CEO Morning Brief

Putrajaya Lifts Cabotage Policy for Cable-laying Ships Effective June 1

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Publish date: Thu, 30 May 2024, 10:20 AM
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TheEdge CEO Morning Brief

KUALA LUMPUR (May 29): Transport Minister Anthony Loke Siew Fook has signed a gazette exempting all cable-laying ships from the cabotage policy, in a bid to boost investments in internet technology (IT) infrastructure in Malaysia, effective June 1.

The cabotage exemption applies to all cable-laying ships engaged in the installation, maintenance and repair of submarine telecommunication cables landed at any centre in Malaysian waters under subsection 65KA(1) of the Ordinance.

Loke was exercising the powers conferred by Section 65U of the Merchant Shipping Ordinance 1952 in providing such exemption.

“Malaysian and international tech companies had since 2020 voiced the need for the government to adopt a more progressive regulatory framework that can promote more investments in the tech sector. The unity government is committed to accelerating the development of Malaysia’s digital infrastructure," Loke said in a statement.

Additionally, the minister has also revoked cabotage exemption for all ships ferrying cargo from any port in Sarawak to any port in Peninsular Malaysia, Labuan and Sabah, and vice versa, at the Sarawak government's request.

For perspective, the cabotage policy prevents foreign-registered ships or foreign-flagged vessels from operating in the domestic market, essentially to protect local companies.

Issues with the Malaysian cabotage policy pertaining to submarine cable repairs came about in mid-November 2020, after then transport minister Datuk Seri Wee Ka Siong revoked exemption for vessels involved in said repairs.

His predecessor, Loke, subsequently approved submarine cable repair vessels from being exempted from cabotage laws in March 2019. This following appeals by state-owned fixed-line operator Telekom Malaysia Bhd (KL:TM) and internet services provider TIME dotCom Bhd (KL:TIMECOM), amid a lack of qualified domestic ships to undertake such works.

However, the cabotage policy was reinstated in November 2020, following a change in government. The change in policy — broadly aimed at reserving the country’s sea-related trades, services and activities for Malaysians — has been criticised for stifling potential foreign investment into the country.

Malaysia Digital Economy Corp (MDEC), a government agency promoting the sector, warned that potential data centre investment worth up to RM15 billion may be reviewed by global technology giants, due to longer repair times as a result of the nation’s cabotage policy.

Source: TheEdge - 30 May 2024

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