Should the Multimedia Super Corridor be reviewed?

Posted on November 26, 1999 
Filed Under CNET, Julian

By Julian Matthews

When Tengku Dr Azzman Shariffadeen, chief executive of Mimos Bhd, called for a review of the Multimedia Super Corridor (MSC) project in August, one would have thought it would cause a stir in Malaysia. At best, one expected a media frenzy of follow-ups to encourage public debate on the controversial project. At worst, the powers-that-be would issue some form of damage-control counter statement. Instead, the comment passed without official reaction, echoing in the hallways of Malaysia’s active rumor mill until it faded into oblivion.

The apparent silence on the part of MSC promoter Multimedia Development Corporation (MDC) and the over 240 investor companies of the project–including some of the largest information technology and telco players in the world–was deafening.

Did the non-reaction suggest apathy or were investors too self-involved to care? Or have all its stakeholders become so wary of the fact that it doesn’t pay to be critical in Malaysia, especially not about the Prime Minister’s multi-billion-ringgit pet project?

“I believe that Malaysians are overly sensitive about criticism of the MSC perhaps because they feel like the underdog, working extra hard to get it up,” said one investor who refused to be named. “They perhaps believe that they deserve more support for those things that they have done right, rather than criticism for those that they have done wrong, and there will always be things that have been done ‘less than perfectly’,” he continued.

His comments typify the hushed tones that MSC investors go into when speaking forthrightly on the project, perhaps for fear of the law of unintended consequences– cold-shouldered by government administrators; falling out of favor with the powerful one-stop super agency that MDC has become; or worst, losing future MSC contracts.

Tengku Azzman’s arrow may have not struck the raw nerve it intended but his contention is still valid. It has been five years since the project was first mooted and much has changed in a world zipping along at the light-speed of the Internet.

“If it ain’t broke, break it,” says Govinathan Pillai, managing director of Sun Microsystems Malaysia, an early MSC investor. “It’s not whether what was done in the past was successful or not. The question is can you afford to stay with one model for a long time? One needs to go back and ask, ‘Is there a new way to do it?’ I think that’s where the call is coming from and we totally support that,” he said.

He added that when first conceived, the MSC banked more on the software developer model. But the world has changed and become more oriented toward the service-provider model.

To be fair to the people behind the MSC, Pillai said they were aware from the very beginning that the project would need constant realignment. “The MSC is not a building plan–you draw the plans and construct the building–but an ever-changing experiment,” he said.

If it ain’t broke, break it

For its part, Sun conducted its own review a year ago. “We’re in the midst of a complete overhaul–not because we’re not happy with what we did, but something conceptualized two years ago for us is far too long. The same principle applies: if ain’t broke, break it. So we’re breaking and we’re rebuilding it,” Pillai said.

Sun initially touted its Java technology and a Java competency center for the MSC. Pillai said the company has now switched to a multi-pronged approach including pushing its Hot Desk architecture and Sun Ray thin-client servers to schools; working on secure services for B2B commerce over the Net; setting up a rendering lab for entertainment applications; assisting in getting the telemedicine flagship application off the ground; and encouraging Java use for e-procurement applications.

“We need to bring these technologies here quickly and do pilots because the country is in a rush to make that quantum leap and it needs the access,” he said.

Other investors are also in favor of a review. “It’s always good to review large ongoing projects from time to time. The MSC should not be an exception,” said Tim Loving, managing director of AccTrak21, an accounting solutions company.

Loving’s sore point is the shortage of “real commercial software industry talent” at the MDC. “There are any number of bureaucrats and academics in there but they are not what’s needed in our industry. It may not be a major stumbling block but it will certainly affect the way MDC views and interacts with the homegrown commercial software industry.”

Loving said MDC staff should visit their software industry clients more frequently. “My company has received very few pro-active visits from MDC staff. The culture seems to be that we should go to see them. That’s a pity because when they do visit us on a one-on-one basis, I’m sure there is a marked change in perceptions. Until they get closer to the software companies and understand what they are trying to do and how they are currently constrained, it will be difficult to formulate an appropriate climate and culture for growth.”

Too much focus on infrastructure

Malaysia’s insistence that MSC companies all move into new host city Cyberjaya within the MSC by June 2000 is also scorned by some already doing fine elsewhere. MDC’s role as a land developer for the Cyberjaya project adds to the controversy.

“Clustering offers little or no benefits to software development companies, nor does ‘world-class infrastructure’. Based on the geographic location of U.S. software companies, no region of the U.S. is pre-eminent. Microsoft itself is based in Washington State, not California. There appears to be no ‘Silicon Valley effect’ in respect of U.S. software companies. Our two major U.S. competitors are based in North Dakota and Ohio, respectively, far from Silicon Valley and Silicon Alley,” he said.

Loving said his own company does not see any significant business benefits in moving to Cyberjaya, from its present location at a university in Serdang.

Location in a physical world seems meaningless when minds are melding on the Internet from the remotest regions. Sun’s Pillai said: “In Malaysia, unfortunately, there is too much focus on building infrastructure. We are not focusing on the key products we want to sell–which is knowledge.”

He stressed that many who plan to do business on the Net desire to have their own server, their own leased line, and “do everything themselves”. “They say the MSC is too expensive. They need lots of money. But the irony is if you want to sell something on the Net today you can go on eBay and set up a small business immediately. Or you can buy a whole service from a Web-based provider. If you really have a unique business model, you should be focusing on your core competency, not on building infrastructure.”

IBM Malaysia country manager Ou Shian Waei said, however, that Malaysia’s operating costs is still among the lowest in the region and the basic telecommunications infrastructure is satisfactory.

“In addition to our ASEAN accounting team headquartered in Malaysia, we also have some other Malaysia-based staff for sales and marketing divisions playing regional roles,” he said.

Ou side-steps the fact IBM is located outside the MSC and has shown no interest in moving from its present site in Kuala Lumpur. Established in Malaysia in 1961, Big Blue has yet to throw its considerable weight into the MSC and was slow in applying for MSC status, which would require a setup in Cyberjaya.

IBM’s cautious entry seems hinged on whether it wins bids to participate in the four identified MSC flagship applications: national smartcards, telemedicine, smart schools and e-government.

Ou was non-committal on calls to review the MSC and refused to engage in any debate, except to say that “our interaction with MSC has so far been positive”.

Asked about whether the MSC encourages entrepreneurship, Ou touted e-Business Exchange Sdn Bhd (eBX), an e-billing and payment solutions developer with customers in Singapore and Hong Kong as an example of local success. Based in Penang, north of the MSC, eBX, ironically, owes nothing to the MSC for its success.

Long on promise, short on execution

Indeed, growing impatience on the MSC promise has seen a number of cyberpreneurs seeking greener pastures elsewhere. Singapore, Hong Kong and the U.S. seem far more appreciative of the fact that speed is critical. Access to funding, and suspect decision-making processes in granting them in Malaysia, has also been a common complaint of investors.

Added to that, Malaysia’s high-tech stock exchange, Mesdaq, set up to help companies raise desperately needed capital, has so far secured only a single company that makes wires and cables since the exchange opened for trading in April.

AccTrak21’s Loving said he prefers the U.S. Nasdaq to the MDC-promoted Mesdaq. “For a company such as AccTrak21 with a global product, Nasdaq remains the listing of choice for optimizing shareholder value.”

Sun’s Pillai qualified that Mesdaq has yet to kick in because the boom is in the U.S. and on Nasdaq. “You can be nationalistic and loyal but if you own a company that has a global product where would you go? The market is such, and the recession did set us back.”

But he acknowledged the lack of derring-do among conservative, salary-bound Malaysians is a problem. “Malaysia has the talents but the trouble is most of the smart ones are working for multinationals. Local companies can train people, but once they reach a certain level they leave for the larger companies. You can’t fight this.

“Now we’re telling people to go out and start up their own companies. But how do you survive? Our environment is not friendly to startups. There are a few, but the numbers are not big enough yet,” he said.

Pillai said his company had “practically given up on the current working population” and instead re-directed efforts at university-level students. “I see hope in the young. The older folks are already too entrenched in their ways and there’s too much of the get-rich-quick phenomenon here. We hope to get students internships in companies we are working with. By the time they come out, the venture capital market will hopefully be more mature here, and more of them may have a chance to go into entrepreneurship.”

Pillai, like other investors, does not dispute the bold vision of the MSC. As the engine of new growth to transform a manufacturing-dependent country to one leveraging on knowledge, research and design and content creation, the project has won international praise. “The question is when it gets down to implementation level, that’s when it gets very fuzzy,” he said. Transparency and the willingness to listen to opposing views are what irks investors.

As another investor aptly put it: “Malaysia needs to take the good with the bad. It will not get it right every time. A sign of the growing maturity of the MSC and the Malaysian high-tech industry will be when we are able to accept criticism in our stride. In the end, it is not right or wrong that matters but whether the MSC Balance Sheet comes out in our favor.”

Published in CNet Asia, Nov 26, 1999: Pg 1 | Pg 2 | Pg 3 | Pg 4

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