Friday, May 30, 2003

Feature: Malaysia bets on cyberfuture

By SHIHOKO GOTO, UPI Senior Business Correspondent

KUALA LUMPUR, Malaysia, May 30 (UPI) -- Malaysian economic architects are hoping the utopian technopolis of Cyberjaya -- known as the "Intelligent City" -- will showcase the country's commitment to growth in coming years, attracting technology-based companies to establish a firm foothold in Malaysia.
Planned as the ultimate in tropically lush, landscaped tech corporate campuses, Cyberjaya -- the size of a small city -- is a cluster of sleek, oversized buildings about 20 minutes' drive from the capital.
While it boasts the eco-friendly motto of "Where man, nature and technology, live in harmony," it is still a work in progress with construction continuing.
Like most southeast Asian nations, Malaysia has seen a surge in growth over the past few decades, but it has been more successful than most. Moreover, for all the criticism of him, Prime Minister Mahathir Mohamad's political domination for well over 20 years has allowed the country to pursue a more focused and forward-looking economic plan that's unique in the region.
The establishment of the country's "Multimedia Super Corridor" in 1996 is one such grand visionary plan launched by the prime minister, as it became clear that while Malaysia's growth has been largely spurred by foreign direct investment in the manufacturing sector, the future was in promoting a knowledge-based economy, rather than simply making goods.
"The Malaysian economy was all about rubber and tin" prior to the country's independence from British rule in 1957, noted one government source, pointing out that the average Malaysian's income was on par with that of Haitians in 1960.
Since then, however, the country has concentrated on attracting foreign capital and producing high-value products, and by 1990, 90 percent of exports were manufactured goods.
Still, competition for attracting overseas investors is stiff. Neighboring Singapore and other southeast Asian countries including Thailand and Indonesia have pursued similar growth strategies, while China has emerged in recent years as the single-biggest market for foreign investors.
Under such a competitive environment in the global markets, Malaysia must focus more on bolstering educational standards to offer highly educated workers that are proficient in English and boost its commitment to research and development, said Mustapa Mohamed, executive director of the National Economic Action Council, which advises the prime minister on economic policy.
Hence, the development of the technology corridor that centers around the still-growing city of Cyberjaya, which is now home to 875 high-tech companies, 67 percent of which are Malaysian. The city borders Putrajaya, which is where the Malaysian government relocated from Kuala Lumpur under Mahathir's command. Both Putrajaya and Cyberjaya still look very much as though they are still under construction, as huge, ornate buildings sit far apart from one another, with tracts of dusty dirt plots yet to be developed running between them. The result is a somewhat surreal scene of huge buildings and little life.
At least land is plentiful for foreign companies that do decide to commit to Malaysia for their high-tech needs, such as back-office activities for the financial sector, computer graphic design for media companies, and potential research facilities for biotech companies. Corporations can also take advantage of considerable tax breaks, unrestricted use of both foreign and local employees, discounts on telecommunications, as well as a high-capacity digital fiber network running across the technology corridor.
"We expect about 100 to 150 companies to enter (into Cyberjaya) each year as the government hopes to develop the country into a knowledge society by 2020," said Nicholas Mazlan Collins, manager of Multimedia Development Corp., which is tasked with promoting the high-tech corridor to investors.
Yet, the whole idea of committing to an information technology-driven economy seems somewhat outdated in light of the dot-com bust in 2000, particularly as companies worldwide are cutting back on the technology investments under the continued economic doldrums across the globe. Indeed, Collins declined to comment on the exact profitability of the companies that are based in Cyberjaya thus far, and he also did not unveil just how much the government has committed to develop the technology park despite the current investment environment.
Moreover, the concept of Cyberjaya is not unique to Malaysia. Most nations in the region have already made some form of commitment to attract high-tech companies, and indeed, even many industrialized countries have actively encouraged the development of technology-driven companies, often by providing tax breaks and setting up special zones to encourage them to flourish.
In other words, competition in the high-tech world could actually be greater than that in the manufacturing sector. At the same time, it is clear that Malaysia sees its future not simply in providing manufacturing bases for foreign companies, but also in making headway in a knowledge-based economy.
And with its current policy of centrally directed economic as well as social planning, Malaysia may have a bigger edge over other countries to nurture the educational system as well as business infrastructure to stay a step ahead.