Kuala Lumpur: Revocation of the cabotage exemption that allows foreign vessels to conduct undersea cable repairs in Malaysian waters might scare foreign investors away from investing in telecommunications and internet infrastructure in Malaysia, according to a research analyst.
Amanda Yeo of EMIR Research feared this could happen despite the fact that the government will triple the bandwidth capacity of the Sistem Kabel Rakyat Malaysia (SKRM) submarine cable linking West and East Malaysia.
“This is especially prominent in Sabah, a Malaysian state with a relatively higher cost of living as the cabotage policy was implemented in Sabah and Sarawak for a whole range of foreign goods and services, not just undersea cable repairs prior to 2017,” she said.
She said although the cabotage policy which allowed foreign vessels to land at Sabah ports directly was rescinded in 2017 in Sabah and Sarawak, it did not result in a lower cost of living.
“Besides a smaller trade volume, other factors contributing to a higher price in Sabah are weak distribution channels, high handling charges, inefficient inland transportation, the inefficiency of port operations and underdeveloped infrastructures in Sabah.
“In this sense, nothing really changes in Sabah with the exemption of the cabotage policy in 2017,” she said in the ‘Thoughts’ column at www.bernama.com, in response to the Transport Ministry’s proposed action.
With regard to undersea cable repairs in Malaysian waters, she pointed out that the country currently does not have sufficient capacity of cable repair ships to support the necessary capacity and capability of submarine cable invested by the Over the Top (OTT) content providers such as Facebook and Google.
“The fear is this might further dampen the cost competitiveness in Sabah, given that Malaysia only has one vessel to carry out undersea cable works,” she said.
She said the cabotage policy also represents a barrier for the restoration of submarine cable failures, indirectly indicating the failure of Malaysia’s effort to attract foreign investment into the country.
“What makes the issue very critical is Sabah recorded 81.2 per 100 inhabitants for broadband penetration in the first quarter of 2020, lower than the national average of 127.4, according to the Malaysian Communications and Multimedia Commission (MCMC).
“This adds insult to injury among Sabahans as the increased delays in underseas cable repairs would severely affect internet stability, quality and speed to customers and industries in Sabah. Coupled with expensive electricity tariff and poor infrastructure, it might hinder industrialisation growth in Sabah,” she opined.
On the digitalisation initiatives that are being promised by the current administration, she said EMIR Research has several policy suggestions for the federal government to look into for Sabah to benefit from digital transformation besides normal prices of goods.
The suggestions include upgrading Sabah’s Sepanggar Bay Container Port (SBCP) as a National Load Centre; developing Lahad Datu Palm Oil Industrial Cluster (POIC) Port as a regional shipping entrepot; focusing on downstream and value-added processing activities to generate investment opportunities; working with the Federation of Sabah Industries; and implementing a freight equalisation programme like Tasmania, Australia.
“By utilising Sabah’s strategic position in the South China Sea, it serves not only the Brunei-Indonesia-Malaysia-Philippines East Asean Growth Area (BIMP-EAGA) but also exports from the Far East can land in SBCP or POIC Port.
“With shorter repair time of undersea cable, Sabah would also be able to capture numerous new and enormous opportunities related to oil palm, biomass, shipping, oil and gas, manufacturing, logistics and other resource-based industries,” she added.
Amanda’s views can also be read at https://www.bernama.com/en/thoughts/news.php?id=1911129, entitled “Time To Revisit Cabotage Policy Liberalisation In Sabah”.
THOUGHTS is a column on Bernama.com where experts in various fields can share their opinions and ideas on numerous topics and current issues.
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