updated version

The Multimedia Super Corridor (MSC) project has failed to make a significant contribution to the economy as the government had hoped, Prime Minister Dr Mahathir Mohamad said today.

"At the moment I would admit that it (MSC) has not contributed as much as expected," said Mahathir.

However, he added, the project which was launched in 1996, has done well as far as the foreign and local investments and the commitment to invest in MSC were concerned.

Speaking at a press conference after officiating the MSC-Lucent Bell Labs Technology Forum in Kuala Lumpur this morning, Mahathir also said that while the Silicon Valley-type project has yet to feel the effects of the American economic slowdown, he predicted it will come soon.

He said this to questions on the confidential status report done by international consultants McKinsey & Co on the project for the state-owned Multimedia Development Corp (MDC). MDC is responsible for overseeing the development of hi-tech zone.

The report stated that MSC has not attracted substantial interest from global technology companies and has no significant impact on the country's economy, adding that the investment and employment levels of knowledge workers were not very significant.

Satisfactory R&D;

The report recommended, among others, cutting down bureaucracy and bringing in more technical and venture-capital expertise to the multibillion-dollar project.

MSC is a 15-by-50km strip that runs from the Petronas Twin Towers in Kuala Lumpur to the Kuala Lumpur International Airport in Sepang and includes the new administrative capital Putrajaya, a software-development centre called Cyberjaya and a new Multimedia University.

The corridor is intended to create the ideal multimedia environment in Malaysia to attract world-class companies to use as a hub. It will be the test bed for harnessing the potential of information technology and multimedia.

Mahathir also said that he was satisfied with the level of collaboration on research and development (R&D;) carried out between the Multimedia University (MMU) and technological companies.

He added that at present there were seven R&D; projects on telecommunications and wireless communications being jointly undertaken by the university and Lucent Bell Technologies.

Platform for smart partnerships

"They have commercial value right now and it is only a matter of time before some of this commercial funding becomes commercialised," said Mahathir.

He said that a number of big companies have expressed interest for a joint R&D; with MMU and there were other companies who were keen to work with other centres in MSC.

Earlier in his speech, Mahathir said the forum will serve as a platform for smart partnerships amongst the industry-driven R&D; centres and as a guide to assist Malaysian companies and universities to define strategic issues, directions and focus in their R&D; activities.

"Some of the technological developments highlighted in this forum will spur the rapid growth of Internet usage and application and the developments in the field of telecommunications into the next generation," he said.

To act on report

MDC executive chairman Othman Yeop Abdullah, who was also present at the press conference, said the corporation will study the McKinsey report and come out with a plan of action that is feasible to follow through.

Othman also said the international participation in MSC was good, with about 40 world-class companies enjoying MSC status.

"In all, there are 471 MSC-listed companies and 420 more still in the registration process," added Othman.

MSC status companies enjoy certain privileges which include unrestricted employment of local and foreign knowledge workers, tax-free status for 10 years and a guarantee of no censorship of the Internet.

Customised incentives

The McKinsey report also stated that MDC has trailed rivals such as Singapore and Israel in customising investment incentives to attract leading foreign technology companies.

To this, Othman said MDC has also provided customised incentives to foreign companies apart from the broad and generic incentives which are given to all MSC-status companies.

He however added that customised incentives tend to prolong the negotiations between MDC and the interested company.

"When negotiating with the companies (on customised incentives), we cannot wait too long for them to decide if they want to be part of MSC," he said.