Indonesia Isn't Ready to Become Asia's Submarine Cable Hub

Subsea cables—thin glass fibers protected by plastic and steel wire armor, about as thick as garden hoses—are the world’s information superhighways, powering 99 percent of internet traffic, including diplomatic cables, military orders, the SWIFT financial messaging network, and more than $10 trillion in global transactions daily. But, according to U.S. officials, parts of these underwater superhighways are at risk of being compromised by Chinese espionage: Beijing could access the sensitive data that traverses Chinese-built cables and possibly tap the systems to track submarines.

As part of broader efforts to “de-risk” itself from China, the United States is redrawing its subsea cable maps along geopolitical fault lines in the Asia-Pacific. Until recently, many of its cables had connected to Hong Kong and crossed the South China Sea. Now, U.S. policymakers and companies are rerouting cables through nonaligned, democratic Indonesia and the strategically located Java Sea as an alternative to Chinese-controlled territories.

In 2021, Meta and Google pledged to pursue “diversification of interconnection points in Asia,” which effectively entails “friend-shoring” their cable systems by locating projects within territories of U.S. allies and partners. Multiple U.S. cables already run through Japan and Singapore, but further expansion is underway on three new cable projects in Indonesia. Four of the 10 major trans-Pacific and intra-Asian submarine fiber-optic systems scheduled for completion by 2025 will have a landing point in the archipelago, and such investments could be lucrative: Indonesia stands to add $59 billion to its GDP between 2023 and 2025 from Meta-invested cables alone.

Washington has recommended other diversification points in U.S.-friendly countries nearby, such as the Philippines, Thailand, and Vietnam, but beyond geopolitics, Indonesia’s combination of opportunity and amenability makes it one of the more appealing destinations for subsea cables. Though it is the world’s fourth-most populous country, it has one of the largest offline populations and is primed for a digital transformation—the value of its digital economy is projected to reach $130 billion by 2025. Facing increasing demands for higher broadband speeds, Jakarta has prioritized high-speed internet infrastructure development and subsea cable expansion. Washington is already invested in the success of these efforts: In July, the U.S. Trade and Development Agency awarded a grant to an Indonesian company to support a feasibility study on a new cable system to serve remote, underserved areas of the archipelago.

Though Indonesia seems poised to become Asia’s next submarine cable hub, it might not be ready. Without reform, two major barriers stand in the way of its success: its geography and its regulatory environment. As the U.S. government and multinational companies such as Meta and Google increasingly route cables through Indonesia, the consequences of inadequate reform could be far-reaching: Billions of dollars in investments—not to mention secure trans-Pacific communications—are at stake.

To paraphrase Napoleon, to know a nation’s geography might be to know its submarine cables. Fishing, anchoring, and underwater earthquakes are the largest causes of cable faults. Indonesia is a high-risk location for all three, giving it one of the highest fault rates worldwide, behind only the United Kingdom, Taiwan, and China. Indonesia is one of the world’s most active fishing hubs, boasting a fishing fleet of 719,000 ships—second only to China—that accounts for about one-fifth of the world’s vessels. It also neighbors one of the world’s busiest shipping lanes, the Strait of Malacca, which more than 100,000 vessels transit each year. When these ships drag fishing nets across cables or drop anchors directly onto them, cables can break. The same is true for earthquakes, which can trigger subsea landslides and rapid turbidity currents that rupture the lines. Unfortunately for its cables, the archipelago also has the most active volcanoes of any country on Earth.

More than 100 submarine cables break worldwide every year, and repair costs are steep, averaging between $1 million and $3 million per fault. But the biggest consequences of these faults largely depend on the availability of redundant connections. If multiple cables service a region and one breaks, that area can reroute internet traffic along other lines within milliseconds. For rural communities that lack such redundancy, the damage can be more severe, since bandwidth loss from a single broken cable can sometimes only be restored by fixing that cable. After two Chinese ships damaged the only two cables connecting Taiwan with Matsu, the outer islands’ 14,000 residents experienced 50 days without internet.

Insufficient regulatory enforcement against theft also undermines Indonesia’s cable ecosystem. Perpetrators often seek to resell stolen cable parts to scrap metal dealers for a profit. In 2018, for example, 12 tons of parts were pilfered near the Riau Islands, but the theft was neither noticed nor its perpetrators apprehended until after local fiber-optic providers received complaints from residents about slow broadband speeds.

Jakarta’s cumbersome cable governance regime compounds this challenge, making it more difficult to repair cables once they’ve been stolen or damaged. Foreign cable investors, suppliers, and owners must meet onerous conditions to operate in Indonesian waters, and permitting processes are lengthy. The government’s preferential cabotage policy requires cable repairs to be performed by Indonesian-flagged vessels with Indonesian crews. In 2021, the Ministry of Communication and Informatics imposed new requirements that at least 5 percent of investments in cables crossing Indonesian waters must be owned by a local telecommunications operator with at least five years of relevant experience.

These laws are in place to help boost domestic cabling ship fleets, but they also delay repairs due to Indonesia’s limited supply of repair ships. In 2022, it took two months after a section of the Sulawesi Maluku Papua Cable System (SMPCS) broke for a repair ship to start fixing it. That same ship needed to first complete repairs on a different cable line, travel to a refuel point on the island of Batam, and then sail nearly 3,000 nautical miles to the town of Merauke to reach the SMPCS. The standard repair time in Indonesia exceeds 30 days, one of the slowest in the world. The archipelago lags behind its regional peers: Repair times average 27 days in Malaysia, 20 days in the Philippines, 19 days in Singapore, and 12 days in Vietnam.

For strict cabotage policies to work, there must be enough resources and expertise to begin with. But that hasn’t always been the case in Indonesia. When Jakarta first mandated that only Indonesian-flagged and -crewed ships could repair its cables in 2008, no such ships existed at the time. Four known Indonesian-flagged ships now operate today, but this is inadequate for servicing the 217 submarine cable segments in Indonesian waters.

Recently, Jakarta has acknowledged the need for reform. In 2021, it initiated a multiyear restructuring of the overlapping subsea cables within its waters to make the network more “orderly.” The following year, Jakarta took steps to increase interagency collaboration on cable licensing applications. It has also liberalized its telecommunications investment regime, potentially allowing increased foreign ownership of submarine cables landing in Indonesia. Whether the government truly embraces foreign investment in this regard, however, remains an open question. In the past, Indonesia has often resorted to economic nationalism—shielding domestic companies from foreign competition—in critical industries; subsea cables, as “vital national objects,” may be no different.

With Indonesia’s growing importance in the global submarine cable network, it must do more to secure the fiber-optic systems in its waters. Though the country cannot change its geography and might not welcome substantial foreign involvement in its cables, it can make other reforms.

First, the government should designate a single regulatory authority to oversee all submarine cable-related activities. This would promote a cohesive, nationally coordinated governance framework instead of the current system, which fragments authority among multiple agencies, including the Ministry of Marine Affairs and Fisheries, Maritime Security Agency, Transportation Ministry, and Defense Ministry. Many countries with advanced cable governance regimes already do this, such as the State Oceanic Administration in China, the Infocomm Media Development Authority in Singapore, and the Marine Management Organisation in the U.K.

Second, Jakarta should create a centralized surveillance system to enhance information-sharing on cable threats among relevant enforcement authorities, such as the Indonesian Navy, police, and Maritime Security Agency. While Indonesia’s legal measures for cable faults are relatively advanced and should deter prospective saboteurs and thieves, examples of effective enforcement are difficult to come by. This change would improve the implementation of existing regulations on stolen and damaged cables.

Third, Indonesia should create a one-stop shop for cable-laying permit and repair applications, decreasing regulatory barriers for the cable ship owners that operate in its waters. This aligns with guidelines released by the Association of Southeast Asian Nations (ASEAN) in 2019, which urge member states to pre-clear repair vessels and issue permits within seven to 10 working days. ASEAN’s Digital Masterplan 2025 calls for establishing regulatory best practices and standardizing access rights for submarine cables across Southeast Asia to minimize permitting delays and repair costs. As the largest economy and de facto leader of ASEAN, Jakarta should work to implement these recommendations as well as spearhead further negotiations among members to develop such a regional framework. Indonesia can raise this topic when it hosts the ASEAN summit in September.

The United States has already decided to entwine the security of its cables with that of the archipelago. Now, it is Jakarta’s turn to choose—whether to embrace regulatory reform or subject the fate of its critical infrastructure to the whims of geography.

William Yuen Yee is a research assistant with the Columbia-Harvard China and the World Program and a consultant for the Rhodium Group. He is the 2022 Michel David-Weill Scholar at Sciences Po, where he is a master’s candidate in international governance and diplomacy. Twitter: @williamyuenyee

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