New Silicon Valley Proceeds Despite the Region's Problems : Malaysia's Wired 'Supercorridor'
International Herald Tribune
November 15, 1997
Thomas Fuller 

When a baby cobra slithered into the offices of Multimedia Development Corp. a few weeks ago, the office workers jumped up and down and screamed, "Kill it! Kill it!"

With the reptile darting around the room, it was time for executive action. Mohammed Arif Nun, the company's chief operating officer, carried the animal outside with a stick and piece of string, hardly the typical tools of a company charged with a $10 billion plan to push Malaysia into the information age.

Then again, Cyberjaya is not your typical high-tech workplace.

Outside Mr. Arif's window, neat rows of oil palms cover the surrounding hills, and manicured flower beds decorate the courtyard. Mr. Arif's office sits in the heart of what Malaysia calls the Multimedia Supercorridor, an ambitious plan to transform rubber and palm-oil plantations into Southeast Asia's Silicon Valley.

The idea: a bucolic alternative to the high-technology offices in developing Asia that are often surrounded by traffic jams and choking car fumes, in a corporate park three times the size of the United States' capital city.

It will mix, its promoters say, a state-of-the-art communications network with untouched wetlands and trees. Wired magazine says the project has the potential to become the "planet's most seductive technopark."

Malaysia has promised a network of high-bandwidth fiber-optic lines that will link houses, schools and shopping malls within the zone.

In Cyberjaya, a so-called intelligent city at the center of the supercorridor, planners are building a multimedia university, tropical promenades and sports centers. Also notable is what planners are not constructing: Two-thirds of the zone will be left undeveloped.

Promising 10-year tax exemptions and other financial incentives, Malaysia is luring the world's biggest software companies, computer makers and data-processing firms to the Supercorridor.

The corridor already has support from big names in the computer industry. Microsoft Corp. has moved its regional headquarters to Kuala Lumpur from Singapore, and Sun Microsystems Inc., Oracle Corp. and Nippon Telegraph & Telephone Corp. have announced that they will invest in the project, although it is too early to know exactly how much.

In planning the corridor, Malaysia has sought the input of the Silicon Valley elite by creating an advisory panel made up people such as the Microsoft chief, Bill Gates, and Sun's chairman, Scott McNealy.

A question mark for the project, as with nearly every business venture in Malaysia today, is what effect the regional currency crisis will have on companies planning to participate.

"I don't think anyone knows whether this is cyclical or whether it is a fundamental adjustment of all Asian currencies — who knows how long it's going to go on?" said Karen Fawcett of Booz, Allen & Hamilton, a consulting firm.

"The dips in the currencies have been so huge it would be hard to imagine that some of these plans haven't been slowed down."

But Prime Minister Mahathir bin Mohamad, the main architect and promoter of the project, sees it as an essential step in moving Malaysia's economy away from manufacturing and into higher value-added industries.

"We have no choice," he said recently.

While Kuala Lumpur recently announced that $20 billion of major projects would be frozen, work on the supercorridor has actually been speeded up. A handful of companies will be able to move into the zone in December 1998, one year ahead of schedule.

In Mr. Arif's office, the sense of urgency is palpable. Construction of the company's temporary headquarters, which houses about 100 employees, took just 28 days.

"It's very much a No. 1 government priority," said Robert Coombe, executive director of Commerce Asset Fund Managers in Kuala Lumpur. "It may not happen as quick as anticipated, but they'll be plugging away at it."

The Supercorridor gets its name from the shape of the strip of land chosen for development. Starting from Kuala Lumpur, the zone is 15 kilometers (9 miles) wide and 50 kilometers long.

Malaysia unveiled plans for the Supercorridor in August 1996, but until several weeks ago, potential investors could judge the project only through brochures and a site on the World Wide Web (http://www.mdc.com.my). Today, with the help of a four-wheel-drive truck, officials are offering a glimpse of what working in the zone will be like, although construction on most buildings is still in earthwork stages.

Bulldozers have cleared away some of the rows of oil palms, but the hills in which the trees were rooted will remain: Mr. Mahathir has ordered that they not be bulldozed away during construction.

For Malaysia, the setting is apt. Sixteen years ago, when Mr. Mahathir came to power, the country's economy was centered on palm oil and rubber plantations.

The prime minister presided over the shift to manufacturing, which now makes up about 35 percent of Malaysia's total output. With the supercorridor, Mr. Mahathir hopes to continue this government-led, top-down approach to diversify the economy further.

"To get an industry motivated and ready to go into this, it really does need someone like the government to say, 'Hey, I'm going in this direction, come along with me,"' said Mark Cullimore, a regional director at Visa International Asia-Pacific, which is involved in several projects related to the supercorridor.

"It doesn't mean the government has to pay for everything, but just the fact that it's endorsed by them gives confidence to the manufacturing industry, gives confidence to the telecom industry."

In addition to tax exemptions, companies applying for a role in the project are being offered unlimited duty-free importation of multimedia equipment. In addition, the companies are unrestricted in the number of foreign "knowledge workers" they can bring into the country, and Malaysia has promised not to censor the Internet.

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