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West warns Malaysia to keep Huawei out of 5G networks

Entertaining offers from 'untrusted suppliers' could cause damage, according to US and EU envoys

The Malaysian government has reportedly been warned against allowing Huawei a role in the country's 5G network rollout by the EU and US amidst continuing efforts to limit the influence of Chinese technology companies.

It appears that envoys to Malaysia from both the US and EU have written to the government in recent weeks following its decision to review the plan enacted by the previous Malaysian government to build a single state-owned 5G network chiefly using technology from Swedish telecoms giant, Ericsson. The Financial Times claims to have seen the actual letters.

Earlier reports revealed that the Chinese technology giant was lobbying for a role in Malaysia's 5G rollout after the current government announced it was reviewing the project, citing concerns over the bidding process. The new administration took over late last year with the appointment of longtime opposition leader Anwar Ibrahim following the collapse of two successive coalition governments.

Malaysia is perceived to be lagging behind other nations in the region in its deployment of 5G network technology. The agreement with Ericsson had the objective of achieving 80 percent national coverage by 2024, making it one of the fastest 5G rollouts globally, in a deal said to be worth 11 billion Malaysian Ringgits ($2.5 billion). The rollout is said to have already exceeded 50 percent coverage by the end of 2022.

However, Reuters reported last month that the country had plans to introduce a second 5G network next year to challenge the monopoly operated by telco Digital Nasional Berhad (DNB), which is owned by the finance ministry. No decision has been made amid concerns that involving multiple technology providers may increase costs and slow the rollout.

According to the FT, US ambassador to Malaysia Brian McFeeters warned of security risks if the country allowed "untrusted suppliers" into any part of its infrastructure, while ambassador and head of the EU delegation to Malaysia Michalis Rokas is said to have told Kuala Lumpur that any change to the agreed deal would not only negatively impact Ericsson, but would likely put off EU investors from doing business in Malaysia.

Huawei has been hit hard by US sanctions against the company, with its profits down by 46 percent in the first quarter of 2023 compared to year-end figures, as The Register reported last week, so it is no surprise that it would be keen to sell its technology wherever it can.

Washington ordered a halt on all American technology exports to Huawei as part of its ban on the sales of US goods to Chinese organizations earlier this year, which has deprived the company of components produced by leading technology suppliers such as telecoms chipmaker Qualcomm.

The US government has also been leaning on allies to follow its lead, especially when it comes to 5G networks, citing claims that Chinese companies such as Huawei may be controlled by their government.

In 2020, the UK government banned telcos in the country from purchasing equipment from Huawei, and last year issued formal legal notices that any such kit already installed must be removed by the end of 2027.

Other countries have announced similar moves, with Germany last month disclosing that it is to scrutinize all Chinese technology in the country's 5G networks following reports in March that it would also block operators from installing technology from both Huawei and ZTE, and would require them to rip and replace existing components made by the two Chinese suppliers.

Huawei declined to comment on these latest reports regarding the situation in Malaysia and has previously denied that its products represent a security threat, telling us in March that "Huawei has a strong security record in Germany and around the world for over 20 years," and that "the consensus among the vast majority of security experts is that restrictions of a reliable supplier with a strong security record will not make infrastructure more secure." ®

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