Malaysia Internet Exchange (MyIX) is strongly urging the Malaysian Government to reinstate cabotage exemption for foreign vessels to conduct undersea cable repairs, or risk losing out to neighbouring countries for foreign direct investment (FDI) in this area.
Late last month, Facebook, in a project with Alphabet’s Google and regional telecommunication companies, is reportedly set to build two new cables called Echo and Bifrost at the bottom of the Java Sea to boost internet connection capacity in Indonesia and Singapore. These cables would then connect both countries directly with the United States.
MyIX said that this is a ‘Big win’ for Indonesia, Singapore, a ‘Significant loss’ for Malaysia. The Indonesia cable project is said to support a $1bn data centre Facebook is building in Singapore, but not in Malaysia.
“We lost out here,” said MyIX Chairman, Chiew Kok Hin. “It’s a shame as Malaysia has our strengths in internet infrastructure due to our strategic geographical location, ease of access, English-speaking population and relatively lower cost of entry.”
“In my view, this ‘big win’ for Indonesia and Singapore marks a significant loss for Malaysia.”
Chiew doesn’t blame the tech giants as “they would inevitably be drawn to countries with more investor-friendly policies.”
He also shared that a global tech giant with a presence in Malaysia told him that the government should not impose ‘protectionist’ policies for the maintenance and repair of subsea cables.
“These tech giants own or co-own the cables and, in my opinion, it is their right to choose who they want to service and repair their assets.”
Chiew said that there is a scarcity of Malaysian flagged vessels with the requisite capability to undertake subsea cable repairs, coupled with delays and no clear and definitive process, and a lack of industry engagement.
“I agree with the tech giants’ view that most of the world’s coastal countries do not treat submarine cable installation or repair as cabotage.
“Most countries define ‘cabotage’ as the transport of cargo or passengers between two domestic coastal points,” said Chiew. “In this matter, the cable and repair material are deployed, rather than transported to another port.”
“To me, the tech giants request is reasonable: They understand Malaysia having its cabotage laws, only that it should be exempted for maintenance and repairs of subsea cables.”
Chiew Kok Hin said Malaysia should ‘walk the talk’ to realise the country’s aspirations under the MyDIGITAL initiative, which comes under the National Digital Economy Blueprint.
“MyDIGITAL is a strategic step in the right direction to further grow Malaysia’s Digital Economy and anticipated to contribute 22.6% of Malaysia’s gross domestic product (GDP) while creating 500,000 new jobs,” said Chiew after the company’s annual general meeting (AGM) held last week.
“To achieve this aspiration, Malaysia would need very stable internet infrastructure that’s robust and reliable as internet usage would inevitably surge in the years ahead for government, businesses and the rakyat.”
In particular, he cited Clause 6 of the blueprint concerning the need to attract more international submarine cables landing in Malaysia to expand and enhance global internet connectivity.
“The Government had clearly stated that the target is for Malaysia to have the highest number of submarine cables landing in Southeast Asia by 2025,” said Chiew.
“However the current cabotage policy concerning maintenance and repair of subsea cables is not consistent with the goals outlines within the MyDIGITAL framework.”
Malaysia previously had cabotage exemption for foreign vessels to conduct undersea cable repairs – until last November when it was revoked by the current Ministry of Transport. Back then, Microsoft, Google, Facebook and Malaysia Internet Exchange (MyIX), in a memorandum to the Prime Minister of Malaysia, dated 20 November 2020, said the decision would have adverse impact on Malaysia’s economy.
This policy change is said to have resulted in undersea cable repairs taking up to 27 days in Malaysia which is way behind other countries in Southeast Asia. As a comparison, undersea cable repairs are said to take 20 days in the Philippines, 19 days in Singapore and 12 days in Vietnam.
For Malaysia to attract more submarine cable investments, this cabotage issue needs to be resolved as soon as possible; and specifically that cabotage exemption for foreign vessels to conduct undersea cable repairs to be reinstated soonest possible, stressed Chiew.
“Since the Prime Minister has placed on record this strategic thrust as a priority, government ministries and agencies should follow suit and not be a stumbling block for Malaysia to realise its aspirations of being a fully-fledged Digital Economy.”
MyIX is an initiative under the Malaysian Communications Multimedia Commission (MCMC) and the country’s only non-profit national internet exchange body operated by industry.
The MyIX committee members include representatives from the TIME dotcom, Maxis, YTL Communications, MyKRIS Asia, Celcom Axiata, REDtone and Telekom Malaysia Berhad.