Loke Reinstates Cabotage Exemption For Foreign Cable Ships

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Transport Minister Anthony Loke has reinstated an exemption under Malaysia’s cabotage policy for specialised ships used to install and maintain undersea cables that form the backbone of the world’s internet infrastructure.
The move, effective June 1 onwards, marks a reversal of his predecessor Wee Ka Siong’s revocation of the policy in 2020.
“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 government is committed to accelerating the development of Malaysia’s digital infrastructure,” Loke (above) said in a Transport Ministry statement yesterday.
The exemption under Section 65U of the Merchant Shipping Ordinance applies to all cable-laying ships engaged in the installation, maintenance and repair of submarine telecommunication cable landed at any submarine cable landing centre in Malaysian waters.
The reinstatement of the policy comes as Prime Minister Anwar Ibrahim tries to drum up foreign investment in technology sectors such as semiconductors, data centres, and artificial intelligence.
Loke had originally put the exemption in place since April 1, 2019, when he was part of the Pakatan Harapan-led administration under Dr Mahathir Mohamad.
However, after Wee succeeded Loke following the events of the Sheraton Move, he revoked the exemption on Nov 15, 2020.
Cabotage policy
The cabotage policy is a protectionist policy intended to maintain Malaysia’s shipping and shipbuilding industries, thereby reducing dependence on foreign shipping.
Under the policy, only a Malaysian-registered and owned vessel may ply domestic shipping routes in Malaysia unless an exemption is granted.
Former transport minister Wee Ka SiongWee had justified the revocation, saying that it helped build local capacity and reduce foreign currency outflow, and there were no delays in issuing exemptions to foreign cable ships when needed.
The revocation had prompted tech giants such as Amazon Web Services, Facebook, Google, and Microsoft to issue a joint appeal to then-prime minister Muhyiddin Yassin to reinstate the exemption.
They said the revocation had reduced Malaysia’s attractiveness to investors due to the increased time needed to repair damaged cables and cited a need for cable ships with “Dynamic Positioning 2” (DP2) capability that Malaysian cable ships lacked.
This is despite the Malaysia Shipowners' Association insisting that Malaysia has the necessary expertise to maintain the cables and should be given a chance.
The revocation also sparked a public spat between Wee and several DAP leaders, culminating in a televised debate between him and former finance minister Lim Guan Eng on topics such as whether the revocation had caused Malaysia to miss out on major foreign investment opportunities.
Meanwhile, the Transport Ministry said Loke has also revoked the cabotage exemption for all ships carrying cargo from Sarawak to any port in Peninsular Malaysia, Labuan, and Sabah, and vice versa.
It said this was done at the request of the Sarawak government and also takes effect beginning June 1. - Mkini

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