Letter from... Malaysia

Ten years ago, amid much fanfare, the Multimedia Super Corridor (MSC) was announced to the world at large. A 15km wide swathe of real estate that would stretch 55km southwards from the Malaysian capital, Kuala Lumpur, the MSC would offer unparalleled global connectivity to businesses needing to be wired into the virtual world. It was also intended to put Malaysia at the forefront of information technology development.

Ten years on, and several billion dollars later, the MSC is a reality, physically manifesting itself at its northern end as do the Petronas Twin Towers in the centre of Kuala Lumpur. Its southern encore is the ultra-modern, steel and glass Kuala Lumpur International Airport.

The MSC also spawned two completely new planned cities: Putrajaya, Malaysia’s new administrative capital, and Cyberjaya, slightly smaller but perhaps more important from the commercial and industrial IT standpoint. Envisaged as an IT hub, Cyberjaya was widely promoted as the oasis around which IT companies great and small would cluster, producing every conceivable type of software that business, entertainment, education, health and government administration could ever want or hope for.

Companies setting up shop in the MSC were granted certain concessions under the Bill of Guarantees, and the term ‘MSC-status company’ became a desirable addition to business cards. Even so, the sentiment today is that this quintessential development of the IT industry has not happened despite the resources invested.

MSC-watchers remark on its high profile, strong government support and its administrative shortcomings. The general sentiment is that civil servants cannot be put in charge of a business unit (which is what the MSC was supposed to be) even with the best intentions, because they will run it like a government department – bureaucratically and perpetually hobbled by red tape.

Recognising that a new industry needed new blood, the Government tried to attract the best and brightest, fresh graduates and academics included. Unfortunately, any venture still needs to be supported by experience if not in technology, at least in business.

Companies in the MSC concur that the people in the Multimedia Development Corporation (MDEC, the authority that manages the MSC) lack the necessary industrial experience to properly evaluate projects for approval and funding even today because of this industrial experience gap.

It is also the general sentiment that, regardless of comparisons with Silicon Valley, the MSC was an example of putting the cart before the horse. One observer remarked: ‘IT companies gravitated naturally to Silicon Valley. There was no government intervention, and this spurred the growth of the industry. With the MSC, it’s the other way around. IT businesses see it as a contrived, restrictive environment because of government intervention, and they stay away.’

Another viewpoint is that the people chosen to run the MSC bought into their own hype – always a dangerous precedent. ‘The novelty of the IT industry, coupled with the global hype and hoopla surrounding it, plus unfettered government support, created a sort of euphoria,’ says one CEO whose software company has weathered both the dotcom boom and shakeout.

‘Everyone wanted a piece of the action, and the barriers to entry were practically non-existent compared to other more traditional industries. But the fact remained: you needed to have some experience and business knowledge which the young people – who raced, fresh from university dorms, to establish their own dotcoms – sorely lacked.’

In 2005, the IT industry in Malaysia was worth about £1.7bn, but this included sales of proprietary MNC software of approximately £307m. A little over £1bn was spent on hardware, and the rest on services like technical support and training.

This indicated relatively little spent on locally-developed software; the preference was still for proprietary MNC software, and the major purchaser of this was the Government. It was a case, to use an industry term, of ‘not eating their own dog food’ and an indication of the lack of confidence in their own startups.

‘The MSC would have done better to invest more funds in local R&D than to organise junkets abroad to promote it,’ says the CEO. ‘The MDEC points to Cyberjaya and the number of MSC-status companies as evidence of its success, but quality-wise, what has emerged is questionable.’

So how much does the MSC actually have to celebrate, 10 years on? Critics generally agree that good infrastructure has been put in, although the public transport system that connects Cyberjaya to the rest of the country is still a major hiccup.

Perhaps what comes across most strongly from the companies associated with the MSC today is their ambivalence about it. One accounting software developer, who established his company pre-MSC in the early 1990s, puts it succinctly. ‘If a company had a good product to begin with, the right people, attitude and business skills, it would have succeeded – with or without the existence of the MSC.’

Majella Gomes is a business writer with a background in corporate communications and IT.