New Economy - Lets get priorities right
It is tough being an Entrepreneur in the New Economy these days. Exactly one year ago it seems everyone wanted to be either a Venture Capitalist or an e-Entrepreneur. Even the Government was emphasising on the need for the people to be more IT literate and to encourage more New Economy entrepreneurs. In 2001, the mood is different. From the e-Economy now it is the k-Economy. What will it be next?
It seems even the Authorities can’t seem to figure out what the future holds for Malaysia. Jargons rule the day. This lack of a long-term focus has not helped Entrepreneurs and it looks like we meander from one jargon to another without a sense of direction or purpose. There is a general malaise in the New Economy front especially within the very Authorities entrusted with the responsibility of taking Malaysia to the forefront of the New Economy in Asia.
This disappointment is widely expressed among e-business circles and especially young Entrepreneurs but surprisingly it is rarely mentioned in the mass media. Am I therefore stirring a hornets’ nest?
The Multimedia Super Corridor (MSC) project is a brilliant idea. To take on the challenge of making Malaysia an electronically enabled and successful nation especially before some of our neighbours even contemplated it was a coup. This was reflected in the enormous publicity generated in the international media and the support given to the project by New Economy leaders from around the world. Many even agreed to join the International Advisory Panel (IAP) to share their ideas on developing this concept as a “greenfield area”.
To create a Silicon Valley in Asia was tantalising to say the least. Added to this was the possibility of obtaining tax breaks and land on the cheap for Research and Development centres for the Asian region. The possible creation of new markets no doubt did not escape their attention either.
Has it been successful? To a degree, yes but not to its true potential. There was so much promise much of which has been lost because of a lack of focus and much politicking.
Let us look at some aspects of what has gone wrong. Firstly, not many companies want to be located within the MSC, specifically in Cyberjaya. Touted as the first purpose built intelligent city in the world, the Multimedia Development Corporation (MDC) now has to resort to pressure to force MSC Status companies to relocate within Cyberjaya. If they do not relocate within a certain timeframe then they will lose their MSC status and with it the benefit of tax free status up to ten years.
If Cyberjaya is such an excellent location why the need for pressure? For companies to relocate their entire office to Cyberjaya, there must be certain benefits and attractions. There is very little at the moment. Travel time to Kuala Lumpur, the hub of business in the Klang Valley takes a good 45 to 60 minutes. One trip to KL takes up half a day and the additional cost of fuel and tolls is a key consideration for start-up companies.
Secondly there is virtually no public transport between KL and Cyberjaya. Thus any employee who needs to travel needs a car or motorcycle. Companies who hire staff have to provide alternate forms of transport. In this day of low unemployment and difficulty in finding IT capable staff, location matters. Why work in Cyberjaya if you can work in KL with all its attractions.
Provision of transport is an additional burden to companies who are already struggling without adequate funds.
Furthermore there is no form of entertainment nor “hangouts” in Cyberjaya. The IT workforce are a different breed of people altogether. There is a greater need to network, interact with fellow technophiles and relax but all the “cool” places are in KL like Bangsar, Bintang Walk & KLCC Suria. There is also a dearth of good restaurants in Cyberjaya.
Perhaps when it is fully developed with the Express Rail Link and Food & Entertainment spots companies will voluntarily move. Therefore the Authorities should work towards this goal of making Cyberjaya a more complete place to live and work in. Lets not speed-track just for the sake of doing things faster. Quality is important too.
When it comes to funds, this is one area that is sorely lacking in Malaysia. In Singapore, the Government has already disbursed RM 3.8 billion and has allocated another RM 3.8 billion for disbursement to IT & Biotech projects. They have even leveraged these funds by encouraging International Venture Capitalists (VCs) to relocate to Singapore and subscribing to these VCs funds. Recently Australia announced the provision of almost RM 5 billion in the “Backing Australia’s Achievements” project, aimed at catapulting Australia ahead in the IT and Biotech fields especially in R&D.
How much has the Malaysian government provided? About RM 130 million to MSC Ventures and RM 300 million to Mayban Ventures and Commerce Ventures. This amount is far too small to be significant in terms of the industry especially for IT and Biotech. Even a small company in Europe spends more on R&D in Biotech alone. In the last budget, our Finance Minister allocated RM 500 million for early stage and start-up funding but nothing more has been heard since then. While our neighbours allocate billions of Ringgit towards the New Economy we only have a few hundred million.
What makes even less sense is that RM 13 to 15 billion will be spent on infrastructure projects this year and even the replanting of rubber trees will be allocated RM 1 billion. One billion for replanting rubber trees!! Now who says the k-economy is the future of this country!
The one other capital raising opportunity is MESDAQ our technology Exchange, but this is languishing in the doldrums. There is no liquidity; it is virtually impossible to trade MESDAQ stocks (just try asking your Remiser to buy you any stock on MESDAQ) and many of the rules are not “Investor Friendly”. Most VCs don't even have MESDAQ on their radar screens. The recently announced Capital Market Masterplan aims to consolidate MESDAQ into the KLSE as one Exchange. This is a very timely announcement, but we hope the implementation does not take too much time. We are already behind.
This begets the question, what has the MSC achieved thus far? There aren’t even any success stories in the New Economy. The only two that come to mind are Jobstreet and Asia Travel Mart, both of which were funded by International VCs out of Singapore. They just happen to be founded by Malaysians. In a country of 23 million, we have only two success stories and even then they are not multibillion-dollar companies like in India or even China.
This article has been written with the intent of getting the attention of the powers that be, to point to them that Malaysians are suffering. Many Entrepreneurs are turning to Singapore and other countries for funding and will leave Malaysia if nothing is done soon. While the Authorities are formulating policies to bring Malaysians from abroad back home, resident Malaysians are leaving for greener pastures overseas. I dare say that few Malaysians will ever leave comfortable jobs overseas to return especially when opportunities and funding are better abroad.
What should the Authorities do? Firstly, its time to climb down from the Ivory Tower and positively engage and listen to local Entrepreneurs. Accept constructive criticism and avoid being defensive.
Refocus on what is really important to Malaysia’s future. Is it the short term Infrastructure and rubber replanting projects, or is Malaysia’s future in IT, the k-Economy and Biotech. If our future lies in IT & Biotech then give this priority and give it the most support, in terms of funds, benefits and personal attention.
Ensure that the best people are there for the industry and not just Civil Servants and PhDs with no Entrepreneurial skills or experience. The top people in the MDC and Energy, Communications & Multimedia Ministry should be the best in the Nation with the support of external experts. Singapore has been successful not because of Singaporeans alone but because they actively source and encourage foreign knowledge workers to be employed in the country. On a per capita basis Singapore probably has more foreign experts than any other country in the world (an educated guess based on the writer’s business experience in Singapore). Malaysia probably has the most unskilled workers per capita (mostly Bangladeshis, Indonesians and Filipinos).
It is time to assist Malaysian Entrepreneurs to become successful global players and not just “Jaguh Kampung” (Village Champions). The Authorities should create the best possible environment for the New Economy. Do it for the nation and for the people, only then will we ever be successful in the New Economy. As they say in ‘New Speak’ - “ don’t just talk the talk, walk the walk as well”.
It seems even the Authorities can’t seem to figure out what the future holds for Malaysia. Jargons rule the day. This lack of a long-term focus has not helped Entrepreneurs and it looks like we meander from one jargon to another without a sense of direction or purpose. There is a general malaise in the New Economy front especially within the very Authorities entrusted with the responsibility of taking Malaysia to the forefront of the New Economy in Asia.
This disappointment is widely expressed among e-business circles and especially young Entrepreneurs but surprisingly it is rarely mentioned in the mass media. Am I therefore stirring a hornets’ nest?
The Multimedia Super Corridor (MSC) project is a brilliant idea. To take on the challenge of making Malaysia an electronically enabled and successful nation especially before some of our neighbours even contemplated it was a coup. This was reflected in the enormous publicity generated in the international media and the support given to the project by New Economy leaders from around the world. Many even agreed to join the International Advisory Panel (IAP) to share their ideas on developing this concept as a “greenfield area”.
To create a Silicon Valley in Asia was tantalising to say the least. Added to this was the possibility of obtaining tax breaks and land on the cheap for Research and Development centres for the Asian region. The possible creation of new markets no doubt did not escape their attention either.
Has it been successful? To a degree, yes but not to its true potential. There was so much promise much of which has been lost because of a lack of focus and much politicking.
Let us look at some aspects of what has gone wrong. Firstly, not many companies want to be located within the MSC, specifically in Cyberjaya. Touted as the first purpose built intelligent city in the world, the Multimedia Development Corporation (MDC) now has to resort to pressure to force MSC Status companies to relocate within Cyberjaya. If they do not relocate within a certain timeframe then they will lose their MSC status and with it the benefit of tax free status up to ten years.
If Cyberjaya is such an excellent location why the need for pressure? For companies to relocate their entire office to Cyberjaya, there must be certain benefits and attractions. There is very little at the moment. Travel time to Kuala Lumpur, the hub of business in the Klang Valley takes a good 45 to 60 minutes. One trip to KL takes up half a day and the additional cost of fuel and tolls is a key consideration for start-up companies.
Secondly there is virtually no public transport between KL and Cyberjaya. Thus any employee who needs to travel needs a car or motorcycle. Companies who hire staff have to provide alternate forms of transport. In this day of low unemployment and difficulty in finding IT capable staff, location matters. Why work in Cyberjaya if you can work in KL with all its attractions.
Provision of transport is an additional burden to companies who are already struggling without adequate funds.
Furthermore there is no form of entertainment nor “hangouts” in Cyberjaya. The IT workforce are a different breed of people altogether. There is a greater need to network, interact with fellow technophiles and relax but all the “cool” places are in KL like Bangsar, Bintang Walk & KLCC Suria. There is also a dearth of good restaurants in Cyberjaya.
Perhaps when it is fully developed with the Express Rail Link and Food & Entertainment spots companies will voluntarily move. Therefore the Authorities should work towards this goal of making Cyberjaya a more complete place to live and work in. Lets not speed-track just for the sake of doing things faster. Quality is important too.
When it comes to funds, this is one area that is sorely lacking in Malaysia. In Singapore, the Government has already disbursed RM 3.8 billion and has allocated another RM 3.8 billion for disbursement to IT & Biotech projects. They have even leveraged these funds by encouraging International Venture Capitalists (VCs) to relocate to Singapore and subscribing to these VCs funds. Recently Australia announced the provision of almost RM 5 billion in the “Backing Australia’s Achievements” project, aimed at catapulting Australia ahead in the IT and Biotech fields especially in R&D.
How much has the Malaysian government provided? About RM 130 million to MSC Ventures and RM 300 million to Mayban Ventures and Commerce Ventures. This amount is far too small to be significant in terms of the industry especially for IT and Biotech. Even a small company in Europe spends more on R&D in Biotech alone. In the last budget, our Finance Minister allocated RM 500 million for early stage and start-up funding but nothing more has been heard since then. While our neighbours allocate billions of Ringgit towards the New Economy we only have a few hundred million.
What makes even less sense is that RM 13 to 15 billion will be spent on infrastructure projects this year and even the replanting of rubber trees will be allocated RM 1 billion. One billion for replanting rubber trees!! Now who says the k-economy is the future of this country!
The one other capital raising opportunity is MESDAQ our technology Exchange, but this is languishing in the doldrums. There is no liquidity; it is virtually impossible to trade MESDAQ stocks (just try asking your Remiser to buy you any stock on MESDAQ) and many of the rules are not “Investor Friendly”. Most VCs don't even have MESDAQ on their radar screens. The recently announced Capital Market Masterplan aims to consolidate MESDAQ into the KLSE as one Exchange. This is a very timely announcement, but we hope the implementation does not take too much time. We are already behind.
This begets the question, what has the MSC achieved thus far? There aren’t even any success stories in the New Economy. The only two that come to mind are Jobstreet and Asia Travel Mart, both of which were funded by International VCs out of Singapore. They just happen to be founded by Malaysians. In a country of 23 million, we have only two success stories and even then they are not multibillion-dollar companies like in India or even China.
This article has been written with the intent of getting the attention of the powers that be, to point to them that Malaysians are suffering. Many Entrepreneurs are turning to Singapore and other countries for funding and will leave Malaysia if nothing is done soon. While the Authorities are formulating policies to bring Malaysians from abroad back home, resident Malaysians are leaving for greener pastures overseas. I dare say that few Malaysians will ever leave comfortable jobs overseas to return especially when opportunities and funding are better abroad.
What should the Authorities do? Firstly, its time to climb down from the Ivory Tower and positively engage and listen to local Entrepreneurs. Accept constructive criticism and avoid being defensive.
Refocus on what is really important to Malaysia’s future. Is it the short term Infrastructure and rubber replanting projects, or is Malaysia’s future in IT, the k-Economy and Biotech. If our future lies in IT & Biotech then give this priority and give it the most support, in terms of funds, benefits and personal attention.
Ensure that the best people are there for the industry and not just Civil Servants and PhDs with no Entrepreneurial skills or experience. The top people in the MDC and Energy, Communications & Multimedia Ministry should be the best in the Nation with the support of external experts. Singapore has been successful not because of Singaporeans alone but because they actively source and encourage foreign knowledge workers to be employed in the country. On a per capita basis Singapore probably has more foreign experts than any other country in the world (an educated guess based on the writer’s business experience in Singapore). Malaysia probably has the most unskilled workers per capita (mostly Bangladeshis, Indonesians and Filipinos).
It is time to assist Malaysian Entrepreneurs to become successful global players and not just “Jaguh Kampung” (Village Champions). The Authorities should create the best possible environment for the New Economy. Do it for the nation and for the people, only then will we ever be successful in the New Economy. As they say in ‘New Speak’ - “ don’t just talk the talk, walk the walk as well”.
28 February 2001
posted by Dr. Siva at 11:03 PM
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