The impact of Multimedia Super Corridor

(MSC) on Malaysian Economic Growth

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- Introductions:
There is no doubt that information and communication technologies
(ICT) have an important impact on most countries in the world, it affects
the communication and the way of working, also ICT is one of the
important sectors that forming knowledge based economy as it is
facilitate the transformation of information and technology through
different sectors of the economy.
Economic growth means the increase in the production of goods
and services which can be improved using the information and
communication technology (ICT), ICT will help in decreasing the time of
the production also save more efforts as we will use a developed
machines in the production cycle also it will help in delivering the service
to the customer efficiently.
Information and communication technology (ICT) also is an
important engine of Economic growth as it affects the investment, trade,
treasury, Employment and GDP.
The Multimedia Super Corridor (MSC) is Malaysia’s most exciting
initiative for the global information and communication technology (ICT)
industry, with this unique corridor, Malaysia continues to attract leading
ICT companies of the world to locate their industries in the MSC and
undertake research, develop new products and technologies and export
from this base.

Research Problem:

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 To enhance the development of the ICT industry and promote
knowledge based economy in Malaysia; the MSC Malaysia was
established to become a global hub for ICT and to push the Malaysian
economy up to the higher value chain, through technology intensive and
knowledge economy.
MSC Malaysia has played a significant role and gave great impact to
the national economy in terms of local revenue, export, employment and
R&D.

Research Hypotheses:
1. The Multimedia Super Corridor (MSC) is Malaysia’s most exciting
initiative for the global information and communication technology
(ICT) industry.
2. MSC Malaysia has an important contribution in the Malaysian
economic growth.
The objectives:
1. To describe the achievement and contribution of MSC Malaysia in
Malaysian economy.
2. To evaluate the MSC Malaysia’s contribution in Malaysian economy
and give some recommendation for its continuing relevance in driving
the economy.
First Section: The development of the MSC Malaysia:
Introduction
Malaysia set the foundation of the knowledge economy by
facilitating the human development, science and technology and research
and development.
Malaysia started to lay the foundation for the knowledge-based
economy in the mid-1990s by launching the National IT Agenda (MITA)
and the Multimedia Super Corridor (MSC). The Multimedia Super

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Corridor (MSC) was launched by the Malaysian Government in 1996
under the supervision of Dr. Mahathir Mohamad, to develop the ICT in
Malaysia.
MSC consists of four major large projects known as the Kuala
Lumpur City Center (ICLCC), Kuala Lumpur International Airport
(KLIA), Putrajaya and Cyberjay a (two of the global Smart Cities), it
includes Multimedia industries, R&D centers, a multimedia university,
shared services and outsourcing centers and Technology Park Malaysia.
([1])
The Multimedia Development Corporation (MDeC) was established
to take charge of the development and implementation of MSC.
MSC Malaysia offer many benefits to encourage the investment in
MSC like: ICT infrastructure. Freedom of ownership, financial
incentives, competitive cost and the protection of the property right. ([2]
Firsts: The development of the MSC Malaysia
The development of the MSC Malaysia is planned under three
phases as per the following
First phase of development (1996-2003):
This phase include the foundation of the ICT infrastructure, two
smart cities are created, cyber laws layout was issued, about 22,000 jobs
created and it achieved a revenue of RM6 billion.
Second phase of development (2004-2010);
This phase include connecting the cities in MSC with other cities in
Malaysia and with other cyber cities of the world, the number of MSC
companies and jobs (100,000 job), also around 1400 property right are
granted
Third phase of development (2011-2020):

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 This phase aims to Link all Malaysia to the whole world by
expanding the ICT connection, to include 500 companies in ICT, the first
cyber court established and to build up to 12 smart cities. ([3])
Second: MSC Malaysia Achievements and Milestones (Target and
actual)
the following table shows the MSC Malaysia achievements
Table 1: MSC Malaysia Achievements and Milestones (Target and
actual)
Phase І ( 1996 - 2003 ) target Achievements

A corridor ranging from KLCC to KLIA, including Cyberjaya and

1 corridor
Putrajaya created

50 world class local companies 742 companies, 50 foreign and local MNCs ,awarded MSC status

Launch 7 flagship applications All 7 flagship applications were launched

frame work of cyber laws set of cyber-laws were enacted

Cyberjaya as world- leading intelligent city Investments in Cyberjaya were focused on physical infrastructure while the
with balanced development of social infrastructure was not at the same pace

Phase ІІ ( 2004 - 2010 ) target Achievements

Web of corridors 7 Cyber-cities and 8 Cyber-centers have been rolled out

3,750 MSC Malaysia status and 250 MSC By end 2007 - 1,482 MSC status companies 17 are Strong Performers and
Malaysia global companies 84 are MNCs

Enhance flagships application and introduce Flagship applications have yet to realize their full potential. There have
new ones been no new flagships.

Leadership towards harmonized global ICT-related laws (especially IP- protection rights) have yet to be
framework of cyber laws adequately enforced

Enhance local ICT industry and catalyze By end 2007 - 1,100 local MSC status companies and 17 Strong
potential world class local companies Performers

High speed link connectivity to Japan, Europe, Asia Pacific and US is now
Link to world leading intelligent cities High
available with outbound bandwidth at 27Gbps and further improvements
speed link connectivity to Japan, Europe,
planned

Source: National IT Council (NITC).

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 Third: MSC Malaysia driving factors
3. Cyber-cities and Cyber-centers
MSC developed the cyber cities and centers to attract the investment
in MSC especially in Knowledge based industries. There are 16 Cyber-
cities and Cyber-centers across the country; 10 in the Klang Valley and 6
in other states of Peninsular Malaysia. ([4])
2. Qualifying Criteria
For the qualifying criteria the MSC qualifying activities are
categorized under three (3) main clusters
1. Software & e-solution.
2. Shared services & outsourcing.
3. Creative multimedia. ([5])
To qualify for MSC-Malaysia Status, there are some criteria are:
Companies must work in information technology field or its
products, appoint a large number of the knowledge workers, and clarify
the importance of its company and the value added to the Malaysian
economy and to follow the Malaysia’s guidelines. ([6])
3. e-Xpats Centre & e-Dfi System
E-Xpats center it is an online system to develop the services that
delivered to the companies in MSC and ensure its efficiency.
E-Dfi system (Electronic ’Duty Free Importation system) is an online
system that used to link the companies in MSC to related agencies; it also
provides other services for the companies such as Bill of grantees([7])
4. Intellectual Property
Intellectual Property Corporation of Malaysia was established to
effectively administer the intellectual property, Trademarks, patents,
industrial design and the copy rights, enforce the intellectual property

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 laws, aware citizens of the importance of the property rights, and help
companies to protect their property rights. ([8])
The Malaysian government grants the IP incentives for the
companies who fill the application regarding the protection of their
property rights these incentives up to 70% of the initial cost for filing
applications to register the property rights protection. ([9])
3.4 MSC Flagship Applications
To link the Malaysian economy with MSC Malaysia a various MSC
Flagship Application projects were established they are:
1. E-Government
It is a software application that provides the citizens with the
services and information to satisfy their needs, this application will
improve the information flow between the government and the public,
cost and time savings and will increase the feedback with Haigh quality
services.
2. Multipurpose Card
To secure the private and government transaction the government
issued the Multipurpose Card, this cards is cost saving and reduce the use
of paper.
3. Smart School
To encourage the creativity and solve the issue of illiteracy the
government adopted the concept of smart schools by upgrading the
infrastructure, software application and supports the teachers to use ICT.
4. Telehealth
To improve the healthcare of the people using many programs like
Tele consultation, My Health portal and Lifetime Health Record. ([10])
3.5 Bill of Guarantees (BoGs)

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 Companies that are granted the MSC-Malaysia status enjoy the 10
Bill of Guarantees (BoGs), which include:
1. Provide a world-class physical and information infrastructure:
Malaysia will provide the companies with the infrastructure,
researches, new technologies and applications that will enable them to
operate their business.
2. Unrestricted employment of local and foreign knowledge workers:
MSC Malaysia employs such number of knowledge workers.
3. Ensure freedom of ownership:
MSC Malaysia Status companies are exempted from equity conditions
and paid-up capital conditions.
4. Give the freedom to fund their companies globally, and the freedom to
repatriate the profits and dividends form the investment in MSC
companies.
5. Provide competitive financial incentives such as investment tax
allowance and no duties on import of multimedia equipment.
6. To be protected by a regulatory framework such as intellectual
property law and other cyber laws and to ensure that this laws will be
enforced.
7. Ensure no Internet crimes as the relevant ministries and agencies will
take any action regarding any illegal action in the online environment.
8. Provide globally competitive telecommunications tariffs that will suit
the overall economic conditions and telecommunications framework
of the Country.
9. Set deals with the leading Companies that willing to use the MSC
Malaysia as their regional hub and offer many incentives for these
companies to encourage them to invest in the infrastructure. ([11])

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10.To establish an agency that responsible for the development of MSC
Malaysia such as Multimedia Development Corporation (MDeC)
which facilitate the interaction between the companies and the
governmental agencies.

Figure 2: Malaysia MSC companies by technology duster 2013

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Source: MSC Malaysia annual industry report, MDeC, 2013.

Second: Malaysia MSC companies’ Investment, 2013.
The investment strategy in MSC based on low cost as competitive
advantage but it focuses on the companies that their business related to
the following sectors: Shared Services & Outsourcing (SSO). Software &
e-Solutions and Creative Multimedia (CMC) as the Malaysian
government supports them with more investment.
Malaysia MSC companies’ Investment reached to RM 3 Billion in
2013 Classified as the following figure:

 
Source: MSC Malaysia annual industry report, MDeC, 2013

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Third: Malaysia MSC companies’ Revenues
in 2013. the Malaysia MSC companies contributed to the total
revenues with 34.55 Billion in 2013 with an annual increase of 1% of
2012 (33.53%). The Info Tech cluster recorded the highest revenue
representing 41% of total MSC revenues in 2013 followed by Shared
service &outsourcing (SSO) 37% while creative multimedia (CMC)
representing 18% and the Institutions of higher learning representing 4%.
Figure 4: Malaysia MSC companies’ Revenues (2009-2013)

 
Source: MSC Malaysia annual industry report, MDeC, 2013.
Fourth: Malaysia MSC companies’ Exports
Total MSC Malaysia exports in 2013 increased by 7.4% from 2012;
the highest contributor to the exports is Shared service &outsourcing
(SSO) representing 68%. The Info Tech cluster recorded 28% of total
MSC exports in 2013, creative multimedia (CMC) representing 3% and
the Institutions of higher learning representing 1%.
Figure 5: Malaysia MSC Local sales and Export sales (RM Billion),
2013

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Source: MSC Malaysia annual industry report, MDeC, 2013.
Fifth: Malaysia MSC Employment
In 2013. the total jobs created in MSC companies was 138.071 with an
average increase of 7.2% from 2012 (in 2013. 9221 jobs created) also
with growth rate of 38% from 2009. this increase in knowledge workers
is one of the important goals of Malaysia towards vision 2020
(knowledge economy)
The local workers in Malaysia represent 87% of the total employment in
2013. while the foreign workers represent only 13% as it is important for
Malaysia to develop the local workforce to meet the demand in ICT
Market. ([12])
Figure 6: Malaysia MSC Employment (2004-2013).

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Source: MSC Malaysia annual industry report, MDeC, 2013.
Sixth: The share of MSC Status Companies and ICT Industry to
GDP
ICT Industry considered one of the drivers for economic growth as it
contribution to real GDP was 9.8% in 2009 compared with 8% in 2008.
Figure 30: the contribution of MSC Status Companies and ICT
Industry to GDP (2004-2009)

Source: MSC.com, Seminar on ICT statistic, 2010.

Conclusion:
MSC Malaysia has a significant contribution to economic and
benefited the ICT industry that will help to transform the nation into a
knowledge-based economy. In terms of contribution to the economy.
MSC Malaysia has contributed a significant value to national GDP with a
cumulative of RM34.57 billion in phase two (2004 to 2010). In addition.
MSC achievements beyond contributing to the GDP. has also significant
achievement with 2520 of MSC status companies producing revenue
RM92.8 billion; create of 99.590 knowledge-based jobs. generated
RM33.1 billion worth of exports and RM1.512 million in R&D
investment as well as Registered of 5721 new IPs.
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 Recommendation
1. The implementation of MSC Malaysia as a national ICT initiative
should be governed by a single entity that will decide on national ICT
strategies and plans and oversee the implementation of MSC
Malaysia.
2. The scope of MSC Malaysia is limited to ICT companies in selected
sub-sectors. These priority sub-sectors, namely Shared Services &
Outsourcing (SSO). Software & e-Solutions (SeS) and Creative
Multimedia (CMC) are selected based on Malaysia's current
competitive advantage The scope of MSC Malaysia should be
extended to include all ICT sectors, including Telco and hardware,
and across the ICT value chain from manufacturing to high-end R&D.
3. Develop HR/ talent and strengthen national innovation system.
4. The government should also review the national R&D incentives.

References:
1. Anna Ong & Wein Siew Wei (2009), MSC-Malaysia Status - How
Can It Benefit ICT Companies? Invest Penang, p.l.
2. Hamsha Bin Injau (2011),Evaluation of Multimedia Super Corridor
(MSC Malaysia) Contribution. in Malaysian Economy, Research
Report Presented to the Higher Degree Committee of
Ritsumeikan ,Asia Pacific University, Malaysia,p.23.
3. Intellectual Property Corporation of Malaysia website:
(http://www.myipo.gov.mv/maklumat-korporat).
4. Jesse Chooi Tze Kheong (2009), Multimedia Super Corridor
Malaysia: Public-private R&D collaboration, Tech Monitor journal,
p.30.
5. Multimedia Development Corporation (MDeC), Malaysia.

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6. Multimedia super corridor website
(http://www.mscmalavsia.mv/sites/default/fiIes/pdf/reports_sur
vevs/flagship_updates.pdf).

[1]Hamsha Bin Injau (2011),Evaluation of Multimedia Super Corridor

(MSC Malaysia) Contribution in Malaysian Economy, Research Report
Presented to the Higher Degree Committee of Ritsumeikan ,Asia Pacific
University, Malaysia,p.23
[2]Jesse Chooi Tze Kheong (2009), Multimedia Super Corridor^
Malaysia: Public-private R&D collaboration, Tech Monitor journal, p.30
[3] Multimedia Development Corporation (MDeC), Malaysia
[4]Hamsha Bin Injau (2011),Evaluation of Multimedia Super Corridor
(MSC Malaysia) Contribution in Malaysian Economy, Research Report
Presented to the Higher Degree Committee of Ritsumeikan ,Asia Pacific
University, Malaysia,p.29.
[5]Anna Ong & Wein Siew Wei (2009), MSC-Malaysia Status - How
Can It Benefit ICT Companies? Invest Penang, p. 1.
[6]Idem, p.2.
[7] Idem, p.3, 4.
[8] intellectual Property Corporation of Malaysia website:
(http://www.rnvipo.gov.my/maklumat-korporat)
[9] Idem, IP Incentives.
[10] Multimedia super corridor website
(http://www.mscmalavsia.my/sites/default/files/pdf/reports_surveys/
flagship_updates.pdf)
[11] Official Portal of MSC Malaysia , MSC Malaysia bill of guarantee 
(http://www.mscmalaysia.my/bogs).

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