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Saturday, April 10, 2021

Cabotage: Amazon joins tech giants in appeal to PM


Four tech giants - Amazon Web Services (AWS), Facebook, Google, and Microsoft - have jointly issued an "urgent" request to Prime Minister Muhyiddin Yassin to reinstate the cabotage exemption on submarine cable repair ships.

In a letter to the premier sighted by Malaysiakini, the four companies said the revocation of the exemption negatively impacted Malaysia's attractiveness as an investment destination for global tech companies and the policy delivers negligible economic benefits to the country.

"It further affects the Malaysian people and businesses that rely on the Internet for education, communication, and their livelihood," they said.

Furthermore, this policy violated the Malaysia Digital Economy Blueprint (MyDigital) - launched by Muhyiddin's government in February - which aimed to attract more international submarine cables landing in Malaysia.

"The revocation further impedes the achievement of other MyDigital objectives, including Malaysia's ability to attract data centre investments, boost economic competitiveness through digitalisation, and develop internationally competitive digital talent.

"These goals are predicated upon increased Internet infrastructure investments, as well as faster and reliable Internet connectivity," they added. 

AWS - the market leader in website hosting - was the latest to join the opposition to the cabotage policy.

In November last year, three companies - Microsoft, Google, and Facebook - had jointly written to Muhyiddin to intervene in the matter.

The three companies also warned that this policy effectively created a monopoly for only one Malaysian company to undertake submarine cable repairs.

Last Nov 13, the Transport Ministry - now helmed by MCA president Wee Ka Siong - gazetted the revocation of cabotage exemption to foreign ships involved in submarine cable repairs.

Transport Minister Wee Ka Siong

The Pakatan Harapan administration had in March 2019 exempted non-Malaysian ships from being subjected to Section 65KA(1) of the Malaysia Shipping Ordinance 1952, if the foreign vessel involved with repair services of submarine cables landed at any submarine cable landing centre in Malaysian waters.

Section 65KA(1) also stipulated that no foreign vessels may engage in domestic shipping.

The repair of submarine cables is a highly specialised field that requires a very specific type of vessel - one categorised as Dynamic Positioning Class 2 - to undertake such work.

With the cabotage policy in place, foreign cable operators will have to write to the Transport Ministry for permission, causing delays in Internet cable repairs - an average of 27 days for Malaysia, which is far behind regional peers the Philippines, Singapore, and Vietnam.

Compounding matters is the fact that government-supported Telekom Malaysia Bhd co-funds alongside regional telcos the Asean Cable Ship Pte Ltd, which has a DP2-class Singapore-registered vessel - the Asean Restorer.

Telekom Malaysia is a government-linked company. Collectively, Khazanah Nasional Bhd, Employees Provident Fund, AmanahRaya Trustees Bhd and Retirement Fund Incorporated own a 57.36 percent stake in Telekom Malaysia.

In the midst of Facebook and Google announcing Indonesia and Singapore as partners over Malaysia for two new submarine cable landings, Wee continued to defend the revocation of the cabotage exemption.

The transport minister claimed that despite the policy being in place, his ministry had granted exemptions to foreign vessels seven times since Nov 15 last year to carry out repairs and there were no delays.

He maintained that the cabotage policy will help build local capacity and reduce foreign currency outflow. -Mkini

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