Malaysia in a scramble to catch hi-tech boom - investing in online startup companies - Brief Article

Business Asia, April 14, 2000

Malaysian companies have taken longer than their regional counterparts to jump on the Internet bandwagon, but now they are scrambling to transform themselves and cash in on a technology boom.

Malaysia has about 800,000 Internet subscribers using two major service providers for a penetration rate of about 10 per cent of households. But usage is doubling every year.

"Malaysian companies have been behind the rest of the region and are playing catchup," said Daniel Tang, technology analyst at G.K. Goh Research.

"But it is only now that there is decent usage of the 'Net. If a company had thrown a vast amount of money at the 'Net a few years ago in Malaysia it would probably have been wasted."

A slew of Malaysian companies have announced plans over the past six months to overhaul their operations and join the new economy.

The most prominent has been conglomerate Renong, the country's largest infrastructure developer.

Hefty debt compounded by the country's recession in 1998-99 forced it to find innovative ways to diversify and boost its shareholder value.

Just this month, Renong announced plans to start an Internet incubator venture, an agreement with Malaysia's YTL Corporation for a Web portal for the hotel industry, and a joint venture with Singapore Technologies to develop an e-commerce park in southern Malaysia.

Mining firm Camerlin Group, through its 22 per cent stake in New Zealand listed Brierley Investments, is set to become a serious regional Internet player, G.K. Goh's Tang said.

Brierley earlier this month launched a US$100 million Internet investment strategy dubbed tech@BIL. The company said the new division would invest in Internet-related businesses in the Asia-Pacific region, under the guidance of an international advisory board.

A host of smaller Malaysian companies has also joined the Internet gold rush.

Private radio broadcaster Rediffusion, precision toolmaker AKN Technologies, air conditioning company Linear Corp and investment firm Dijaya Enterprise have all announced Internet ventures.

While only about 10 per cent of Malaysian households have access to the Internet, Chow Quee Fee, senior analyst at Hwang DBS Securities in Kuala Lumpur, estimates that the majority of upper and middle-income households now have an Internet-linked personal computer.

About 50 per cent of homes in Singapore have Internet links, while that number stands at roughly 40 per cent in Hong Kong. Malaysia is ahead of Indonesia, Thailand and other South East Asian countries.

"Web enabling and systems integration is going to be another great way for Malaysian companies to take advantage of the current boom," a regional technology analyst said.