New Malaysian policy for undersea cable repairs by Singaporean firm

KUALA LUMPUR – A new coastal transport by the government prioritising local ships for undersea cable repairs, following an alleged monopoly by a Singaporean firm, has come under increased scrutiny and criticism.

Opposition lawmakers and technology giants have expressed their concern on the removal of a cabotage exemption for the undersea cable repairs.

They fear that the change in policy would lead to longer repair periods, and ultimately compromise Malaysia's positioning as a data centre.

Malaysian Transport Minister Wee Ka Siong in November removed the coastal transport exemption, which had allowed non-Malaysian vessels to undertake undersea cable repairs in Malaysian waters with a shortened regulatory approval process.

Malaysia's cabotage policy generally restricts the operation of foreign vessels within its territory, and also subject them to a long regulatory approval process while prioritising Malaysian vessels. However, an exemption was introduced specifically for undersea cable repairs in 2019.

The exemption was previously introduced by Dr Wee's predecessor, Mr Anthony Loke Siew Fook, from the former Pakatan Harapan administration that collapsed in February.

Dr Wee had argued that the exemption removal was done to build capacity for Malaysian ships and vessels, under the request of the Malaysian Shipowners Association (Masa).

He also said that foreign vessels would still be allowed to carry out repairs in the event that Malaysian ships cannot carry out the works.

“There are already companies under Masa that can do the job because they have proven to conduct repairs whether in Singapore, Indonesia and so on,” Dr Wee told Parliament in defending his decision.

Masa is the country's only industry organisation representing shipowners, and gets a priority in Domestic Shipping Licences.

Tech giants such as Google, Microsoft and Facebook on Nov 20, a week after the new policy was introduced, collectively wrote to Prime Minister Muhyiddin Yassin expressing their concern.

Malaysia currently has 19 undersea cables, out of over 380 that have been laid worldwide, most of which are funded by Internet and technology giants such as Google and Facebook.

Singapore, which has 17 undersea cables in its waters, is considered the de-facto Internet, communications and technology (ICT) hub.

Masa chairman Abdul Hak Md Amin said on Wednesday (Dec 2) that there are Malaysian ships capable of carrying out the repair works, but they are registered and operating in other countries now.

Datuk Abdul Hak also said that due to the cabotage exemption, the cable repair works are being “monopolised” by a single Singapore-registered company.

Both Mr Loke and former multimedia and communications minister Gobind Singh Deo had criticised the policy reversal, pointing out that it could hurt Internet connectivity in Malaysia.

Mr Loke said he introduced the exemption upon request by Malaysian broadband service providers in 2019, after finding that there is a lack of Malaysian vessels that had the necessary specification to carry out undersea cable repairs.

Mr Loke said in 2019 that before the cabotage exemption, undersea cable repairs in Malaysian waters took over 20 days on average to resolve, which the International Cable Protection Committee labelled as “not up to par” in 2016.

“Were the voices and demands of the local telecommunications and Internet industries taken into account?” Mr Loke asked at a press conference soon after the exemption reversal came into effect.

According to a report in The Edge newspaper, several technology giants said they might review their cable investments in Malaysia after being unconvinced by Dr Wee's rationale over the policy reversal.

The report also cited a paper by a government agency, the Malaysia Digital Economy Corporation, as saying that the country was lagging in international connectivity compared with neighbours such as Singapore, partly due to delays in undersea cable repairs.

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