Investments in research and development (R&D) in knowledge-based industries is the key for Malaysia to keep up with or stay ahead of its competitors in information and communications technology (ICT), according to Tun Dr. Mahathir Mohamad, Malaysia’s former prime minister.

During his tenure, Mahathir was instrumental in the setting up of the Multimedia Super Corridor (MSC Malaysia), launched on 1 August, 1996 so Malaysia could venture into the knowledge age at the beginning, along with other countries and people more advanced economically than us.

“We went into the industrial age much later than the countries which initiated in and we were therefore handicapped and had to depend on the expertise and technology of  those who had exploited them earlier,” said Mahathir in his talk, The MSC and Leadership in the Information Age” in Cyberjaya on 22 April.

The goal of the MSC Malaysia project is to provide the infrastructure and knowledge for the people to be trained and to actually be involved in R&D and in businesses made possible by the quick and easy access to information.

Disappointing performance

However, while the project was a pioneering initiative by Malaysia among developing countries, Mahathir was rather disappointed that Malaysia has fallen behind its competitors by a few years in this area.

“Much progress has been made with MSC Malaysia but it’s not quite what we had expected,” said Mahathir.

While an International Advisory Panel helps to guide and monitor the progress being made, Mahathir felt that Malaysia has not yet developed an R&D culture which would speed up our progress and ICT, nor have we learned to use the power of information and the hardware that has been developed, as much as we should to expand our economy.

A university was set up in MSC Malaysia to produce the personnel to go into this new industry but Mahathir felt that it’s unfortunate that having seized the opportunity to start together with the others, we’ve fallen behind and allowed others to go ahead as we neglect this information potential.

“The fact that our competitors are better equipped and are prepared to provide more funds than us has only increased the gap between them and us,” said Mahathir. “To catch up with them will be a difficult task and we may not achieve it even if we try but for certain we will be left behind if we do not try at all and to catch up we really have to go all out,” he added.


Mahathir, a medical practitioner, cited as an example the pharmaceutical company May & Baker which had filed many patents on medicines, not all of which it actually marketed.

“However, if research yields results, the returns can be many, many times greater than the funds expended,” he said.

Worldwide recognition

On gaining respect and recognition for quality, Mahathir urged Malaysian ICT companies to invest in the promotion of their products and services in new markets without expecting an immediate return.

He cited Japanese manufacturer Komatsu which flew its tractor to Ireland by plane to demonstrate its capabilities as being better than the competition, while being prepared to bear an initial loss.

However, the problem with that is that both May & Baker and Komatsu are established multinational with deep pockets, while Malaysia’s ICT companies are mostly startup companies, so how can they afford to make such long term investments, without quick returns?

“Irrespective, they must invest some of their revenue on R&D and like the pharmaceutical giants they may want to consider pooling their resources in shared investments, the results of which they can all share in,” said Mahathir.

“To those in charge of funds, I would like to point out that funding research is not like investing in a business. We cannot predict, and most certainly we cannot guarantee a return on investments. However, the funds expended on research are never wasted, as at the very least, we would be adding to the sum total of our knowledge in the fields concerned,” added Mahathir who sees animation and robotics as areas with current potential.

He also cautioned Malaysian ICT companies which have developed products and solutions to not rest on their laurels but to always be alert to new developments, citing the satellite phone company Iridium which let people make calls from almost anywhere on the planet but which was overtaken by terrestrial cellular phone systems.

Real economy more robust

On Malaysia being affected by the global economic crisis, Mahathir feels that we’re involved in the real business of producing goods and providing services, we will not be badly affected by the crash of speculative businesses in North America and Europe.

“For example, the producing businesses such as in Germany and Japan are not as badly affected by the crash as the speculative businesses and while we will be affected to an extent, many companies are moving here to take advantage of our skills, and as an exporter, we must find new markets for our products and services,” said Mahathir.

Also after 30 years of Neo-Liberal policies, economists, investment advisors and analysts in the most badly affected Anglo Saxon countries are beginning to question the “conventional wisdom” of over 30 years of neo-liberal, von Hayekist, Chicago School policies of globalisation, of shifting their productive industries offshore, of free trade, open borders and so on.

For example in his article, “Doomed by the Myths of Free Trade: How the Economy was Lost,” Paul Craig Roberts, assistant secretary of the Treasury during the Reagan administration wrote that the offshoring of manufacturing jobs by US corporations resulted in the loss of well paying manufacturing jobs, which were replaced by low paying service jobs, such as selling products in mega stores such as Wal-Mart.

The later offshoring of professional services by these corporations enabled by the high-speed Internet, resulted in the further loss of highly skilled and highly paid jobs, with software engineers and ICT workers being the most badly affected.

All this not only resulted in the states of the United States losing their tax base but also in the greater reliance by people on credit to maintain their lifestyle, which kept the economy afloat for a while longer but which was ultimately unsustainable, leading to the collapse of the financial services and speculative industries in the United States.

End the neo-liberal era?

Now does this mean an end to ideology of neo-liberal globalisation, open borders and free trade, and a return to a more protected economies with higher tariff barriers?

“The current form of globalisation is not good as it lets the rich exploit the poor,”said Mahathir.

Lopsided economy?

On the impression that Malaysia has placed too much emphasis on the ICT industry while it played down or even ridiculed its legacy agricultural and manufacturing industries, instead of enhancing them as part of an holistic economy, Mahathir said, “Different governments focused on different industries relevant to his period and if they did not focus on certain things, they would not be able to move into those areas.”

“My government focused on ICT not only in itself but also as an enabler for more advanced techniques in agriculture and manufacturing. For example, farmers in many other countries carry notebook PCs, while microchips are used to deliver the correct amount of fertilizer, water and so on to the crops,” he added.

An age, not digital divide

Mahathir believes the so called digital divide is in fact an age divide.

“The digital divide is by age. For example, my grandchildren can handle ICT-related devices in ways which I cannot, while I have trouble even using a mobile phone and also had difficulty adjusting from a film to a digital camera, until I realised its benefits,” said Mahathir.

MSC Malaysia today

“Today there are over 2,000 MSC Malaysia companies, which generated RM17 billion in revenue in 2007 as well as RM5.5 billion in exports and of these, over 80% are from Malaysian companies,” said Tan Sri Halim Ali, Chairman of the Multimedia Development Corporation in his welcome address.

The exemplary ones among them are companies such as XYBase which specialises in airport management systems, regional outsource call centre company Scicom, online employment portal Jobstreet.com, 3D animation movie producer, Les Copaque and software company CWorks, while multinationals such as Dell, Hewlett-Packard and TeleTech have set up services centres in Malaysia.

One of the first of MSC Malaysia’s initiatives is the MyKAD multipurpose smart card carried by all citizens, with over 150,000 points of usage covering 10 sectors and integrated into over 300 government service centres.

Also over 80,000 knowledge workers work for MSC Malaysia companies across the country.



 

---

Add This