Broadband For All

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Speech on the 2006 Budget (3)
by Lim Kit Siang  
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(Parliament, Monday): The development of information and communication technology in Malaysia is full of contradictions, and setbacks.

Malaysia was the earliest among developing countries to have a government-sponsored plan for ICT development, namely the RM 5-billion Multimedia Super Corridor (MSC) project. But MSC has failed to live up to its expectation to become regional IT hub for R&D and other high value-added activities.

Today, MSC/Cyberjaya has downgraded itself to serve the low-end of global IT value chain – shared services and outsourcing (SSO) activities. Let us not to fool ourselves anymore. While it is true that new investments and jobs accompanied MSC’s transformation into an international call centre, one should be reminded that such scenario has vastly deviated from MSC’s original purpose as the engine to drive Malaysia into the high-end of the IT world.

The Government’s IT policy since mid-1990s is flawed because it only focuses on one area, not every corner of the country; and it only intended to serves the interests of multinational corporations (MNCs), not all ordinary Malaysians.

The government was only interested in land development in Cyberjaya and attracting investments from MNCs but failed to realize that it is the local talent pool that matters most. One notable example is that the success story of India’s Bangalore lies in its ubiquitous institutes of technology that train numerous capable English-speaking software engineers. Very few key players in the industry relocated its regional headquarters to MSC despite generous incentive being dished out.

The Prime Minister now wanted to “re-examine the package of incentives that we offer to make the MSC a more compelling choice for investors” (NST 9/9/2005). Instead of showering potential investors with unrealistically generous packages, isn’t it better to look inwards at why MSC fails its mission. The lesson from the MSC failure would be useful for future ventures, such as the biotech sector – the government’s new favorite. 

In 1997, I told this chamber that “the MSC may be the crown jewel of the National Information Infrastructure which Malaysia must build if we are to make the transition to the information society, but it is not the infrastructure.” I said, “In the ultimate analysis, the IT revolution must be about people….This is why any national IT policy, strategy and plan must be people-centred and not project-centred or MSC-centred” (Debate on Royal Address, 25/3/2997).

The DAP adopted the “IT for All” slogan in that year and called for an equitable IT development for all without creating a new disparity between “information-rich” and “information-poor”. (DAP, “IT for All”, 1997).  

Sadly, MSC did not turn out to be what it should be and the overall ICT development in Malaysia is a disappointment. Eight years after MSC was launched, the government launched the second MSC in Bayan Lepas, Penang and Kulim, Kedah. Why is there a need for a second-tier MSCs? Shouldn’t the entire nation have access to facilities available in a MSC after so many years of government-initiated development in the IT sector? 

Broadband for All

A key indicator of ICT development in a country is its broadband penetration rate. Compared to narrowband, broadband offers speedier download and better quality of transmission, which will allow more activities to be conducted via internet at a faster speed.

Sadly, more than five years after broadband was commercially available, the broadband penetration rate is still below 1 % of Malaysian population while other countries experienced quantum leap.

Energy, Water and Communications Minster Datuk Seri Dr. Lim Keng Yaik claimed that the government is open to proposals to boost penetration rate in broadband service to 30%-40% by 2008, despite the National Broadband Plan having a modest target of 10% of population. He said, “even if we cannot reach South Korea’s broadband penetration of more than 60%, languishing at 1% of the population is politically and socially unacceptable” (Telecom Asia Daily 6/7/2005).

I agree with Keng Yaik that Malaysia is “already ten years behind leaders such as South Korea.” Whether Malaysia reaches 10% or 40%, others will not wait for us. Korea will literally achieve “IT for All” and “Broadband for All” when broadband is rolled out to almost every household in the next two or three years.

But how did the “politically and socially unacceptable” below-1%-broadband penetration rate happen? The most important obstacle preventing the rise of broadband in Malaysia is TM’s delay in opening up the last mile, or local loop access to consumers. TM owns more than 90% of the last mile access.

The Malaysian Communications and Multimedia Commission (MCMC) finally mandated TM  to unbundle the local loop in June 2005. In August, Jaring signed a deal with TM, signaling the opening up of the last mile access. However, TM is obviously taking its sweet time to comply with MCMC’s Access List as it is not keen to open up the access to its competitors.

No holder of monopoly would let it go without a fight. It is the onus of the government and regulatory agency to enforce competition. There is no point to hope that WiFi or WiMax or any other wireless tools would have the magical power to increase Malaysia’s broadband penetration rate substantially.

The most realistic and inexpensive way to improve the lackluster performance of the broadband development is to increase competition among internet service providers (ISPs) and drive down the price.

DAP calls for a “Broadband for All” policy, modeling after the Korean success, to be included in the 9^th Malaysia Plan. The Ministry of Energy, Water and Communications and MCMC should ensure that TM will not be an obstacle to the development of a broad-based IT literacy and usage.

Open Source – “kow tow” to Microsoft?

Another example of the government putting corporate interest above the national goal of broad-based IT literacy is the shelving of a plan to experiment with open source operating system.

In April 2004, Science, Technology and Innovation Minister Datuk Dr. Jamaludin Jarjis announced that Mimos Bhd was tasked with creating an operating system for computers using open source software. According to NST, it is “a move that when completed will make information communication technology cheaper and accessible to all” (29/4/2004).

Microsoft holds a monopoly on operating systems for personal computers and charges expensive royalty and fees usage and upgrade. Open-source is software for which the source code (the instructions for the software) is available for distribution and modification. The modifier retains the copyright for his work, but the source code is public domain.

Brazil, China, France, Germany, Japan, South Korea and recently Peru, among others, have been actively moving toward the Linux operating system and other open-source alternatives that can mean millions of dollars in savings. Institute of Information Technology, a Brazilian government agency working to promote digital inclusion, estimated that Brazil spent USD 1.1 billion on royalties and licensing fees for imported software programmes in 2002. According to the same source, Brazilian government agencies that have adopted free software had their costs reduced to a mere three percent of what would have been paid for proprietary programmes.

Datuk Jamaludin pointed out then that the Government wanted to look at ways to boost computer literacy among Malaysians without the burden of paying high fees. Malaysia spent about RM 7.86 billion on IT in 2003, of which RM 1.8 billion were on software. If the cost of using open-source software is 10% of Microsoft’s product, the RM 1.6 billion savings could be utilized to reduce the gap between the “information haves” and “information haves-not”. 

Less than two months after Jamaludin’s announcement, Micosoft’s boss Bill Gates visited Malaysia, met with the Prime Minister and other ministers, and donated RM 10 million to some schools.

Since then, the discussion on open source operating system vanishes from public discourse. It is time for the government to reexamine the potentials of open-source and stop “kow tow” to Microsoft. Therefore, the IT policy of Malaysia must be a policy that champions “IT for All”, not favoring big corporations.

Let me put down some quick thoughts  by a  local IT specialist on several IT issues facing the country:

1. Allocation of RM29b for education. Hopefully,  this is spent wisely in ICT training in the schools, universities and colleges. More often than not, the training in these schools do not prepare the student for proper ICT literacy but instead are specific to products from a single company, microsoft. As a result, we're utilizing government/taxpayer funds to provide training services to a foreign MNC. Ideally the training should be focussed on the utilization of software tools and be centred around creating proper letters, documents, presentations and spreadsheet calculations. This way the student will learn how to  use the software productively instead of just user training on a specific product.

2. Expansion of the Malaysian Intellectual Property Office capacity. This is the body which regulates patent approval in the country and is tied to the software patent issue.  . Software patents are instruments which cover abstract ideas and as a result many readily used concepts are patented by large corporations and patent houses in order to prevent others from performing any innovation in that area. A simple example is the "one-click patent" from amazon.com where the company has patented the CONCEPT of a single web click and as a result has locked out  others from utilizing the same idea even though they may have independently come up with the idea and independently written the software to implement it.

Software patents should not be confused with software copyrights which exist today. Software copyrights have been used by all as adequate and strong protection for software programs under WIPO and intellectual property laws. Software copyrights protect the source code (i.e. the blueprints) of a computer program and are the mainstay of software development.

Software patents go further than software copyrights in that they extend the lock in to generic and abstract ideas. The risk in this is that due to the frivolous nature of software patents, large MNCs who have a portfolio of software patents can cripple the Malaysian software industry. The only ones who would be able to survive in such a scenario would be the MNCs themselves, leading to the dissolution of local software companies and the goals of the MSC. Only nations with huge patent portfolios will benefit like the US and the UK.

The European Parliament has voted to reject software patents for these reasons.

3. Extension of period to carry forward absorbed losses/capital allowance during pioneer period (tax free period) of MSC companies is laudable and will further increase the benefits of companies under the MSC. However this initiative needs to be confined solely to local companies as they are the ones who're being sidelined in the MSC push today. Multinationals, including their Malaysian wholly owned subsidiaries, should not be allowed to enjoy this benefit as it would be counter productive to the government's aim to build a local technology-centric industry.

4. Malaysian Biotechnology Corporation. Will this be the same as MDC ? what are the key performance indicators for this corporation and what are the checks and balances in the system? Will we see another MDC which continues to give excuses 10 years after the MSC was conceptualized ?

5.Improvement of basic amenities including housing and transport at cyberjaya is a good thing. A suggestion to increase frequency and reliability of bus services within cyberjaya to the erl station at putrajaya in order to make it easier for commuters should be a high priority.

6. What exactly will the ICT Development Institute be doing which is different from what is provided by our public and private universities? Wouldnt it be better to concentrate on producing more quality graduates and skillsets instead of having to set up another institute? Perhaps the funds spent for the institute may be better spent on redefining the curricula and teaching methodologies at our secondary schools and universities instead.

I asked another Malaysian IT pioneer, Bala Pillai, who operates from Australia, for his thoughts and assessment of the MSC and Malaysia’s IT plans and ambitions.

He gave a response which is so unconventional but original that I think it deserves the serious consideration of MPs and policy makers if we are serious in wanting to propel Malaysia into  an information society, knowledge economy and  IT superpower.

He encapsulated his thoughts with the title “Problems = Opportunities and No Problems = No Opportunities”.

This is what he has to say:

“The harder a problem, the greater the reward, the lesser the competition, and the more uncertain resourcing is.

“The corollary, the easier a problem, the lesser the reward, the greater the competition, and the more certain resourcing is.

“Low Hanging fruits lie in the sweetspot between ‘not too easy a problem such that competition makes the rewards so unworthwhile’ and ‘not too hard a problem such that resourcing is so uncertain’.

“Let us talk about the Low Hanging Fruits for Malaysia in ICT.

“But first let's remind ourselves of the bigger picture.  The Malay Archipelago was a producer of quantum inventions up to about a thousand years ago. In fact, up to then, Southeast Asia together with China and India produced nearly every quantum invention in the world.

“By quantum invention, I mean a significant leap in order of problem-solving from cave man days up to now. Examples being taming of fire, domestication of rice and pepper, invention of paper, wheel, gunpowder, Minangkabau architecture, urban social systems, ocean-going vessels to Madagascar, printing press, electricity, TV, credit cards, the Internet – you get the picture.

“What happened? Why did we stop producing these quantum inventions and their near cousins?

“The government should  engage the deepest and broadest thinkers available to narrow down the likely causes for this turn of events. Like thousands of streams flow into tributaries which flow into a few rivers onto the ocean, let's converge into a few clear schools of thought on why we stopped producing quantum inventions.

“It is because of a switch from objective perception to subjective perception. A switch from expecting our world to be roses, thorns and in-betweens and finding it to be such to expecting our world to be roses and thus trained to spot thorns. When we all become thorn spotters, in time it becomes uncomfortable to spot our own thorns. In time, this breeds greater amounts of disagreements. These disagreements drastically reduce the social and trust capital that is required for inventiveness.

“If we want a proper solution rather than a quick-fix, we should address this underlying mental soil issue. Average seeds sown on great soil will grow but great seeds sown on stone won't. We have to find the inner strength to ask the tough questions, knowing full well that as painful as this might be, NOT asking these questions will have even more painful consequences.

“In determining Low Hanging Fruits, we would look at our strengths. Let me point towards some less emphasized aspects

1)   Around 1400 AD, Malaysia or Malacca was the happening place in the world. The most adventurous brains, Arabs, Indians, Chinese wanted to be here. In global adventurousness terms, the Spice Trade and Malacca then was what Silicon Valley and ICT  today is. Even Christopher Columbus if he had not lost his way, in his pursuit of spices might have ended up here.

Question: We didn't give any tax credits and yet they came like bees to honey. How come? I will not answer this, I would like you to reflect on it. I would like you to reflect on the energy that made us such an exciting buzz. And which attracted the best self-starters here and self-starters overseas with fires in their belly to make the world happen.

2)     As the giants India and China rise up, today we are presented with another opportunity. Like that piece of sand in an oyster, without which a pearl cannot form, we can be the catalysts for India and China to rise levels above or faster in their ICT in social entrepreneurship aims.

“Some areas we can consider focusing on are:-

 a)   Microentrepreneur ecosystems – make it much easier for an eager Instant Messaging using high school student to step that adaptiveness towards online or Skype or convergence facilitated self-employment. Knowledge workers.

b)   China and India have a large swell of people who want to be their own boss. It is as if on a personal level, many want to go back to how things were a 100 years ago when nearly all of us were self-employed. Let's consider leading this for ourselves, China and India. For example, organize frameworks and structures for tele-entrepreneur franchisees to inhabit, grow and thrive.

c)   India is well known for its movie industry and the Tamil and Hindi movie industries magnets of attention amongst our citizens. Many would love the chance to be models, actors, script-writers, producers. The weakness of these industries are in the capital raising, investments unitizing and distribution sides. The US has come a long way in organizing this. Let's flow US expertise with the passion of our entrepreneurs to streamline these aspects of these industries. In this ecosystem deepening process, the Malay movie industry will also benefit.

d)     The biggest opportunity in Asia today is in Change Management in the many forms it takes. For example in identifying the best bang for the buck in change management. In making change fun. In accrediting trainers. I urge in depth look into these problem and opportunity areas.”

I commend these and other  thoughts of Pillai to MPs.