Malaysia's distant 2020
vision By Ioannis Gatsiounis
KUALA LUMPUR - The bell tolls in Malaysia
in 2020, the deadline the United Malays National
Organization-led government has given itself to
deliver the Southeast Asian country from
developing- to developed-world status.
Former authoritarian leader Mahathir
Mohamad launched the ambitious campaign in 1991,
which aimed broadly to create a progressive
scientific society and position Malaysia as a
regional hub for leading innovative technology
companies. The stepping stone of that plan was the
establishment of the Multimedia Super Corridor
(MSC), unveiled in 1996 as Malaysia's answer to
Silicon Valley, which includes a 728-hectare
futuristic "intelligent garden" city known as
Cyberjaya. The government project is expected
eventually to cost US$5.3
billion and usher Malaysia into the information
age.
Malaysia was arguably in a better
position to take the leap than most developing
countries. After years of rapid manufacturing-led
growth, its infrastructure was nearly world-class.
Regionally, the levels of the country's gross
domestic product and education were higher than
most of its neighbors'. Oil and gas production was
providing handsome revenues that could be used to
spark technology-oriented spending.
To
Mahathir, the MSC and Cyberjaya, which in Malay
translates to "cyber success", seemed a visionary,
win-win proposition.
Nowadays, nothing
informs Malaysia's sense of success or failure
more than the fate of its high-tech sector. Yet
it's becoming increasingly clear that the
country's so-called 2020 vision is fast falling
out of focus. Malaysia now lags behind both
China's and India's science and technology
sectors, and regional rivals Singapore and
Thailand now attract more foreign direct
investment. Even Malaysia's political leaders have
at times lamented the country's "first-class
infrastructure, but third-class mentality".
Nor has private-sector innovation taken
off to the degree first envisaged by government
policymakers. To the contrary, the glaring lack of
home-grown technology firms means that holders of
information and technology degrees currently make
up about 20% of Malaysia's unemployed university
graduates, who apparently lack the knowledge and
skills needed to compete in the global technology
marketplace.
When the government has tried
to fill the private-sector gap, it has often
missed the mark. The government's pet Information
Communication Technology projects, including the
Smart School Project, the Worldwide Manufacturing
Web and Borderless Marketing Flagships, have all
flopped because of mismanagement, overspending and
poor execution, critics say. There are recent
reports claiming that as many as 90% of state-led
ICT startups have gone belly-up, according to
Technopreneur Association of Malaysia president
Farith Rithaudeen.
That poor record has
been a drag on the entire science and technology
sector, souring private-sector sentiment and
drying up the venture-capital funding for other
so-called technopreneurial pursuits, including the
startup ICT ventures that should be leading the
country up the value-added information-technology
ladder.
Consider, for instance, the case
of Sentinel Technology, a small Malaysia-based
research-and-development-oriented ICT firm.
Mohamad Asendy, the startup's chief executive
officer, said his company recently developed new
anti-piracy software that he contends has the
capacity to become a global market leader.
The company even held discussions with
Microsoft's Malaysia division, which according to
Asendy was duly impressed with the innovation and
encouraged Sentinel to divulge how the technology
works so that Microsoft technicians could test its
effectiveness.
Asendy said he preferred
first to formalize legal protection for his firm's
innovation, but he lacked the RM300,000
(US$81,500) he needed to apply for a US patent.
The Malaysian government offered him a RM50,000
grant, Asendy said, but in efforts to land the
additional funding needed for the requisite
marketing, accounting and legal requirements to
apply for the patent, he was frequently asked in
exchange to give up a majority stake in the
intellectual property.
When he tried to
obtain further government funding to patent his
innovation, he was first directed to the Internal
Affairs Ministry, which after a long wait
redirected him to the Science, Technology and
Innovation Ministry, he said. From there, he was
told he would first have to get MSC status before
he could apply for funding. The innovation, many
months later, still is not legally protected.
Government hindrances The
government is often at the root of Malaysia's
innovation problems, scientific surveys say. A
Global Entrepreneurship Monitor, a worldwide
research project to be released soon that aims to
describe and analyze entrepreneurship processes,
recently surveyed 45 local ICT experts and 2,000
Malaysian nationals about the country's
entrepreneurial environment.
The study's
results reflected poorly on the government's
performance, claiming that its policies disfavor
new firms, and that government bureaucracy and
regulation and licensing requirements impede new
firms from expanding. It raised doubts about the
government's competence and effectiveness in
supporting new and growing firms. The study
singled out the lack of financial support, quality
of education and training, and overall market
openness as other main factors holding back
Malaysian entrepreneurs.
For all these
discouragements, however, Prime Minister Abdullah
Badawi's government is not abandoning his
predecessor's high-stakes, high-tech dream. In
part, that's because it's impossible to brush the
ambitious scheme under the rug. Wired with
high-speed fiber optics, the MSC spans a whopping
777 square kilometers.
Moreover, the
government has poured billions of dollars into the
MSC's infrastructure and provided huge tax breaks
to companies that have agreed to locate there.
Meanwhile, Abdullah, who on the whole has
demonstrated a disdain for the profligate
megaprojects favored by Mahathir, has nonetheless
reaffirmed his government's commitment, some say
blindly, to all matters high-tech.
For
instance, the Ninth Malaysia Plan (2006-10), the
country's recently minted economic-policy
blueprint, allocates RM1.5 billion to
technology-oriented schemes, a 40% increase from
the previous plan. One of the plan's main thrusts
is "to raise the capacity for knowledge and
innovation and nurture first-class mentality". The
document is spangled with terms such as
"knowledge-based", "science", "innovation" and
"research and development".
To be sure,
there have been some bright spots on Malaysia's
ICT horizon. In May, US technology giant Dell
announced it would set up a technology and
development center in Cyberjaya. The center will
focus on various value-added projects, including
software design, and employ up to 1,000 workers.
Narayanan Kanan, senior vice president of
the development division of the Multimedia
Development Corp (MDeC), the agency tasked with
overseeing and directing the MSC, said the Dell
deal was a positive development - though he played
down any suggestion that such major foreign
investments were out of the ordinary. About 1,500
companies currently have MSC status and as many as
10 new ICT-innovating companies are being added to
the corridor's roster each week, he said.
However, critics contend that Kanan's
assessment is overly rosy and glosses over some of
the hard-market realities looming over the MSC's
long-term viability, which if not quickly
addressed could eventually spell doom for the
entire multibillion-dollar enterprise. They
contend that many of the foreign MSC-registered
companies have established centers here for basic
distribution purposes rather than innovative
pursuits.
The country's ICT sector is
suffering from various "market failures",
including a severe shortage of seed-funding and
so-called angel investors, said Nazrin Hassan, an
adviser to the Technopreneurs Association of
Malaysia.
Hassan contends there are about
seven times as many venture capitalists providing
startup funding for technopreneurial ventures in
neighboring Singapore. "In order to see growth in
technopreneurs you have to take chances [with
funding]. Many [Malaysian] technopreneurs have
died off waiting for seed funding."
Meanwhile, Malaysia's education system
requires a serious overhaul to spur the sort of
innovation needed to move Malaysia up the ICT
value-added ladder. As in many Asian countries,
the Malaysian school system emphasizes rote
learning and quantitative rather than qualitative
education, critics say.
"We have not
developed a capacity for lateral thinking," said
Kuala Lumpur-based educationalist F R Bhupalan.
"We have straitjacketed our students and not
allowed them to engage in meaningful analysis."
The situation is exacerbated by draconian
legislation, such as the Universities and
University Colleges Act, which requires incoming
university students to take a pledge to the
government and bars them from joining political
parties. Fear and feudalistic deference have long
infected Malaysia's education system, experts say,
and in turn the classroom often punishes rather
than rewards creative thinking and risk-taking.
Nor has education funding always been well
targeted. For instance, the government recently
invested RM300 million on a Smart School program
for 80 schools, which broadly aimed to center
education on ICT. About 60% of the project's
funding went toward hardware, and procurements
were frequently smeared with allegations of
mismanagement and misappropriation.
"Many
ICT contracts were awarded to the wrong people,
some with no experience or reputation, but with
the right connections," said Chris Chan, chief
executive officer of TMS, a Cyberjaya-based
Internet company. "We have high tech visualized
nicely - the implementation's been flawed."
That raises hard questions about the
viability of about 500 new education-oriented
projects detailed in the Ninth Malaysian Plan.
Changing tech tack The Badawi
administration is reacting to the criticism. For
instance, this year the government replaced MDeC's
chief executive officer with industry insider
Badlisham Ghazali, the previous director and
general manager of Hewlett-Packard in Malaysia,
who has more than 18 years of ICT-related work
experience. Rumors abound that more key MDeC posts
will be filled with industry players rather than
crusty bureaucrats.
If true, such moves
could make a big difference, said Chan, who for
one doesn't buy the notion that Malaysia's small
talent crop - its total population is a mere 24
million - poses a major problem to becoming a
global ICT leader.
"You don't need that
many people to produce positive change," Chan
said. "Appointing qualified, successful
enterprisers rather than government appointees is
a positive first step."
Kanan acknowledged
that the government is trying to change its old
tack. Government policymakers have recently
narrowed their previous broad focus down to six
strategic ICT areas, including software and
hardware design, creative multimedia contents,
shared solutions and outsourcing, he said.
The government intends to roll out the MSC
to other areas of the country and offer new,
juicier incentives to attract more multinational
corporations, Chan said.
MDeC communicates
regularly with the Education Ministry concerning
what kind of graduates the industry requires,
Kanan said. The ministry declined to comment on
what specific policy steps it has recently taken
to encourage more creativity and innovation among
ICT students.
Efforts to improve funding
for startups, including three funds of undisclosed
amounts pertaining to science, technology and
innovation, have recently been established by the
government, but were hardly enough to create the
critical mass of technology-oriented ventures
needed to realize the government's 2020 vision,
Kanan said.
But critics say most of the
government's plans lack concrete details,
suggesting that it is paying lip service to the
overwhelming need to change the venture's focus
fundamentally. They suggest detailed plans for
creating better linkages between local
universities and the ICT industry. That would
ensure curriculum meets industry standards and
requirements, allowing foreign investors easier
access to strategic tie-ups with local firms and
encouraging the government to invest in more
locally produced ICT software and hardware, which
are all badly needed.
Currently, the
government accounts for about 80% of Malaysia's
total annual ICT consumption, the project's
advocates note. And, they argue, Malaysia has in
the past performed admirably with its back against
the economic wall, particularly during the 1997-98
Asian financial crisis, which Malaysia handled its
own way and arguably weathered better than its
neighbors.
Until now, a certain mix of
talent, pragmatism and will power has enabled
Malaysia to develop beyond expectations. Excelling
in the ultra-competitive ICT industry, though,
will likely require something extra, a formula
Malaysia is still grasping for. But it's becoming
increasingly clear that the private sector, rather
than the government, should be leading the
country's ambitious drive into the brave, new
global information age.
Ioannis
Gatsiounis, a New York native, is a Kuala
Lumpur-based writer and previously co-hosted a
weekly political/cultural radio call-in show in
the US.
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