Malaysia -- Tech Industry Looks to Bill Gates to Draw Capital, Attention

Location: Tokyo Author: Hope Leman, Editor, Asia
Date: Friday, September 15, 2000

The Malaysian government is attempting to mitigate sovereign risks by staging a public relations coup for its Multimedia Super Corridor (MSC) with the various news articles generated this week by the visit of Microsoft chairman Bill Gates, in an attempt to draw capital. The trigger of such capital inflows, however, rests with what Gates said and what results might actually follow from his visit.

First of all, Gates described the project as ''awesome" and said that outside the U.S. there is no comparable IT project of the same scale and involving the same level of commitment and energy. He said that countries such as France and Germany are following the project's progress. One would point out that both of those countries are considered laggards on the high-tech scene at this point and that much of the tech boom elsewhere in Asia such as in Korea and in Taiwan has been in the smallish entrepreneurial sector and not in government-led projects like the MSC.

Second, it is true that Gates met with the main backer of the MSC, Prime Minister Mohamad Mahathir. The two spent an hour discussing developments in the corridor. One might also point out that 30 percent of Microsoft's revenue in Malaysia comes from its enterprise products, of which the government is a big purchaser and that the government is estimated to account for 30-40 percent of Microsoft's annual sales in Malaysia.

Third, while Gates' visit to Malaysia is getting much press internationally, he passed up the meeting last week of the MSC's International Advisory Panel (IAP) -- of which he is a member -- because of other commitments. He stayed on this visit to Malaysia one day. On that one day he made his first visit to Cyberjaya -- the "intelligent city" at the heart of the project -- though the MSC project has been going on since 1996. He last visited Malaysia two and a half years ago. Not exactly indications of burning interest—though he has been tied up with lawyers a lot lately.

A Microsoft official who did attend the IAP meeting made the point recently that the government's goal is to get companies to actually move to the corridor. That would be a step in the right direction since the government has been touting it as Southeast Asia's version of Silicon Valley for years now—never mind that the real Silicon Valley prefers to keep well away from the heavy hand of government and to get on with the wheeling and dealing of the dotcom world.

One problem the MSC is having is that much of the most talented of the tech talent the country does produce -- and with far fewer universities than the comparably sized Taiwan that is a relatively thin cohort -- is heading right past the MSC and looking for start-up funding and entrepreneurial expertise in Singapore. Although Singapore is not exactly renowned for its openness to the new ideas that Internet companies thrive on, it is far more open to them than is Malaysia and certainly has a better track record of nurturing small companies. Both countries are noted for the heavy hand of bureaucracy, but Singapore's moves faster than Malaysia's and is not laden with the kind of cronyism and pro-Malay policies that characterize the Malaysian business landscape.

Getting back to Microsoft. It is true that on his visit Gates opened in Cyberjaya the new office of Microsoft Knowledge Capital Center (MKCC), a wholly owned subsidiary of Microsoft Corporation. But some commentators on the tech scene contend that Microsoft -- for all its capital and market heft -- has missed the boat as far as the Internet goes. And Gates spent much of his time in Malaysia touting his company's new Microsoft.NET strategy, its gamble that it can dominate the post-PC age.

Finally, in terms of putting its money where its mouth is, MKCC's contribution of $2.63 million over the next five years to Malaysia's Multimedia University for training programs and facilities development is chickenfeed for the capital-rich Microsoft.