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PAS : KE ARAH PEMERINTAHAN ISLAM YANG ADIL
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Subject:
[alternatif-net] Malaysia: Multimedia Super Corridor not
performing to cue
Date:
Sat, 07 Oct 2000 22:12:42 -0700
From:
"Mohammad Fudzail" <[EMAIL PROTECTED]>
To:
[EMAIL PROTECTED]
The Asian financial crisis and insufficient local interest and skills
have
all conspired to slow Malaysia's leap to a knowledge-based future,
according to Business Asia, a publication of the Economist Intelligence
Unit.
The Multimedia Super Corridor (MSC) -- a big, bold initiative conceived
by
Mahathir Mohamad half a decade ago to catapult Malaysia into the
information age -- is languishing in limbo, a victim of heavy official
oversight and slack investor interest. Unless it gets a new lease of
life,
the country's ability to meet the challenges of globalisation -- and the
government's burning ambition of achieving the leap from a production-
to a
knowledge-based economy -- will be compromised.
While greeted with considerable scepticism when first mooted in the mid-
1990s, the futuristic project made much sense. A prolonged
manufacturing-
driven boom in Malaysia had been steadily pushing up production costs,
eroding the economy's competitiveness. The prime minister and his
policymakers concluded that to continue growing strongly, the economy
had
to move up the value chain. And fast. The MSC -- a 15x50-km zone
stretching
south from central Kuala Lumpur, and designated for the creation, use
and
distribution of information technology products and services -- was to
spearhead the climb.
The government set about trying to turn the largely greenfield site into
an
Asian Silicon Valley. It pledged an initial US$10bn for basic
infrastructure, including a 2.5-10 gigabyte fibre-optic communications
backbone, and stipulated the "flagship" applications to be pursued:
electronic government; distance learning; telemedicine; multipurpose
smartcards; remote manufacturing; borderless marketing; and R&D
"clusters".
Acutely aware that little if any progress was possible without the help
of
big players in the global high-tech industry, the authorities devised an
attractive incentives package to woo them. This exempted investors from
the
restrictions on foreign ownership and expatriate employment applicable
to
other parts of the economy; offered generous tax breaks and competitive
communications tariffs; and promised MSC infrastructure contracts to
companies willing to use the zone as a regional base. Bureaucrats busied
themselves drafting a series of "cyberlaws" to encourage the development
of
the corridor and protect investors and their products. Dr Mahathir set
up
an MSC "international advisory panel" that included the bosses of
technology and new economy giants such as Microsoft, IBM, Apple, Oracle,
Compaq and Sun Microsystems. Its members applauded the prime minister's
vision, and most committed themselves to setting up operations in the
zone.
It seemed poised for take-off.
Then the Asian crisis struck. While the MSC was largely spared the
public
spending cuts that forced the cancellation or dilution of numerous other
large projects, it was adversely affected in other ways. Scores of
small,
local companies granted MSC "status" found themselves deprived of
anticipated funding almost overnight.
More ominously, the early enthusiasm of some of the major multinationals
waned. One reason was Dr Mahathir's transformation into a seemingly
hostile
sponsor. The increasing frequency and vehemence of his anti- Western
outbursts -- blaming foreign "speculators" for the downturn and accusing
overseas companies of preying on Malaysian businesses weakened by it --
and
his imposition of capital controls gave them pause for thought. The
government's repression of domestic critics, which involved monitoring
Internet traffic, was also seen as less than conducive to the sort of
innovation supposed to flourish in the corridor.
The Multimedia Development Corporation (MDC), the official agency
overseeing the MSC, continues to talk up the project. It says the number
of
MSC-status companies has grown steadily to 362 -- 40% of them foreign-
owned -- undertaking a wide range of activities, among them software and
hardware development, Internet-based business, systems integration, and
telecoms and networking.
But other figures released by the MDC, based on the business plans of
the
companies under its supervision, are hardly flattering. By 2001 they
will
have invested no more than US$475m, and generated a maximum of 7,300
jobs
-- modest numbers when measured against rival high-tech zones elsewhere
in
Asia. Worse, independent MSC-watchers say only about one-quarter of the
approved firms have actually moved into the corridor. Most are resisting
pressure to do so, not least because it still lacks essential facilities
such as housing, shops, schools and public transport. Indeed a sizeable
proportion of the companies are effectively dormant, according to
industry
analysts.
So what's gone wrong? Members of the international advisory panel
attending
its fourth annual meeting last month in Cyberjaya -- one of two
"intelligent" cities slowly taking shape in the MSC -- highlighted
numerous
shortcomings. For starters, too much is being attempted with too little
resources, so more focus is required, they said. Some suggested that
prioritising two or three of the seven flagship applications -- most of
which are unique to Malaysia -- would be a sensible move.
Others felt there was insufficient commitment to the project on the part
of
Malaysian firms, and warned this would have to change if foreign
companies
are to play a bigger role. The problem stems partly from the limited
appreciation among local businesses and other potential consumers of the
benefits technology could bring.
But there are other reasons, too. One is a severe shortage of indigenous
knowledge workers. The MDC touts low salary levels as a big plus for
investors -- the pay cheques of Malaysian managers are on average about
one-fifth and one-third those of their Hong Kong and Singaporean
counterparts respectively -- but it is a double-edged sword. A lot of
local
talent has migrated as a result to more remunerative and vibrant
high-tech
hubs now mushrooming across the region and beyond.
The MDC insists the dearth of qualified Malaysian professionals is a
short-term problem and will be more than adequately addressed when two
state-run universities in the corridor (that are now operational) begin
turning out engineers, researchers and other specialists. Still, the
education system generally, which has long favoured memorisation over
inquisition and creativity, will have to become far more attuned to the
needs of an increasingly IT-based economy.
Another obstacle to the emergence of a critical mass of homegrown
technology companies is lack of financial support. Malaysia's
conservative
banks, conditioned to underwriting investments by old-economy
manufacturers
and property developers, have been acutely risk-averse since the recent
recession. Some have so-called venture-capital units, but few of these
possess the capacity to assess the creditworthiness of seed and
early-stage
start-ups, so tend to shy away. There is also little scope for them to
exit
such investments. The MESDAQ, a new stock exchange modelled on the
tech-heavy NASDAQ in the US, and launched 18 months ago, has secured
just
two listings.
Here, too, the government is trying to plug the gap. MSC Venture
Corporation, an MDC offshoot set up in mid-1999 with a M$120m (US$31.6)
war-chest, has injected little more than M$20m into seven companies.
Staffers attribute the modesty of the outlay to the poor quality of many
of
the business plans they receive. Nonetheless, MSC advisory panel members
pointed out that government-backed funds are often ill-equipped to
identify
worthy initiatives, and made a case for the introduction of tax and
other
concessions to attract more discerning overseas funds that have
established
a strong presence elsewhere in Asia.
The persistence of copyright piracy, and the local authorities'
ambivalent
attitude to it, is a major disincentive to investment in the MSC for big
and small companies alike. In mid-year Dr Mahathir appeared to condone
the
practice, warning that makers of high-technology products would continue
to
be victims of counterfeiters until they reduced prices to levels local
consumers could afford. On the other hand, crackdowns on end-users of
illegal software and audiovisual goods have intensified, and tougher
laws
targeting manufacturers are now on the statute books. Still, the problem
in
Malaysia is less the quality of its legislation than the willingness and
ability of government agencies to implement it. Moreover, given the
speed
of the technological revolution, concern is being expressed, even in
official circles, about the risk of existing cyberlaws quickly becoming
outdated. Insisting numerous gaps and inconsistencies are already
apparent,
Othman Yeop Abdullah, the MDC's executive chairman, has called for a
major
review.
Is there any positive message in all this? Well, there seems little
doubt
that the MSC, a project which was to have provided a good deal of the
momentum for Malaysia's much-needed advance up the technological value
chain, will be rather more modest than originally envisaged. That is no
disgrace. The question is whether the authorities can recognise this and
adapt MSC strategies accordingly. Failing this, the country's
much-vaunted
leap into the future could be little more than a hobble.
___________________________________________________________________________
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