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Changes afoot

Malaysia's Multimedia Super Corridor (MSC) holds out hope that change is coming. The costly government-led experiment to attract the world's top IT companies to set up shop here, and crank out products for the new millennium, may well provide the leg up that the homegrown software industry needs.

MSC promoter Multimedia Development Corporation (MDC) is attempting to cover all bases to provide the environment where future software powerhouses can be incubated and flourish. These include grants, a venture capital fund, low-rent offices for startups, tax breaks and unlimited import of foreign knowledge workers.

Ultimately, the project hopes that some foreign-to-local brainpower osmosis may take place that will throw up a local Marc Andreesen, Linus Torvalds or Sabeer Bathia.

The top-down push, however, has its fair share of detractors. "Neither government nor the MDC nor financiers can take the ultimate responsibility for success or failure of individual companies or the software industry in general," says Tim Loving, managing director of AccTrak21 Sdn Bhd, which designs and develops a range of financial and business management software.

Loving believes that business is business, and people going into software should expect to have to make a lot of sacrifices and take a lot of risks. "If they are not prepared to risk their house, they should stay working for somebody else. Don't expect the government to take all the risk and the effort out of it. They cannot, nor should they spend taxpayers' money attempting to do so," he adds.

Loving says the American software industry model, the most successful seen so far, appears to have no government involvement whatsoever.

"The software industry there consists of 10,000-plus companies, most of which are small and struggling seedlings. But the ones that succeed go on to become mighty oak trees, and among the richest, most profitable corporations ever seen in the history of mankind. The ones that fail are not total failures, the staff do not die with the company. The experience of failure may be one of the most important lessons to learn in moving towards eventual success," he adds.

On grants and incentives, Loving says local software companies should not await for such handouts. "If the Malaysian software industry has to depend on those, it stands little chance of being robust and competitive enough to survive in a tough world."

Loving adds, though, that local financial institutions have not been supportive of the industry. "Malaysian financial institutions and venture capital groups cannot as yet get their minds around an industry that has little or no net tangible assets (NTA). Many of the great engines of wealth that today drive the U.S. would have been stifled at birth by Malaysian financiers, since they don't fit the Malaysian asset-driven formula for loans and investments.

"So Malaysian software companies that need capital for global expansion should not expect to find it here," he says. AccTrak21 itself has ventured out to get an IPO on the Nasdaq national market.

Loving says that even government-sponsored funds are usually administered by people with no knowledge or understanding of the software industry and its very special characteristics. "Hence, the approval processes are likely to be onerous, slow and risk-averse. They may not even work. Time will tell," he says.


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