Subscribe to ourAPRIL 7 — There are two strong opposing views on the issue of the cabotage policy impacting the undersea internet cable industry, and both seem to have a strong argument with good intention that requires clarity.
They are essential strategic assets for countries to be part of the global digital infrastructure, as economic activities riding on the back of submarine cables include e-commerce, data transfer, financial transactions, business processing, digital exports, social interactions, services delivery and communications impacting national security.
A cable ship is required to stay in one position at sea during a repair and is equipped with a Dynamic Positioning system consisting of thrusters and computer systems to precisely maintain its position without drifting, regardless of wind and sea conditions. DP3 class of ships – similar to DP2 class ships but can additionally handle a fire or flooding in one compartment.
Unlike countries like the USA, Taiwan and Philippines, Malaysian cabotage law also covers maritime services, which includes submarine cable deployment and repair, which means when the best ship available for a cable repair is a foreign ship, a Domestic Shipping License Exemption is required and before this can be issued, local ship owners are asked for their consent through the Malaysia Ship Owners Association .
Hence, in April 2019, the then Minister of Transport, Anthony Loke issued an exemption order. This was positively received by investors and local telcos and plans were made to land cables in Malaysia. Now, let’s look at the arguments forwarded by the other side, which mainly rests on the critical need to develop local capabilities.
When government policies impacting investors are arbitrarily changed without prior consultation, there is no certainty or stability that would provide assurance to the investors.