Aug 30, 2021

Monday, August 30th, 2021 by ANIS HAZIM / graphic by MZUKRI MOHAMAD MALAYSIA’S exclusion from major subsea optic cable investments meant to upgrade the Internet infrastructure could stunt the quality of the country’s connectivity and hinder it from achieving the goals of the Malaysia Digital Economic blueprint (MyDigital). Malaysia has missed out on two subsea cable system investments under the purview of tech giants Facebook Inc and Google LLC, namely Echo and Bifrost, and is now set to add the Apricot subsea cable system to the list. MIDF Research estimates Malaysia’s exclusion from the Facebook and Google-backed Apricot subsea cable will result in a loss of high-capacity connectivity and investment worth US$300 million-US$400 million (RM1.26 billon-RM1.68 billion). “This estimated loss is excluding the worth of capacity and investment of another two subsea cables that Malaysia recently missed (Echo and Bifrost). “Malaysia has also lost the chance to receive a 70% increase in an overall transpacific capacity with the dismissal of those two subsea cables, and worsened with the exclusion of Apricot,” MIDF told The Malaysian Reserve (TMR) in an email. MIDF said the exclusion from the Apricot subsea cable system could not only decrease the quality of Internet connectivity, but hamper investments in data centres by both local and global companies. Many have blamed the cable exemption on the removal of the cabotage exemption policy by Transport Minister Datuk Seri Dr Wee Ka Siong. DAP secretary general and Bagan MP Lim Guan Eng has advocated that the government revise the policy, which has put some RM12 billion to RM15 billion worth of digital investment at risk. Malaysia could perform better as a data centre market, which is expected to witness investments of US$1.4 billion by 2026 and a compound annual growth rate of 7% between 2021 and 2026, the research outfit added. “The exclusion of Apricot, after Echo and Bifrost, is likely to hinder Malaysia’s goals of having the highest number of submarine cable landings in South-East Asia by 2025,” pressed MIDF. The Apricot subsea cable will have a bandwidth of 190Tbps and enable users to have a seamless connection to South-East Asia, North Asia and the US with very low latency. Although the Mandatory Standard on Access Pricing has reduced broadband prices and increased broadband speed, the coverage and speed of Malaysia’s broadband, notably mobile broadband, is still weaker than its regional peers, MIDF Research noted. According to the Speedtest Global Index in January 2021, Malaysia’s mobile download speed ranked 94th out of 140 countries and eighth among Asean nations. RAM Rating Services Bhd said the exclusion from another undersea cable investment would dilute Malaysia’s ambition to achieve the highest number of submarine cable landings in South-East Asia by 2025, a part of the country’s MyDigital initiative. Its analyst Chu Jia Ying said based on TeleGeography, Malaysia’s submarine cable connectivity is lagging behind other neighbouring countries. “Malaysia is currently connected by 23 submarine cables, including under construction cables, lagging (behind) Indonesia with 55 submarine cables and Singapore’s 31, while the Philippines with 19 cables could outpace us if we continue to be left behind,” Chu told TMR. The analyst said there is a lack of clarity and directive from the government on how to transform the country into a digitally-driven and high-income nation by 2030. “What investors require is clarity on policies and certainty in the business environment — the policy flip-flops and ongoing cabotage issue have not encouraged investor confidence. “Frequent engagement and roundtables with key stakeholders, such as Google, Facebook and Microsoft Corp are crucial for future cable projects, and something the new administration will hopefully review.” According to Chu, weaker global connectivity in terms of cable investments and support for other digital infrastructure such as data-hosting facilities will also influence Malaysia’s success in its digital aspirations. “The issue will always revolve around data sovereignty and security with regard to how data centres and cloud service providers will be regulated or licensed,” Chu pressed. In February 2021, the government granted conditional approval to international tech firms to build and manage hyper-scale data centres and cloud services. But thus far, only Microsoft has expressed its interest publicly. In the absence of further disclosures, the analyst said the government’s approach to this “sensitive” issue would drive future investments. Chu stated the Malaysian Communications and Multimedia Commission is expected to implement new regulations targeting data centres and cloud service providers as early as next year. Nevertheless, Chu said the lack of cable connectivity alone would not halt the growth of the data centres, although it may mean lost opportunities for Malaysia. “We expect the data centre segment to register positive growth in the medium term, premised on growing demand and new launches or expansion of data centres by local players such as TM One, AIMS (Data Centre Sdn Bhd) and Extreme Broadband (Sdn Bhd),” she added. Singapore’s moratorium on data centre construction could also provide new opportunities to Malaysia, given its geographical proximity, land availability and cheaper power tariffs. The analyst stressed a supportive and agile regulatory environment, combined with consistent policies and clear directives, are key to pave the way for a strong digital economy and achieve the country’s goals under its MyDigital roadmap. RELATED ARTICLES