Cabotage exemption: Four tech giants appeal to Ismail Sabri

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Four giant global tech firms have appealed to Prime Minister Ismail Sabri Yaakob to reinstate the cabotage exemption policy for submarine cable repair works.

In a letter dated Sept 1, the four firms – Amazon, Microsoft, Google and Facebook – and Malaysia Internet Exchange (MyIX) told the prime minister that all it would take are simple changes to Malaysia’s infrastructure policies to reap considerable economic benefits.

“(The cabotage exemption) had (previously) ensured that submarine cable repair works could be conducted efficiently within a short timeframe, thus minimising the duration and economic impact of cable disruptions.

“We respectfully propose that the government reinstates the cabotage exemption policy with immediate effect,” the firms said in a joint statement.

The firms said reinstating the policy will send a strong message on the government’s commitment to realising its MyDigital agenda, which among others, sought to attract more international submarine cable landings in Malaysia to expand global connectivity with the goal of having the highest number of submarine cables in Southeast Asia by 2025.

In 2019, the Pakatan Harapan administration allowed a cabotage exemption for submarine cable repair works – a highly specialised field for which no Malaysian vessels are equipped.

This was reversed by the Muhyiddin Yassin administration in November 2020, granting the Malaysia Shipowners’ Association (Masa) rights to block the use of a foreign vessel should a local vessel want any available repair jobs.

At the time, Transport Minister Wee Ka Siong (who has been reappointed to this post) said that the delay caused by this system was 48 hours at most, and a foreign repair vessel’s application process for a domestic shipping licence would take 10 days at most.

However, industry players such as MyIX claim that this takes far too long, causing Malaysia to be behind the Philippines, Singapore and Vietnam in cable repair times.

Since November last year, there have been several high-profile cable landings in Indonesia and Singapore, leading to speculation that the tech giants were avoiding Malaysia because of the cabotage policy.

Meanwhile, the tech firms told Ismail Sabri that Malaysia’s digital infrastructure is crucial for its economy, pointing to communications technology services which contributed to 19.1 percent of GDP in 2019.

The firms said a study by RTI International had shown that submarine cables have helped push up Malaysia’s GDP per capita by 6.9 percent between 2011 and 2015 and increased job opportunities.

The Covid-19 pandemic has also increased the critical role of connectivity infrastructure in the Malaysian economy as businesses and consumers adapt to new ways of working and living.

“This, in turn, drives demand for internet traffic – overall peak traffic growth was 20 percent to 33 percent from March to May 2020 with MyIX reporting its highest daily peak traffic at 614Gbps, surpassing 2019’s peak point record of 500Gbps.

“Going forward, the digital economy is expected to contribute 20 percent of Malaysia’s GDP by the end of 2021,” said the firms.

The five firms have sent several correspondences to the previous prime minister Muhyiddin Yassin, but to no avail. – Malaysiakini