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MSC: Is this cybercity a bold move or boondoggle?
By Kapal Berita
18/9/2000 8:08 pm Mon
MSC: Is this cybercity a bold move or boondoggle?
Building a hitech magnet
By Thomas Omestad
CYBERJAYA, MALAYSIA-In Malay, jaya means success, and that is
what this self-styled can-do nation of 22 million aims to achieve here on
the verdant outskirts of its capital city, Kuala Lumpur. This once-quiet
expanse of palm-oil and rubber trees is giving way to roadways and
building sites, the red earth split open to make way for the powerful
fiber-optic cables and other components of a fully wired information-age
If all goes according to plan, Cyberjaya will be home to a quarter-million
people, the jewel in a high-tech belt stretching south for 31 miles from the
world's tallest buildings in downtown Kuala Lumpur to a futuristic
international airport. Next door will be Putrajaya, a wired government
administrative center. The multibillion-dollar, 270-square-mile zone,
named the Multimedia Super Corridor, is meant to catapult Malaysia into
the ranks of developed nations in 20 years. It is the boldest initiative yet by
Prime Minister Mahathir Mohamad. He calls it a "gift to the world."
The question is, of course, will it work? Doubts abound, though backers
counter them with upbeat pronouncements. Cyberjaya's marketers report
leasing out office space as fast as it is built. A total of 362 companies have
won MSC status, entitling them to an income-tax holiday for up to 10
years, exemption from import duties on multimedia equipment, and
no-hassle approval of work visas for foreigners. Japan's giant Nippon
Telegraph and Telephone Corp. and U.S.-based accounting firm Arthur
Andersen are here, and Shell Services International will move in with a
150-person tech center after December.
Yet most of the giants of the information-technology industry have
hesitated to sink big investments in the zone. Mahathir has courted Silicon
Valley, getting corporate leaders like Intel's Craig Barrett and Microsoft's
Bill Gates to join the MSC advisory panel. Microsoft, for one, considers
itself a "strong supporter," says Salwana Ali, who directs the company's
Cyberjaya training facility for software developers. But its venture,
launched in July, is modest: seven employees and a $2.6 million
commitment over five years. Sun Microsystems closed an earlier MSC
operation for lack of software developers; it now envisions a
three-to-four-person office here.
Why the apparent reluctance? One reason is Mahathir himself. He is the
MSC's tireless champion. In power for 19 years, Mahathir has made the
MSC a top national goal. But the prickly, 74-year-old Mahathir, with a
string of controversial actions behind him, may be the project's biggest
liability. "We've had real shockers in Malaysia the last couple of years,"
says Bruce Gale of Political and Economic Risk Consultancy in Singapore.
After the Asian currency crisis of 1997, Mahathir slapped controls on
capital flows and pegged the Malaysian ringgit to the dollar. He blamed
foreign financiers, particularly George Soros, for the ringgit's fall, which
terminated a decade of 8-plus percent annual growth and triggered a
recession. Mahathir also sacked his one-time protégé, Deputy Prime
Minister Anwar Ibrahim, a potential rival. Anwar was then jailed, beaten,
and convicted of corruption and s###my in trials that struck many
Malaysians as a vendetta through the courts. Meanwhile, Mahathir, an
advocate of "Asian values," stepped up his warnings about globalization
and purported Western plans to recolonize developing nations. His
resentment may be one reason he is bent on making Malaysia a high-tech
bastion. "Enough of us must be assigned to the acquisition of the
necessary knowledge and skills of the information age so as to enable us
to catch up with our detractors and enemies," he told officials from Islamic
countries in June.
"Siliclones." Some foreign investors have been scared off. A major
international bank considered basing its electronic money transfers in
Malaysia but opted for Singapore instead out of concern that Malaysia
might try to regulate Internet access, according to Gale. Indeed, Malaysia
faces competition from rival "Siliclones." Singapore, Hong Kong, Taiwan,
Thailand, and India all are promoting high-tech districts.
Finally, some question whether the MSC's huge bet on fiber-optic cables
will pay off given advances in wireless technology. "The way the Internet
is going suggests there's no particular advantage in being in one specific
location," concludes Yeoh Keat Seng, CEO of a start-up provider of
Those running the MSC disagree. "No matter how virtual the world gets, you have to locate yourself somewhere," says V. Danabalan, a vice president at MSC's developer. With the Asian currency crisis past, corporate interest is indeed up. And, Danabalan says, Mahathir's pro-business policies and commitment to the MSC matter more to investors than his political rhetoric. Malaysia's bid for cyber-riches will depend on it.
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