As Transport Minister continues to thumb nose at Malaysia’s digital ambitions, MyIX strongly urges govt to reinstate subsea cable cabotage exemption

• Facebook, Google making investments to benefit Singapore, Indonesia
• Malaysia slower than Phillipines, Singapore & Vietnam to repair undersea cables

Caption: MyIX chairman Chiew Kok Hin (seated, centre left in darker blue shirt) with committee members Maxis, YTL Communications, MyKRIS Asia, Celcom Axiata, REDtone, TT dotcom and Telekom Malaysia Bhd

The 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.

Its chairman Chiew Kok Hin said that the country should ‘walk the talk’ to realise the country’s aspirations under the MyDigital initiative, which comes under the National Digital Economy Blueprint.

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.

An Internet exchange is the physical infrastructure through which Internet service providers (ISPs) and content delivery networks (CDNs) exchange Internet traffic among their networks and peer together. This way, it reduces portion of an ISP’s traffic while vastly improving routing efficiencies and fault tolerance, and increases benefits of having a greater network effect.

“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)  by 2025 while creating 500,000 new jobs,” said Chiew after the company’s annual general meeting (AGM) held yesterday.

“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 Ministry of Transport.

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.”

‘Big win’ for Indonesia, Singapore; ‘Significant loss’ for Malaysia

Earlier this week, Facebook, in a project with Alphabet’s Google and regional telecommunication companies, is reportedly set to build two new cables 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.

In a statement, Facebook said:  “In the Asia–Pacific region in particular, the demand for 4G, 5G, and broadband access is rapidly increasing.” It added that these cables “will support further growth for hundreds of millions of people and millions of businesses. We know that economies flourish when there is widely accessible Internet for people and businesses.”

“These cables together are a big portion of our investment in the Asia Pacific region,” Facebook vice-president of network investments Kevin Salvadori reportedly said. The Indonesia cable project is said to support a US$1 billion data centre Facebook is building in Singapore.

“We lost out here,” said Chiew. “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.”

“n 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.”

A global tech giant with a presence in Malaysia has expressed its disappointment over the short-sighted cabotage policy to Chiew, urging 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. Rather, 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,” he explains.

“To me, the tech giants request is reasonable: They understand Malaysia having its cabotage laws, but urge that it should be exempted for maintenance and repairs of subsea cables.”

Meanwhile, the MyIX AGM yesterday, disclosed findings that MyIX is one of the best run Internet exchanges in the region, said Chiew.

The MyIX committee members include representatives from the TIME dotcom Group, Maxis, YTL Communications, MyKRIS Asia, Celcom Axiata, REDtone, TT dotcom and Telekom Malaysia Berhad.