Cabinet has decided to reinstate cabotage policy exemption for undersea cable repairs, says Loke

PUTRAJAYA: The Cabinet has decided to reinstate the cabotage policy exemption for non-Malaysian vessels to conduct undersea cable repairs that was removed in 2020, says Anthony Loke.

"The effective date of the decision will be announced later," the Transport Minister said in a press conference at the ministry building in Putrajaya on Friday (March 1).

"This is an important decision to attract more foreign investments in the data centre industry and to stimulate the growth of the digital economy," he said, adding that the decision was made in a Cabinet meeting on Friday.

"Immediately after this afternoon's post-Cabinet meeting, instructions will be given for the necessary steps for gazetting.

"We are confident that it can be done within two months," said Loke.

He added that the Transport Ministry had held many discussions with IT companies and the reinstatement of exemption was extensively discussed.

"We concluded that one of the most important policy changes, as far as cabotage is concerned, is to allow the exemption for undersea cable repairs as this is important for IT and telco companies.

"We will do everything necessary to ensure that there is certainty with this policy to attract more international investment – not just with undersea cables – but also data centres in Peninsular Malaysia, as well as Sabah and Sarawak," he said.

Meanwhile, Loke said the cabotage policy exemption for cargo services will be reinstated in Sarawak and maintained in Sabah.

Loke also said all local and foreign ships that provide cargo services in Malaysian waters must apply for a domestic shipping license (DSL) for security reasons.

"The process of applying for a DSL has been simplified and it will be processed within three days," he said.

Loke stressed that all foreign ships can provide "direct call" shipping services from foreign ports to any port in Sabah, Sarawak and Labuan to transport imported or exported goods.

He said the Transport Ministry's policy in the 1990s to promote Port Klang as the only national load centre will no longer be applicable as the port is currently handling over six million containers or TEUs (twenty-foot equivalent units) for exports and imports.

"The decision to dock in any Malaysian port is allowed and it is bound by shipping companies' commercial decisions,'' added Loke.

Introduced in January 1980, the former Pakatan Harapan government revoked the cabotage policy for cable repair works in April 2019, which exempted submarine cable maintenance vessels from applying for a DSL.

The cabotage policy was then reintroduced on Nov 16, 2020 after the Pakatan government collapsed.

The re-imposition of the cabotage policy for submarine cable repair works has been a contentious issue, with critics arguing that such a policy could deter foreign investment and cause giant tech companies to exclude Malaysia from cable projects aimed at boosting regional Internet connectivity.

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