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The Multimedia Super Corridor (MSC):
Kuala Lumpur's Cradle of Innovation

 By Rafi-uddin Shikoh,
 Posted, Oct 20th, 2005

From multi-nationals such as Silicon Graphics, IBM, Intel, Reuters to domestic companies such as Redtone, Millinux, and NetCousins.com, over 900 local and international ICT companies (industry/vertical applications, enterprise applications, outsourcing/shared services, content development, and infrastructure systems) have made MSC the hub for serving the Asian and global markets.

This carefully put together innovation greenhouse offers attractive financial incentives, a high-tech infrastructure, R&D centers, ICT industry clusters, skilled resources, liberal operating regulations, strict IP laws and support frameworks; all at a competitive cost of doing business.

According to the MSC, by Nov 2004, companies in the Corridor were employing 19,000 highly skilled 'knowledge workers,' with total investments exceeding US$ 1.054 billion, and exports from the MSC reaching US$ 316 million.

CyberCities that form the MSC

The Multimedia Super Corridor is a 50km long high-tech zone stretching from the Petronas Twin Towers in the north to the Kuala Lumpur International Airport in the south offering distinct benefits to foreign-owned and home-grown Malaysian companies focused on multimedia and communications products, solutions, services and research and development.

To obtain all the benefits and guarantees provided by this zone, a company has to obtain MSC status (see status criteria) as well as locate within the Corridor. MSC status companies that don't locate within this zone still enjoy partial benefits.

The corridor today consists of five Cybercities which are Cyberjaya, Technology Park Malaysia, Universiti Putra Malaysia - Malaysian Technology Development Corporation (UPM-MTDC), Kuala Lumpur City Centre (KLCC) and KL Tower. Cyberjaya serves as the center of MSC.

Based on an approach that has been quite successful in the Silicon Valley, these cities are also setup as industry clusters - locating similar technology companies within the same geographical areas with high speed data networks and infrastructure as well as all other supportive services and resources.

Why Consider the MSC?

IBM Malaysia's Managing Director, Voon Seng Chuan, when speaking about why IBM decided to set up a new Recovery Centre (which offers business continuity and recovery services) in Cyberjaya, said, "when IBM was looking for a site to set up the recovery Centre, foremost in mind was a location that would give us the best, in terms of infrastructure and resources. Our guiding principle was cost-effectiveness and efficiency. Cyberjaya, with its well placed location and state-of-the-art infrastructure, was the natural choice".

A 10-point MSC Bill of Guarantees (BoGs) is the fundamental MSC incentive to all MSC status companies. These impressive set of infrastructure, cyber law, financial and non-financial incentives are strongly backed by the government of Malaysia for any MSC status company located in the Cybercities.

Siemens, Lucent, Reuters, Bloomberg, Silicon Graphics, and Motorola are some of the other global companies who have established major centers at the MSC. In all, 67 World-class ICT companies are located in the MSC - undertaking research, developing new products and technologies and exporting them from this center.

Another advantage is the MSC's industry clusters around key ICT segments. Although the largest segment of MSC Status companies are in the vertical applications market, the one with the most significant growth is the Shared Services & Outsourcing (SSO) services cluster.

Malaysia's prominence in Outsourcing was highlighted in the 2004 "Making Offshore Decisions" report by global management consulting company AT Kearney in which Malaysia was ranked #3. According to the report, ".Malaysia is a rising alternative to India and China, benefiting from a well-developed, low-cost infrastructure and strong government support." Many world-class companies like BMW, DHL, Shell, HSBC, and NOKIA have set up their base for regional and global operations here.

Today, there are 44 MSC-status companies in the SSO space, with another 75 companies that are non-MSC status. Malaysia is also home to 250 call centres. This growth has been attributed to the core competencies in a well-educated and multi-lingual workforce , a world-class infrastructure and a business and ICT friendly government incentives. Besides all of this, Malaysia's ready access to the booming Asian market and a growing credibility of MSC Status companies is another major advantage. In 2004, the fact that 55% of the sales of MSC companies were exports is a testament to this fact.

Cost of Doing Business: Cyberjaya - MSC Area: 7,000 acres Telecommunication: - DEL to Kuala Lumpur: US$ 0.01/min - Internet ADSL 2Mbps: US$ 181/month Utilities: - Electricity: US$ 0.07/kWh - Water: US$ 0.47/m3 - 0.51/m3 Office Rental & Associated Charges: - Office Rental: US$ 0.66/months/sf - Parking Charges: US$ 31/month Land Cost: - Enterprise : US$ 13-17/sf - Residential : US$ 9-14.5/sf - Commercial : US$ 22-29/sf Data: Multimedia Development Corporation

Boosting local Entrepreneurship and Innovation

The MSC is also an ideal growth environment for Malaysian ICT SMEs to transform themselves into world-class companies. In addition to the 10 BOG's there is a tremendous set of resources for local ICT entrepreneurs which include venture financing, entrepreneurship awards/support, Intellectual Property training and assistance, and R&D infrastructure support.

Millinux Networks Sdn Bhd, an appliance server solutions vendor, is one of the notable success stories of the Multimedia Super Corridor (MSC). For a company which was only established in October 2000, Millinux has made impressive strides with products that are now sold in the thousands across the Asia-Pacific region including Japan, China, Korea, Singapore, Taiwan, Hong Kong, Thailand and the Philippines. It has also struck up alliances with industry giants such as Microsoft, Hewlett Packard and Trend Micro.

Multimedia Development Corporation (MDC), the organization that manages the MSC, has also initiated a national and region wide ICT Award. Winners of the local awards are submitted for the regional Asia Pacific ICT Awards (APICTA).  The awards provide a platform for innovators and entrepreneurs in the ICT sectors in the region to benchmark their products with each other.

Developing a Smart Workforce

As part of jump-starting the MSC initiative, the government had setup seven innovative Flagship Applications in the MSC. These projects would raise the level of technology adoption within its own society by introducing technology applications for government, healthcare, education and business services. These applications cover initiatives in the following areas:

Such flagship applications are sure to have a tremendous impact on the whole Malaysian society, transforming its citizens and labor pool into smart knowledge workers who live and work in an environment of informational technology efficiencies.

Such is the environment, which is proving to be of tremendous value to large or small, regional and global businesses who are seeking to leverage the MSC.

Companies based in Silcon Valley have always had a unique stature. Today, being a MSC Status company is beginning to gain that clout as well.