[kictanet] Undersea cable plan tangled in acrimony in South Africa

[Alex Gakuru]

Eric, I am wondering how different this lesson is from
"Investors grope in darkness over cable deal"? 
<http://www.bdafrica.com/index.php?option=com_content&task=view&id=1828&Itemid=5810>

And what could be avoided in TEAMS if GoK decided to
spend 1% of its current budget to finance the whole
cable and make it "Open Access"?(--with consultations
of course to avoid flopping and going belly-up) 

Also what other lessons lie ahead.....   

-----
"Malaysia's distant 2020 vision" 
Asia Times
16 August 2006

Malaysia's distant 2020 vision
By Ioannis Gatsiounis

KUALA LUMPUR - The bell tolls in Malaysia in 2020,the
deadline the United Malays National Organization-led
government has given itself to deliver the Southeast
Asian country from developing-to
developed-worldstatus.

Former authoritarian leader Mahathir Mohamad launched
the ambitious campaign in 1991, which aimed broadly to
create a progressive scientific society and position
Malaysia as a regional hub for leading innovative
technology companies. The stepping stone of that plan
was the establishment of the Multimedia Super Corridor
(MSC), unveiled in 1996 as Malaysia's answer to
Silicon Valley, which includes a 728-hectare
futuristic "intelligent garden" city known as
Cyberjaya.

The government project is expected eventually to cost
US$5.3 billion and usher Malaysia into the information
age.

Malaysia was arguably in a better position to take the
leap than most developing countries. After years of
rapid manufacturing-led growth, its infrastructure was
nearly world-class. Regionally, the levels of the
country's gross domestic product and education were
higher than most of its neighbors'. Oil and gas
production was providing handsome revenues that could
be used to spark technology-oriented spending.

To Mahathir, the MSC and Cyberjaya, which in Malay
translates to "cyber success", seemed a visionary,
win-win proposition.

Nowadays, nothing informs Malaysia's sense of success
or failure more than the fate of its high-tech sector.
Yet it's becoming increasingly clear that the
country's so-called 2020 vision is fast falling out of
focus. Malaysia now lags behind both China's and
India's science and technology sectors, and regional
rivals Singapore and Thailand now attract more foreign
direct investment. Even Malaysia's political leaders
have at times lamented the country's "first-class
infrastructure, but third-class mentality".

Nor has private-sector innovation taken off to the
degree first envisaged by government policymakers. To
the contrary, the glaring lack of home-grown
technology firms means that holders of information and
technology degrees currently make up about 20% of
Malaysia's
unemployed university graduates, who apparently lack
the knowledge and skills needed to compete in the
global technology marketplace.

When the government has tried to fill the
private-sector gap, it has often missed the mark. The
government's pet Information Communication Technology
projects, including the Smart School Project, the
Worldwide Manufacturing Web and Borderless Marketing
Flagships, have all flopped because of mismanagement,
overspending and poor execution, critics say. There
are recent reports claiming that as many as 90% of 
state-led ICT startups have gone belly-up, according
to Technopreneur Association of Malaysia president
Farith Rithaudeen.

That poor record has been a drag on the entire science
and technology sector, souring private-sector
sentiment and drying up the venture-capital funding
for other so-called technopreneurial pursuits,
including the startup ICT ventures that should be
leading the country
up the value-added information-technology ladder.

Consider, for instance, the case of Sentinel
Technology, a small Malaysia-based
research-and-development-oriented ICT firm. Mohamad
Asendy, the startup's chief executive officer, said
his company recently developed new anti-piracy
software that he contends has the capacity to become a
global market leader.

The company even held discussions with Microsoft's
Malaysia division, which according to Asendy was duly
impressed with the innovation and encouraged Sentinel
to divulge how the technology works so that Microsoft
technicians could test its effectiveness.

Asendy said he preferred first to formalize legal
protection for his firm's innovation, but he lacked
the RM300,000 (US$81,500) he needed to apply for a US
patent. The Malaysian government offered him a
RM50,000 grant, Asendy said, but in efforts to land
the additional funding needed for the requisite
marketing, accounting and legal requirements to apply
for the patent, he was frequently asked in exchange to
give up a majority stake in the intellectual property.

When he tried to obtain further government funding to
patent his innovation, he was first directed to the
Internal Affairs Ministry, which after a long wait
redirected him to the Science, Technology and
Innovation Ministry, he said. From there, he was told
he would first have to get MSC status before he could
apply for funding. The innovation, many months later,
still is not legally protected.

Government hindrances

The government is often at the root of Malaysia's
innovation problems, scientific surveys say. A Global
Entrepreneurship Monitor, a worldwide research project
to be released soon that aims to describe and analyze
entrepreneurship processes, recently surveyed 45 local
ICT experts and 2,000 Malaysian nationals about the
country's entrepreneurial environment.

The study's results reflected poorly on the
government's performance, claiming that its policies
disfavor new firms, and that government bureaucracy
and regulation and licensing requirements impede new
firms
from expanding. It raised doubts about the
government's competence and effectiveness in
supporting new and growing firms. The study singled
out the lack of financial support, quality of
education and training,
and overall market openness as other main factors
holding back Malaysian entrepreneurs.

For all these discouragements, however, Prime Minister
Abdullah Badawi's government is not abandoning his
predecessor's high-stakes, high-tech dream. In part,
that's because it's impossible to brush the ambitious
scheme under the rug. Wired with high-speed fiber
optics, the MSC spans a whopping 777 square
kilometers.

Moreover, the government has poured billions of
dollars into the MSC's infrastructure and provided
huge tax breaks to companies that have agreed to
locate there. Meanwhile, Abdullah, who on the whole
has demonstrated a disdain for the profligate
megaprojects favored by
Mahathir, has nonetheless reaffirmed his government's
commitment, some say blindly, to all matters
high-tech.

For instance, the Ninth Malaysia Plan (2006-10), the
country's recently minted economic-policy blueprint,
allocates RM1.5 billion to technology-oriented
schemes, a 40% increase from the previous plan.

One of the plan's main thrusts is "to raise the
capacity for knowledge and innovation and nurture
first-class mentality". The document is spangled with
terms such as "knowledge-based",
"science","innovation"
and "research and development".

To be sure, there have been some bright spots on
Malaysia's ICT horizon. In May, US technology giant
Dell announced it would set up a technology and
development center in Cyberjaya. The center will focus
on various value-added projects, including software
design, and employ up to 1,000 workers.

Narayanan Kanan, senior vice president of the
development division of the Multimedia Development
Corp (MDeC), the agency tasked with overseeing and
directing the MSC, said the Dell deal was a positive
development - though he played down any suggestion
that such major
foreign investments were out of the ordinary. About
1,500 companies currently have MSC status and as many
as 10 new ICT-innovating companies are being added to
the corridor's roster each week, he said.

However, critics contend that Kanan's assessment is
overly rosy and glosses over some of the hard-market
realities looming over the MSC's long-term viability,
which if not quickly addressed could eventually
spell doom for the entire multibillion-dollar
enterprise. They contend that many of the foreign
MSC-registered companies have established centers here
for basic distribution purposes rather than innovative
pursuits.

The country's ICT sector is suffering from various
"market failures", including a severe shortage of
seed-funding and so-called angel investors, said
Nazrin Hassan, an adviser to the Technopreneurs
Association of Malaysia.

Hassan contends there are about seven times as many
venture capitalists providing startup funding for
technopreneurial ventures in neighboring Singapore.
"In order to see growth in technopreneurs you have to
take chances [with funding]. Many [Malaysian]
technopreneurs
have died off waiting for seed funding."

Meanwhile, Malaysia's education system requires a
serious overhaul to spur the sort of innovation needed
to move Malaysia up the ICT value-added ladder. As in
many Asian countries, the Malaysian school system
emphasizes rote learning and quantitative rather than
qualitative education, critics say.

"We have not developed a capacity for lateral
thinking," said Kuala Lumpur-based educationalist F R
Bhupalan. "We have straitjacketed our students and not
allowed them to engage in meaningful analysis."

The situation is exacerbated by draconian legislation,
such as the Universities and University Colleges Act,
which requires incoming university students to take a
pledge to the government and bars them from joining
political parties. Fear and feudalistic deference have
long infected Malaysia's education system, experts
say, and in turn the classroom often punishes rather
than rewards creative thinking and risk-taking.

Nor has education funding always been well targeted.
For instance, the government recently invested RM300
million on a Smart School program for 80 schools,
which broadly aimed to center education on ICT. About
60% of the project's funding went toward hardware, and
procurements were frequently smeared with allegations
of mismanagement and misappropriation.

"Many ICT contracts were awarded to the wrong people,
some with no experience or reputation, but with the
right connections," said Chris Chan, chief executive
officer of TMS, a Cyberjaya-based Internet company.
"We have high tech visualized nicely - the
implementation's
been flawed."

That raises hard questions about the viability of
about 500 new education-oriented projects detailed in
the Ninth Malaysian Plan.

Changing tech tack

The Badawi administration is reacting to the
criticism. For instance, this year the government
replaced MDeC's chief executive officer with industry
insider Badlisham Ghazali, the previous director and
general manager of Hewlett-Packard in Malaysia, who
has more than 18 years of ICT-related work experience.
Rumors abound that more key MDeC posts will be filled
with industry players rather than crusty bureaucrats.

If true, such moves could make a big difference, said
Chan, who for one doesn't buy the notion that
Malaysia's small talent crop - its total population is
a mere 24 million - poses a major problem to becoming
a global ICT leader.

"You don't need that many people to produce positive
change," Chan said. "Appointing qualified, successful
enterprisers rather than government appointees is a
positive first step."

Kanan acknowledged that the government is trying to
change its old tack. Government policymakers have
recently narrowed their previous broad focus down to
six strategic ICT areas, including software and
hardware design, creative multimedia contents, shared
solutions and outsourcing, he said.

The government intends to roll out the MSC to other
areas of the country and offer new, juicier incentives
to attract more multinational corporations, Chan said.

MDeC communicates regularly with the Education
Ministry concerning what kind of graduates the
industry requires, Kanan said. The ministry declined
to comment on what specific policy steps it has
recently taken to encourage more creativity and
innovation among ICT students.

Efforts to improve funding for startups, including
three funds of undisclosed amounts pertaining to
science, technology and innovation, have recently been
established by the government, but were hardly enough
to create the critical mass of technology-oriented
ventures needed to realize the government's 2020
vision, Kanan said.

But critics say most of the government's plans lack
concrete details, suggesting that it is paying lip
service to the overwhelming need to change the
venture's focus fundamentally. They suggest detailed
plans for creating better linkages between local
universities and the ICT industry. That would ensure
curriculum meets industry standards and requirements,
allowing foreign investors easier access to strategic
tie-ups with local firms and encouraging the
government to invest in more locally produced ICT
software and hardware, which are all badly needed.

Currently, the government accounts for about 80% of
Malaysia's total annual ICT consumption, the project's
advocates note. And, they argue, Malaysia has in the
past performed admirably with its back against the
economic wall, particularly during the 1997-98 Asian
financial crisis, which Malaysia handled its own way
and arguably weathered better than its neighbors.

Until now, a certain mix of talent, pragmatism and
will power has enabled Malaysia to develop beyond
expectations. Excelling in the ultra-competitive ICT
industry, though, will likely require something extra,
a formula Malaysia is still grasping for. But it's
becoming increasingly clear that the private sector,
rather than the government, should be leading the
country's ambitious drive into the brave, new global
information age.

Ioannis Gatsiounis, a New York native, is a Kuala
Lumpur-based writer and previously co-hosted a weekly
political/cultural radio call-in show in the US.

<http://bpms.kempen.gov.my/index.php?option=com_content&task=view&id=7367&Itemid=61>

Alex Gakuru


--- Eric Osiakwan <eric at afrispa.org> wrote:

> The sole active supporter of the NEPAD-backed
> Broadband  
> Infrastructure Project that will never be built, the
> South African  
> Government is trying to arm-twist EASSy because the
> project has  
> slipped free of NEPAD control. This is the arrogant
> display of naked  
> political power that those who have not signed the
> NEPAD political  
> protocol feared would occur if the larger African
> brother failed to  
> get its way.
> The 10,000km Eassy cable will be 27% owned by
> Telkom, Neotel and MTN,  
> and is designed to provide desperately needed cheap
> bandwidth to 21  
> African countries. But SA's communications
> department has taken  
> umbrage at what it sees as the commercial nature of
> the enterprise,  
> and intends to withhold landing rights.
> Instead, the government will use taxpayers' money to
> roll out two  
> rival cables heading east and west, jointly known as
> the Nepad  
> Broadband Infrastructure Network. Denying landing
> rights to EASSy  
> will be detrimental to the three local companies,
> which, they say,  
> have had the foresight to invest in the project to
> slash bandwidth  
> prices.
> It will also be anticompetitive if EASSy members are
> not allowed to  
> sell bandwidth to other operators in SA, says Mohsen
> Khalil, a  
> director with the International Finance Corporation
> (IFC). He also  
> says the government's hostility shows it has not
> understood a new  
> commitment the consortium has made to open access.
> The IFC is part of the World Bank, and is investing
> $32,5m to help  
> about 15 small operators participate in Eassy. Yet
> the director- 
> general of the communications department, Lyndall
> Shope Mafole,  
> remains vehemently opposed to the project. "Eassy is
> bad news for  
> developing countries that are not at the level of
> SA," she says.
> "We have many problems with it. The fact that you
> work for the World  
> Bank makes you think you know what's good for Africa
> even when you  
> don't live in Africa. I find that quite insulting."
> Because Eassy's biggest shareholders are giants like
> MTN and Telkom,  
> their bulk buying power gives them an advantage over
> smaller  
> operators also trying to buy and resell capacity to
> customers in each  
> country, she says.
> "South African companies could use their dominance
> to compete  
> unfairly in other countries. We have a
> responsibility as the  
> government to ensure there is fair competition. We
> are not willing to  
> look at something that is clearly discriminatory. We
> couldn't rest  
> with a clear conscience." If the South African
> Government has this  
> responsibility, why has it not exercised it over
> Telkom's SAT3  
> prices? The Department of Communications talks the
> talk but does not  
> walk the walk.
> A bigger issue threatening not only Eassy but also
> other foreign- 
> backed cables is a demand that any cable landing in
> SA is partly  
> owned by local companies. The minimum percentage of
> local ownership  
> will be determined by Communications Minister Ivy
> Matsepe Casaburri.
> The instant reaction is to question whether SA has
> the right to do  
> that. It has, under the Electronic Communications
> and Transactions  
> Act, Shope-Mafole says. The second reaction is to
> assume that foreign  
> investors will be deterred. The government's
> belligerent stance in an  
> effort to promote local industries may backfire and
> deprive consumers  
> of cheaper bandwidth if foreigners opt to bypass
> SA's coastline.
> Nonsense, Shope-Mafole says. "There are millions of
> people who want  
> to enter into arrangements and land in SA. We
> welcome anybody who  
> wants to invest in submarine cables that land on
> South African soil,  
> but we need South African companies to invest."
> Although Eassy boasts 27% local ownership, that may
> not be enough.  
> Seacom, another private cable already under
> construction, must also  
> recruit local investors for the plans on its map to
> match reality.  
> Seacom has signed a deal for SA's second network
> operator, Neotel, to  
> operate the local landing station, which does not
> impress the  
> government.
> Shope-Mafole said the demand for local ownership in
> the entire cable  
> linking India to Europe via SA was discussed with
> Seacom's mostly US  
> investors over a cup of coffee. "I don't think they
> thought it was  
> unreasonable. I wouldn't say they loved it, but they
> didn't throw  
> their cups at us," she says.
> (Source: Business Day)
> 
> 
> Eric M.K Osiakwan
> Executive Secretary
> AfrISPA (www.afrispa.org)
> Tel: + 233.21.258800 ext 2031
> Fax: + 233.21.258811
> Cell: + 233.244.386792
> Handle: eosiakwan
> Snail Mail: Pmb 208, Accra-North
> Office: BusyInternet - 42 Ring Road Central,
> Accra-North
> Blog: http://blogs.law.harvard.edu/eric/
> Slang: "Tomorrow Now"
> 
> 
> 
> 
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