Cabotage Policy Exemption To Allow Foreign Ships Installing And Maintaining Undersea Internet Cables An Important Reform To Attract Digital Mega Investments into Malaysia

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Transport Minister Anthony Loke’s announcement to reinstate 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, is an important reform that will attract mega digital investments into Malaysia.

Loke’s move, effective June 1 onwards, marks a reversal of his predecessor, PN’s Minister of Transport Wee Ka Siong’s revocation of the policy in 2020. The cabotage policy 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.

Wee had attracted brickbats for revoking Loke’s earlier decision to grant the exemption, which was seen as a disincentive for billions of ringgit of digital investments. Loke’s reinstatement of the exemption, which was widely anticipated, would help to recoup and recover digital investments.

This was evident with the billions of US dollars of digital investments from internet and digital giants, the latest being Google’s USD $2 billion in investments in Selangor to develop its first data center and a cloud facility. This is Google’s largest planned investment in the Southeast Asian nation, according to Alphabet Inc. Chief Financial Officer Ruth Porat.

Loke’s adoption of a progressive regulatory framework can promote more investments in the tech sector and accelerate the development of Malaysia’s digital infrastructure.


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