Dr Wee Ka Siong isn’t going to budge from its decision to cancel the cabotage exemption for undersea cable repairs. As a result, tech giants are now looking to other avenues for help. Companies including Facebook, Google, Microsoft and MyIX have repeatedly expressed concerns that the revocation will affect Malaysia’s internet speed and quality and they are reviewing their cable investments in Malaysia.

According to a recent report published by The Edge Malaysia, the tech firms have met with Minister of Science, Technology and Innovation, Khairy Jamaluddin in mid-January to seek help in solving the cabotage issue. It was reported that Khairy has agreed to assist but there were no further details at the moment.

In December 2020, the minister told Parliament that his ministry has brought up concerns about the cabotage issue in cabinet meetings. He added that the government was drafting a new procedure that will provide opportunities for local shipping companies without causing further delays to repair undersea cables.

In addition to meeting with MOSTI, The Edge’s source said that Google, Facebook and Microsoft are also seeking for a meeting with the Ministry of Finance to state their case. It was reported that they are still trying to secure a date to meet with Ministry of Finance officials.

Based on correspondence with the government sighted by The Edge, the tech giants have explained that most countries do not treat submarine cable installation or repair as cabotage. They added that ‘cabotage’ are usually defined as transport of cargo or passengers between two domestic coastal points. It explained that submarine cable installation and repairs do not involve any cargo and passengers but it covers the installation and repair of long-term infrastructure that’s deployed on the sea floor.

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The cabotage exemption for undersea cable repair works was granted during the Pakatan Harapan administration in April 2019 to help reduce time required to conduct undersea cable repairs by nearly half. With the current cabotage, the Malaysian Shipowners’ Association (MASA) has the right to block foreign vessels if a local member has the required capabilities.

Source: Optic Marine

Former Ministers Anthony Loke and Gobind Singh have told Parliament late last year that undersea cables took 27 days to repair and Malaysia doesn’t have the DP2 vessels required by tech giants to carry out the work. Dynamic Positioning is a computer aided system that helps vessels maintain a fixed position in the water by using a system of propellers and thrusters. In Malaysia, Optic Marine Services (OMS) owns a cable laying vessel called Cable Orchestra which is a barge that’s equipped with DP1 capabilities but the tech giants require a more advanced DP2 for insurance purposes.

As highlighted by MyIX Chairman, revocation of the cabotage exemption will negatively impact all Malaysians. He also questioned if it is worth protecting the Malaysia Shipowners’ Association from foreign competition while putting Malaysia’s aspiration to build a RM125 billion digital economy at risk.

MDEC has also released a position paper which highlights the negative impact of revoking the exemption on internet stability, digital economic growth and foreign investments. It also highlighted that Malaysia suffers an average of 6 outages per year and the delays in repairing undersea cable discourages cable systems from landing in Malaysia.


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Alexander Wong