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News & Highlights

MSC moves into Phase Two

BY netv@lue2.0 team
The EDGEDaily Online , 3 Jul 2004

The Multimedia Development Corporation (MDC) last week set up an exhibition booth at the KLCC to promote the Multimedia Super Corridor (MSC) and all its achievements. That week-long effort, themed "My Malaysia, MyMSC" culminated in the official launch of MSC Phase Two, eight years after the groundbreaking ceremony for the MSC was held in Cyberjaya.
Phase Two has among its objectives the establishment of a web of corridors throughout the country, creating 250 MSC global companies and enhancing current flagships while introducing new ones to improve national competitiveness. It also aims to take a leading role in harmonising the global framework of cyberlaws, enhancing the local ICT industry centred on services to people, and linking to the world's leading intelligent cities.
These are no doubt grand aims but before we proceed, it is prudent to look back and ask what Phase One has achieved and what has been learnt in order to make Phase Two successful.
The MDC, naturally, has hailed the MSC as a great success. It is, when seen from a conceptual, infrastructural and mindset change point of view.
Former president of the Technopreneurs Association of Malaysian, Sivapalan Vivekarajah, and Microsoft Malaysia's managing director Butt Wai Choon both agree that the MSC has put Malaysia on the world map for technology. Adds Foo Yong Kwang, who runs venture capital firm Netrove Partners Sdn Bhd, "The MSC had a positive impact on the growth of the ICT industry with regard to awareness and adoption of ICT and the creation of a new breed of technoprenuer besides initiating the strategic direction of developing knowledge workers."
Another player, K K Lim of iNavigate, an MSC company in the wireless space, declares that "the MSC gave hope, motivation, imagination and focus to a generation of new technoprenuers".
Sivapalan even believes that the MSC can enable Malaysia to compete in the future with China, India and other Southeast Asian nations.

Nagging feeling
Still, in many conversations the netv@lue2.0 team has had with people from all spectrums of the technology scene, there is a nagging feeling that the MSC has not fulfilled its potential.
Says a leading ICT CEO: "On an absolute basis, I think Malaysia has reason to be proud. On a relative basis, I don't know. About RM4 billion has been spent to produce an estimated 22,500 jobs. That works out to about RM200,000 invested to create one job. Is that the most efficient use of funds?"
One weakness is the critical mass of companies engaged in research and development (R&D). And while the MDC hails its achievements of attracting 60 world-class companies, one CEO feels the numbers are irrelevant. "The question is, how many are really engaged in R&D?"
The R&D factor aside, the flagging flagship projects are a major disappointment. Bureaucracy, poor implementation and poor leadership have been blamed for the lack of progress. Take the Telemedicine project. The Ministry of Health, fed up with the delays, finally took away the project from Medical Online for its failure to deliver.
A survey of CEOs in the sector reveals that they have a poor impression of the various flagship projects. Among the reasons cited was the lack of progress-updates from the MDC. netv@lue2.0 had requested for such information previously but got no answers.
The Media Shoppe founder and TeAM president Chris Chan says, "The flagships were conceptually too big and costly. And they were carried out without considering the possibility that they could potentially fail."
Shaifubahrim Saleh, former head of Cisco Malaysia, agrees that implementation is the biggest weakness and needs to be improved.
iNavigat's Lim says the biggest disappointment has been that while the flagship projects took so long to roll out, none has contributed to any R&D breakthrough or made any impact on society.
MyKad is considered the most successful of the flagship projects so far but its true success must be measured by how many of its smart features have been adopted by the millions of holders. As Larry Gan, newly retired country managing director of Accenture puts it, "I have one [MyKad] but that is about it." How many of our leaders have activated the various features on their MyKad or are they using it as a glorified identity card?
Sivapalan, a VC himself, adds that MSC's reputation has been hurt by the perception that some contracts for flagships were given out to consortiums that might not have been the best qualified. He suggests the government give future flagship contracts on the basis of merit and set key performance indicators for contractors to deliver. "They should also do away with the consortiums and allow any able company to tender for the work. This will not only assist the technology firms but the government will be far more certain that the objectives will be achieved," he says.
For many, MSC Phase One should be considered a learning phase and as Butt puts it, "the learning extracted from the last eight years alone is the best investment" that Malaysia could have made.
Gan agrees. "Many ideas were spawned and lessons learnt. We should be all the more wiser for Phase Two." He also feels that Malaysians are a few notches up on ICT literacy and usage because of the initiative.
The biggest lesson from Phase One has been in implementation, says Gan. "Phase One showed there is absolutely no substitute for accountability and a performance culture."

Absence of strong focus in Phase Two
And while Malaysia scores high on the tangible factors �institutional components that can be planned, organised and physically created �it is in the intangibles that it needs to work on the most if the MSC's second phase is to be a success.
Butt cites the fact that Malaysia has not churned out sufficient technical computer science and engineering graduates as well as post- graduates to push Phase Two into high acceleration as one misstep.
Tengku Farith Rithaudeen, president of Skali.com, says that while the MSC has made it possible for companies like his to be created, it has yet to deliver strongly in the area of intellectual property products. "Yes, we have more than 1,000 MSC-status companies today but where does Malaysia stand with regard to its own IP? We need to have more creative, more risk-taking ICT companies," he says.
Going forward, what is worrying about MSC Phase Two is the absence of a strong focus on where the ICT sector should be heading.
An IT consultant says that while MSC Phase One was focused on foundation building, the focus for the MSC's second phase remains unclear.
"Malaysia set the ball rolling with its MSC vision but lost its edge when other countries overtook it, specifically in e-government. Back then, only a handful of countries were moving into this area but today, almost every country has implemented some form of e-government. The issue now is, what area should Malaysia focus on so that the local ICT sector can be further driven to make the MSC a real success?" the consultant asked. Business process outsourcing, he says, is a good area for Malaysia but that won't last long with other countries eyeing it as well. "So what's next after that?"
Some industry observers see the prime minister's vision of taking ICT to the rural masses as a good focus for Phase Two. However, there must be an economic return for the users or ICT adoption will not happen. The CEO of an investment fund points out that certain things like telemedicine and smart schools are clearly the domain of the government and the private sector will not invest in such sectors without the possibility of making a profit. As for the goal of creating a web of corridors to create a knowledge-based economy, he feels this is questionable as "we have not yet created enough critical mass to sustain the MSC even in Selangor, let alone the nation".
Sivapalan, however, cites the AgriBazaar portal launched recently as a great way of delivering useful services to rural communities. "This can now be adopted for many other markets. If the people find a monetary or social benefit in ICT, then they will adopt it much faster. This will also provide greater income levels to the rural people," he says.
And to help MSC companies, Lim suggests special incentives to drive private enterprises, government-linked companies and government bodies to buy local ICT products.
As for Butt, he says Malaysia should focus on moving up the value chain, meaning creating more job opportunities for high value creation of software and other IT services. "We cannot live in the space of low cost labour. Thailand, India and China will easily overtake us in this aspect. Moving up the value chain requires a commercial model. It cannot rely on only government funded projects," he cautions.
The ICT industry generally feels that Malaysia needs to overhaul its education system so that rote learning is replaced by a more inquisitive, enquiring method. Universities should be more R&D-centric rather than being just knowledge mills in order to produce a more diversified and talented workforce.
Lastly, as Shaifubahrim says, Malaysia seriously needs to work on removing its inherent fear of failure so that the willingness and desire to experiment and innovate will generate that spark that is currently missing from the MSC.