Cabotage policy exemption revived


PUTRAJAYA: The cabotage policy exemption for non-Malaysian vessels conducting undersea cable repairs has been reinstated by the government as part of an effort to spur the growth of the digital economy, says Transport Minister Anthony Loke.

This could take effect within two months, he said.

Following this decision by the Cabinet, he said the ministry would take the appropriate steps to see through its gazetting process.

He said the ministry had held many rounds of discussions with IT companies in which the subject of reinstating the exemption was extensively discussed.

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

“We will do everything necessary to ensure that there is certainty in this policy,” he said.

“This was to ensure that the policy would attract more international investment in not just undersea cable but also data centres in Peninsular Malaysia, as well as Sabah and Sarawak,” he told reporters yesterday.

The cabotage policy, which was introduced in 1980, is aimed at developing local shipping and minimising dependence on foreign vessels and the outflow of foreign exchange in the form of freight payments.

In 2019, the then-Pakatan Harapan government revoked the cabotage policy for cable repair works, which exempted submarine cable maintenance vessels from applying for domestic shipping licences (DSL).

The cabotage policy was reintroduced in 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.

However, Loke said the Cabinet had approved the reinstatement of the cabotage policy for ships providing cargo services from Peninsular Malaysia to Sarawak, upon request of the Sarawak government.

“This is to support the growth of the local shipping industry that has been threatened by the cabotage policy exemption since June 1, 2017,” he said.

For Sabah, the exemption of the cabotage policy for cargo services from Peninsular Malaysia to Sabah and Labuan was maintained based on the Sabah government’s stance.

Loke also said all local and foreign ships that carry out cargo services in Malaysian waters must apply for a DSL for security reasons.

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

At the same time, Loke stressed that all foreign ships can provide “direct call” shipping services from foreign ports to any ports in Sabah, Sarawak and Labuan to transport imported or exported goods.

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