Tech giants urge Ismail Sabri to reinstate cabotage exemption to attract undersea cable investments

Global tech giants including Amazon Web Services, Facebook, Google and Microsoft continue to raise concerns about the ongoing cabotage issue which affects undersea cable repairs in Malaysian waters. In a sighted letter addressed to the newly appointed Prime Minister Dato Sri Ismail Sabri Yaakob, the international tech firms are requesting the government to reinstate the cabotage exemption that was revoked by the Transport Minister Dr Wee Ka Siong in November last year.

In the letter, the tech giants have expressed their eagerness to work together with Ismail Sabri’s administration to achieve the goals set under the MyDigital plan to enable Malaysia to be a digitally-driven high-income nation by 2030. The tech companies are also requesting a meeting with the Prime Minister to discuss how they can work together to support the MyDigital agenda and to share several reforms to facilitate connectivity investments that will benefit the country.

Cabotage exemption must be reinstated with immediate effect

After failing to get a desired outcome during the Muhyiddin administration, the tech giants are urging Ismail Sabri to reinstate the cabotage exemption with immediate effect. It elaborated that the previous exemption for submarine cable repair vessels has helped to ensure that submarine cable repair works can be done efficiently within a shorter timeframe. As a result, repairs can be carried out quickly to minimise the impact of cable disruption.

The cabotage exemption for undersea cable repair vessels was introduced in April 2019 during the Pakatan Harapan administration while Anthony Loke was the Transport Minister. As argued in Parliament last year, the exemption was only given for the purpose of undersea cable repairs as Malaysia didn’t have the required DP2 vessels. The exemption was requested by Telekom Malaysia and Time dotcom with the support from former Communications and Multimedia Minister Gobind Singh. Anthony Loke said that undersea cable repairs in Malaysia took 27 days which is longer than the Philippines, Singapore, and Vietnam.

Importance of submarine cables

Going back to the letter, the tech giants said reinstating the cabotage exemption will greatly help in realising MyDigital’s goals of having the most submarine cable landings in Southeast Asia by 2025. It added that this policy change is a low-hanging fruit that can deliver substantial economic benefits to the country. As a result, Malaysians will benefit from increased connectivity with more reliable digital services.

The letter also highlighted the critical role of connectivity infrastructure, especially during the COVID-19 pandemic. With more Malaysians adapting to the new normal, there’s a significant increase in demand for internet traffic. MyIX has reported the highest daily peak traffic of 614Gbps during the first phase of the MCO versus a peak of 500Gbps recorded in the previous year. Submarine cables are the global backbone of the internet and it is responsible for 99% of the world’s internet, voice and data traffic.

During the previous administration, the tech giants have written to former Prime Minister Muhyiddin Yassin at least twice to raise concerns about the cabotage issue. In April this year, 6 ministries were instructed to deliberate the impact of the cabotage policy exemption on digital investments and the local shipping industry. They were supposed to report back in two weeks with a recommendation. After several months of inaction, MyIX and PIKOM raised concerns that the government’s silence on the matter continues to cause jitters with foreign investors. MyIX claimed that 5 out of 6 ministries were actually in favour of reinstating the cabotage exemption.

The cabotage policy draws criticism from both sides of the political divide. UMNO deputy president Datuk Seri Mohamad Hassan had also commented on the cabotage issue and urged the government to make informed decisions or risk turning Malaysia into a joke. MDEC Chairman, Dr Rais Hussin has also strongly opposed the cabotage policy as it is detrimental in making Malaysia the choice for investment destination especially high-value digital investment.

This year, Google and Facebook announced a number of new undersea cables in the Asia Pacific region including Echo and Bifrost, and most recently Apricot. The new cables do not land in Malaysia and are seen as a huge loss of opportunity to the country.

Under the current Ismail Sabri administration, Dr Wee Ka Siong retains his Transport Ministry portfolio while Tan Sri Annuar Musa is the new Communications and Multimedia Minister.

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