Cabotage policy a good move for nation

THE Social and Economic Research Initiative (Seri) welcomes the recent decision by the Malaysian Cabinet to reinstate the cabotage policy exemption for non Malaysian vessels to conduct undersea cable repairs (“Cabinet has decided to reinstate cabotage policy exemption for undersea cable repairs”, The Star, March 1; online at bit.ly/star_cable).

The announcement made on Friday by Transport Minister Anthony Loke marks a significant stride towards enhancing foreign investment in the data centre industry.

(According to the Investment, Trade and Industry Ministry, “cabotage policy is a policy that governs the transport/shipping of goods or passengers between two places along coastal routes in the same country by a transport operator from another country”.)

Such policy changes recognises the benefits they bring to Malaysia’s digital infrastructure development. These policies are pivotal for Malaysia’s growth in the digital age; moreover, the initial implementation of a cabotage policy was to develop domestic shipping fleets, which has nothing to do with submarine cable repairs.

This move addresses the issue of a shortage of Malaysian vessels for deepwater repairs, resulting in delays and inefficiencies that have placed Malaysia at a disadvantage in comparison with other nations in the Asia Pacific.

The reinstated cabotage policy exemption, coupled with simplifications in the process of applying for a domestic shipping license for cargo services is poised to effectively resolve the shortage of vessels capable of conducting undersea repairs in Malaysian waters.

By enabling foreign fleets to invest and perform undersea repairs, Malaysia can minimise financial losses caused by interrupted transactions, and further bolster its global digital connectivity.

Since undersea cables serve as the primary means for international data transmission, regular repairs and maintenance are crucial to ensuring reliability for businesses, governments, and individuals to stay connected to global digital hubs.

Accessibility of fleets that are able to seamlessly ensure deepwater repairs places Malaysia at a point of global competitiveness in data centres and digital infrastructure through smooth and uninterrupted operation of business, in turn attracting more investments to the country, and warranting development of a robust domestic digital ecosystem.

We believe this shift will not only benefit the data centre industry, but will effectively strengthen Malaysia’s connection to the world, fostering innovation that has the power to streamline aggregate economic growth in the country.

SOCIAL AND ECONOMIC RESEARCH INITIATIVE (SERI)

Seri is a is a non-partisan think-tank dedicated to the promotion of evidence- based public policies.