To casual observers, the MSC lacks vision - Malaysia's Multimedia Super Corridor

Business Asia, August 30, 1999

Should Microsoft's Bill Gates attempt to work from an office at Malaysia's ultra--modern Petronas Twin Towers, the normally casually clad Gates is likely to be denied entry.

The Twin Towers, the world's tallest building, and the centrepiece of Malaysia's Multimedia Super Corridor (MSC), has a dress code that bars anyone wearing jeans, slippers or shorts, even after business hours.

Together with high rentals, unreliable telecommunications systems and power failures, the dress code does not provide a work environment conducive to the IT types that the MSC is supposed to attract.

The problems at the Twin Towers typify for many IT industry observers how Malaysia's push into cyberspace has sacrificed substance for form.

The Multimedia Super Corridor is a 50km by 50km area that has been lavished by the Malaysian government with massive spending on infrastructure, tax breaks and other incentives designed to encourage investment. The aim: to turn the area into the Malaysian equivalent of California's Silicon Valley.

People in the Malaysian IT industry, however, argue that Silicon Valley is not about grand buildings such as the Twin Towers but rather the coming together of creative people finding commercial applications for their ideas.

The Malaysian government's ambition, they argue, would have been better served if even a tenth of what has been spent on infrastructure was allocated instead on research and development.

Malaysia's main disadvantage in IT, they stress, is a lack of research-based learning. As a result, the country's workforce lacks the skills necessary to create a knowledge-intensive industry.

The government is likely to spend anywhere between 5 to 10 billion ringgit on developing the MSC. Additional investment is likely from the private sector, but much of this is being directed into property development such as the Twin Towers.

As a result, much of the commercial activity in the MSC today is in property speculation.

The government, via its Multimedia Development Corporation (MDC), is attempting to redress the situation via its own venture capital fund. However, its affirmative action policies favouring ethnic Malays is distorting the allocation of funds -- so the best ideas do not always get the money.

Worse, even ethnic Malays who have shown a natural ability for creative work find that they are not getting the funds because of the bureaucratic nature of the MDC.

Meanwhile, the rest of the region is not standing idle. Singapore and Hong Kong are developing their own versions of the MSC, and programmers in Myanmar and Vietnam are proving highly competitive and competent. Highly qualified and costing about US$50 per month to employ, they are making Indian programmers look expensive.

The MSC has attracted multinationals such as Microsoft, SUN Microsystems and NTT, but their priority is to provide the goods and services needed by the Malaysian Government to build the MSC.

They are also taking advantage of tax breaks while using cheap labour from around the region to cater for clients in Malaysia and elsewhere.

The benefits to Malaysia of such arrangements are negligible -- drawing comparisons to the days when the former British colony's resources were exploited by British companies.

An interesting footnote is that most of the MSC is located on former British-owned rubber and palm oil plantations.

* Victoria's IT future -- p16.