Private Companies and Business Sector : as Driving Forces on ICT Development
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1 APT 2 nd Meeting on Asia-Pacific Initiatives for the Information Society (AIIS) Private Companies and Business Sector : as Driving Forces on ICT Development By Azizah Hamzah Ministry of Energy, Communications and Multimedia, Malaysia Negara Brunei Darussalam 6 August
2 Presentation Outline 1. Profile of the Country & Changing Economic Structure 2. Privatisation of Communications Sector 3. Malaysian Communications Sector 4. Conclusion 2
3 Country Profile & Changing Economic Structure 3
4 Malaysia Country & Regional Profile (2001) MALAYSIA (POPULATION) ASEAN (POPULATION) ASIA (POPULATION) GDP PER CAPITA TOTAL LABOUR FORCE EMPLOYED 23 MILLION 520 MILLION 3,720 MILLION USD3, MILLION 8.8 MILLION 4
5 Three Waves of Economic Change Living Standards Periods of Dislocation Information Wave xxx Industrial wave Agricultural Wave Time 5
6 6 Changing Economic Structure 159,119 (53.1%) 84,230 (50.6%) 25,280 (44.3%) 8,265 (47.6%) 2,948 (45.0%) Tertiary (Services) 51,987 (31.2%) 30,408 (18.2%) 1995 RM(Mil) 3,504 (20.2%) 5,596 (32.2%) 1975 RM(Mil) 951 (14.5%) 2,653 (40.5%) 1965 RM(Mil) 2005** RM(Mil) 1985 RM(Mil) Sector 116,833 (39.0%) 14,001 (24.5%) Secondary (Manufacturing) 37,405 (12.5%) 17,812 (31.2%) Primary (Agriculture) **= **= Projected Projected
7 Privatisation of Communications Sector 7
8 Objectives of Privatisation (i) Relieve the financial and administrative burden of Government; (ii) Improve efficiency and productivity; (iii) Facilitate economic growth; (iv) (v) (vi) Reduce the size and presence of the public sector in the economy; and Help meet the national economic policy targets. Multiplier effects created through the privatisation of projects/services or sale of Government assets 8
9 Malaysia Incorporated Malaysia Inc. Policy, introduced in 1991: stresses the importance of cooperation between the public and private sectors in order to ensure rapid economic growth and national development the success of private sector will provide more revenue to the nation through collection of various government taxes thus, it is crucial that the public sector ensures the success of the private sector 9
10 Benefits of Privatisation 1. Efficiency and Productivity Increases in the efficiency and productivity due to: Upgrading of facilities Usage of new and modern technology Expanded capacity and network Fostered changes in management and organisation 2. Benefits to the Public Overall improvement in the quality of services 3. Gains to Government Proceeds from taxes and savings from reduction in public expenditure 10
11 1. Efficiency and Productivity Indicators Indicator Telekom Malaysia Berhad (privatised in 1990) Return on Assets (per sen) Revenue Per Subscriber (RM) Production Per Employee (RM) Direct Exchange Lines Per Employee Response to Complaints/ Faults (per sen) Before Privatisation 4.0 1,227 34, After Privatisation (2000) 4.7 1,755 51, Source: Eighth Malaysia Plan
12 2. Benefits to the Public Improvement of the Quality of Services Telekom Malaysia Berhad 98% of calls made by subscriber trunk dialling were successful on the first attempt. 96% of calls made to TMB operators were answered within 10 seconds. 12
13 Malaysian Communications Sector 13
14 TELECOMMUNICATIONS: THEN TO NOW Telecommunication Department Malaysia was established Ministry of Energy, Telecommunication and Post (METP) was established The operation of the country s communication services was transferred from Telecommunication Department Malaysia to Syarikat Telekom Malaysia Berhad Privatisation of Telekom Malaysia Berhad. TMB became a public listed company Five new licences issued to mobile operators (1+5) Issued licence to Measat Broadcasting Satellite Service- ASTRO (Direct to home) pay TV 14
15 TELECOMMUNICATIONS: THEN TO NOW (cont) METP went through a restructuring and re-emerged as the Ministry of Energy, Communications and Multimedia Telecommunication Department Malaysia was dissolved and Malaysian Communications and Multimedia Commission was established as the industry regulatory authority Licensees under the Telecommunications Act 1950 and Broadcasting Act 1988 were given one year to decide whether they wish to migrate to new regime Last day to indicate decision to migrate fixed on 31 st March. 1 st April 2001, new licensing regime started New licences issued under Communications and Multimedia Act
16 MSC Physical Area and Location 16
17 LEAPFROGGING MALAYSIA INTO THE INFORMATION AGE Go Global Create the ideal multimedia environment to attract world-class companies to use MSC as a hub Enhance domestic productivity Leapfrog into success in the Information Age Create value from Information Age businesses Catalyze a highly competitive cluster of Malaysian multimedia/it companies that become worldclass over time Lead Regional 17
18 THE MSC VISION: CONCEIVED AS THE NEXT ENGINE OF GROWTH The MSC was set up based on: The recognition that Malaysia needs to respond to the systemic changes in the socio-economic environment brought about by the convergence in ICT, and the impact of globalization; Need to drive the economy towards higher productivity through technology and high value-added added economic activities; Information Age and converging technologies presented the best opportunities for socio- economic transformation. 18
19 A UNIQUE, WORLD-CLASS MULTIMEDIA ENVIRONMENT AND INCENTIVE PACKAGE World-class Infrastructure and Infostructure Leading-edge edge cyberlaws and incentives The Flagship Applications MDC as the one-stop shop for investment E - Village 19
20 FLAGSHIP APPLICATIONS TO JUMPSTART & ACCELERATE DEVELOPMENT OF MSC Smart Schools Multipurpose Card Developmental Flagship Electronic Government Telehealth Environmental Flagship R&D Cluster E-Commerce Borderless Marketing Centre Worldwide Manufacturing Web 20
21 Technopreneur Development Flagship Technopreneur Portal Key Focus Areas of Technopreneur Development Flagship Talent Development Market Access & Venture Development Seed Capital Venture Capital & Grants National Incubator Network and MSC Status for Incubators21
22 MSC S BILL OF GUARANTEES 1. World-class physical and information infrastructure. 2. Unrestricted employment of foreign knowledge workers. 3. Freedom of Ownership. 4. Freedom to source for borrowings and capital globally. 5. Financial incentives; no income tax up to 10 years or investment tax allowance of up to 5 years. 6. Intellectual property protection and cyberlaws. 7. No internet censorship. 8. Globally competitive telecommunication tariffs. 9. Tender MSC infrastructure contracts to web-shapers. 10. MDC as the one-stop shop. 22
23 Communications and Multimedia Service Providers Service Operator Telecommunications Broadcasting: i. Free-to-Air TV ii. Subscription Broadcasting iii. Radio Stations Number of Licensed Operators Total
24 CONVERGENCE THE CONCEPT Telecommunications: Digitised Network Multimedia : Interactive Integrated Delivery Various Forms Broadcasting: Digitised Content Computers: 24
25 NEW INSITUTIONAL MECHANISM TO MANAGE AND REGULATE CONVERGENCE INDUSTRY MINISTER MINISTRY OF ENERGY, COMMUNICATIONS AND MULTIMEDIA MALAYSIAN COMMUNICATIONS AND MULTIMEDIA COMMISSION Organizational principles: Independence Transparent Autonomous management Self Funding Professional 25
26 CONVERGENCE LEGISLATION - COMMUNICATIONS AND MULTIMEDIA ACT Enacted in 1998 Ten Policy Objectives 1. Creating a global hub 2. Building a new civil society 3. Nurturing local content and culture 4. Giving priority to people 5. Nurturing user confidence in the new sector 6. Promoting access and equity 7. Growing applications service markets 8. Allocating resources efficiently 9. Developing sector capabilities 10.Providing secure and safe networking 26
27 CYBERLAWS AS INSTRUMENTS OF GOVERNANCE Cyberlaws 1. The Computer Crimes Act The Copyright (Amendment) Act The Telemedicine Act (Yet to be enforced) 4. Digital Signature Act The Communications & Multimedia Act 1998 Purpose Covers offences relating to misuse of computers. Scope of Copyright protection widened to cover communications of intellectual property online. To facilitate the practice of Telemedicine To regulate the use of Digital signatures and provide its legal status for electronic transactions. To regulate and facilitate the development of converging communications and multimedia industry. 27
28 PRINCIPLES OF NEW ENABLING LEGISLATION Key Elements Transparency Less rather than more regulation Industry self regulation Technology neutral Service focus 28
29 NEW LICENSING STRUCTURE LICENCE CATEGORY Network Facilities Provider (NFP) INDIVIDUAL LICENCE CLASS LICENCE Network Service Provider (NSP) Applications Service Provider (ASP) Content Applications Service Provider (CASP) _ 29
30 LICENSES ISSUED UNDER THE NEW REGIME LICENCE CATEGORY Network Facilities Provider (NFP) Network Service Provider (NSP) Applications Service Provider (ASP) Content Applications Service Provider (CASP) TOTAL INDIVIDUAL LICENCE CLASS LICENCE
31 Distribution of Networked Content and Applications CASP ASP NSP Various content and applications services Transport & Connectivity Network and applications management services NFP Core network Infrastructure Access network Customer Access device 31
32 What can you do with a class licence in the ASP category? PSTN telephony Public cellular telephony services IP telephony Public payphone service Public switched data service Currently requires individual ASP license Eventually will become class activities to encourage the active participation of applications services providers Why wait? Register now! Audiotext hosting services Directory services Internet access services Messaging services Only requires registration under a class ASP license 32
33 The CMA licensing framework provides opportunities for developing new commercial relationships The The Internet Service Provider A Bandwidth Wholesale Portal supplier Content aggregator Content originator Service Provider B Bandwidth Wholesale Infrastructure provider provides access and network connectivity as well as intelligent network services to service providers 33
34 Self Regulatory Forums Consumer Forum Service quality; complaints handling Content standards Content Forum Choice of service providers; service reach; cost of service Access Forum CONSUMERS Standards; interoperability Technical Forum 34
35 ACCESS - UBIQUITY TARGETS KPI CURRENT LEVEL (M SIA) 2001 CURRENT WORLD CLASS LEVEL TARGET (2005)* Fixed lines per 100 population (teledensity) Internet users per 100 population No. of PC per 100 population Mobile subscriber per 100 population *RMK-8 Target 35
36 Ensure Universal Access Fixed Line Penetration Rate in Malaysia (Per 100 population) LOCATION Overall Urban Rural Source : MECM 36
37 Strategies for Widening Access 1. Develop a sustainable Universal Service Program 4. Move towards cost-based tariff 4 3. Leverage on new technologies 2. More liberal licensing and reduce barriers to entry 37
38 POLICY ON INFRASTRUCTURE DEVELOPMENT Policy Industry is responsible for all info-communications infrastructure rollout including uneconomic areas Implications Slow development as concentration is on economic areas and limitation of USP fund Affects our target for 2005, particularly for the rural areas Digital gap may widen Policy Review Intervention needed Government to also contribute and to focus on schools with no infrastructure RM 1 Billion has been approved to supplement and complement industry s fund for
39 1. Development Allocation For PROGRAMS/PROJECT ALLOCATION (RM MIL.) (%) MSC Flagship Program E-Government Smart Schools Telehealth Multipurpose Card R&D Cluster Cross Flagship Computerization Research & Development Bridging the Digital Divide Infodesa Internet Desa Universal service Provision Computer Infrastructure for Schools Local Content Others Total 1, , , ,
40 2. Widening Access to ICT Services 200 schools to be connected in 2002 Balance of 2000 schools & clinics by 2005 All schools to be smart schools by 2010 All Schools to be provided with electricity Widen Rural Internet Centres 40
41 3. Leverage on New Technologies Web Based, Internet Wireless and Satellites (e.g. 3G, DTTB, MMDS, VSAT, CDMA, TVRO) Voice-Over-Internet-Protocol (VOIP) Service providers can introduce new services without having to apply for new licences 41
42 4. Tariff Rebalancing Fixed by Government Market decides Tariff - Cost-based Tariff Rebalancing effected on and tariff is now more aligned to cost. 42
43 WHERE DO WE GO FROM HERE? Encourage new business models to capitalize on new opportunities brought about by convergence Rationalise the market structure of the current industry players HARNESS THE BENEFITS OF THE CMA 1998 e.g. separation of networks from facilities, availability of class licensing regime, many other services exempt from licensing 43
44 44
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