Desert, goats and an IT Park in Oman

The Sultanate of Oman, with a land area of just over 300'000 square kilometers, is the third largest country on the Arabian Peninsula. Over 80 per cent of Oman's territory is desert but it contains large reserves of oil and natural gas. Oil-related activities account for almost 40 per cent of the country's GDP and have contributed strongly to economic development. Nonetheless, over half of Oman's population is still involved in agricultural activities. This becomes apparent once outside the more developed part of the country centered around the capital, Muscat. About an hour away from the capital, goats seem to outnumber people.

Over 80 per cent of Oman's territory is desert.

One of Oman's some 700'000 goats. In rural areas, goats seem to outnumber people. More than half of Oman's population is engaged in agricultural activities.

Until the recent rise, stagnation in oil prices had led to a fall in per capita income, pointing out the danger of over reliance on a single commodity. The government is thus keen to diversify the economy. Its Oman 2020 vision calls for increasing the role of other sectors. It is hoped that, by 2020, the contribution of crude oil to GDP will be less than ten per cent.

A step in that direction has been the creation of economic zones-called Industrial Estates-that clusters primarily manufacturing companies together. Six Industrial Estates have been created that offer some 200 companies a comprehensive package of incentives such as tax breaks and subsidized rentals. In addition, transport and communications infrastructure and facilities such as schools and shops are also provided in the Industrial Estates. The Public Establishment for Industrial Estates (PEIE) is the government-owned agency that manages Industrial Estates.

Recognizing the growing role of Information Technology (IT) in both manufacturing as well as an industry in its own right, the government has plans to create an IT Park designed along the model of the Industrial Estates. Indeed, PEIE has taken the lead role in drawing up the plans for the IT Park, based on a United Nations for Industrial Development Organization (UNIDO) study. The design of the IT Park has been completed and ground breaking is scheduled for September 2001. It will be ready for tenants by July 2002.

The IT Park is to be located three kilometers from Rusayl (location of the largest Industrial Estate containing the biggest conglomeration of companies in Oman) and only ten minutes from Seeb International Airport. Covering some 300'000 square meters, the IT Park is divided into three parts: offices for software companies; a training center including an IT college (to be built by the private sector); and services such as shopping, a food court, health club, etc.

Oman's location-just across the Arabian Sea from India, next door to the other Gulf States, and close to the Horn of Africa-plays an important role. One objective of PEIE is to attract companies who want a gateway to East Africa, the Gulf Cooperation Council and Yemen. It is hoped that the brand recognition of Omani products-for example the most famous milk powder in Sudan comes from Oman-and a reputation for quality will help software exports. Another plus is language; most Omanis speak both Arabic and English. The large number of expatriates and closeness to Iran and India also means that significant portions of Oman's inhabitants are also familiar with Farsi and Hindi.

The Sultanate's closeness to India is evident from the large number of Indian workers. India's success in developing its own software industry has had an influence on Oman's IT Park and Omani officials have visited Indian software parks and obtained ideas. In fact, a team of Bangalore-based Indian architects designed the sleek, glassy, 3-story multi-domed IT Park.

Developing the needed human resource skills for the IT Park will be crucial to its success. One factor that should help is that the IT Park is just 1.5 kilometers from Sultan Qaboos University (SQU), Oman's only public institute of higher education. SQU offers degrees in Information Systems and Information Engineering. To ensure a steady supply of programmers, an Omani-Indian company plans to establish a university-the Middle East College of Information Technology-in the heart of the IT Park. This private-sector initiative will offer Omanis and other Gulf students a bachelor's degree. Plans are to open in September 2002 with an intake of 500 students.

Headquarters of Oman Telecommunication Company. OmanTel will be responsible for providing the communications infrastructure of the IT Park The IT Park will have state-of-the-art communication infrastructure most of which will be provided by the state-owned telecom company, OmanTel. Fiber optic cable will extend up to the IT Park (the availability of fiber will be no problem since the only fiber optic cable plant in the Middle East is located at Rusayl). The IT Park will have its own 1'000 line telephone exchange. It is planned to provide 155 Mbps of bandwidth to the desktop over the IT Park's Local Area Network. Just in case, there will be a powerful uninterruptible power supply.

Oman first connected to the Internet in January 1997 with an initial one Mbps link. As of May 2001, international connectivity stood at almost 30 Mbps. There are 33'000 Internet subscribers or almost 100'000 users in the country (just over 4% of the population). One barrier is the shortage of PCs in homes. Although over half of Omani homes have a telephone line, less than 10% have a PC. OmanTel is launching a program to facilitate the purchase of home PCs. Other goals include raising the level of Internet access in schools and providing broadband local access.

Incentives for companies locating at the IT Park will be similar to those for the Industrial Estates. These include tax holidays, exemptions on import duties, subsidized rent, visa facilitation for expatriates, clearances and 100 per cent foreign investment. In addition, some special inducements for the IT Park include an initial lowering of the cap for Omani employees (normally 35%, reduced to 10% for the IT Park) and discounts on network access. Nonetheless it is hoped that the IT Park will create employment for IT skilled Omani nationals as well as serve as an incubator for Omani dot.com start-ups. Tele-working is another possibility as there is a large number of highly educated Omani women who are potential employees but who would prefer to work from home.

A major goal of the IT Park is to develop software for export. This includes customizing applications for the regional market and Arabizing software. There are already some precedents in this area. For example, Medicom, an Indian-Oman medical software company, has exported its hospital management system to South Africa, Saudi Arabia, Qatar and India. There is also expected to be a lot of work developing local applications. For example, there is an Omani e-government committee chaired by the Minister of National Economy, which is expected to propose a number of projects. Another area is education where the Ministry of Education has proposed the development of a student database.

Multimedia Malaysia

Kuala Lumpur, November 2000

Can a multi-ethnic, South East developing nation of 22 million leapfrog to a Knowledge Society?

It seems that practically anything in Malaysia to do with Information and Communication Technology (ICT) uses the word multimedia. For example, the ICT policy-maker is the Ministry of Energy, Communications and Multimedia; the Communications and Multimedia Commission (CMC) refers to the industry regulator; the Multimedia Super Corridor (MSC) is the country’s answer to Silicon Valley; and the Multimedia University is the nation’s ICT institute of higher education. This could easily be construed as over-hype, particularly as many governments are paying lip service to the Internet age but rarely back their public proclamations up with concrete actions. However something appears to be going on in Malaysia in its embrace of ICT as a lever to lift it to developed country status by the year 2020 (its so-called Vision 2020).
The Internet market is growing thanks to cheap tariffs, the introduction of broadband access, growing liberalization, rising awareness and a strong government commitment to ICT for development. The Malaysian Institute of Microelectronic Systems (MIMOS) <www.mimos.com.my>, launched the nation’s first Internet Service Provider (ISP) — Jaring www.jaring.my — to provide Internet access to Malaysian users. TMnet, the ISP of incumbent telephone operator, Telekom Malaysia, was the second, launching service in November 1996. Four other telecom infrastructure companies were licensed ISPs by early 2000. In July 2000, CMC introduced a new Internet licensing scheme with four types of licenses: Internet Access Service Provider (an ISP), Network Service Provider (provider of Internet infrastructure and bandwidth), Network Facilities Provider and End-Users Services. Four companies are Network Service Providers (Jaring, TMnet, Time Dot Com and Maxis Net) meaning they supply bandwidth for IASPs including themselves. ISPs (or IASPs in Malaysia) require a license from CMC that costs RM 2’500 a year.
TMNet is the largest ISP. It claimed around 700’000 subscribers in August 2000 for what it estimates to be between 65-70 per cent of the market.[1] This puts the size of the Internet subscriber market at just over one million. Figures on the estimated number of users diverge widely. One report predicts the number of Internet subscribers will be 1.5 million and the number of users 7.5 million by end 2000.[2] Yet the same report quotes a government official as stating that six per cent of Malaysians used the Internet in May 2000, or around 1.4 million people. A more realistic figure is probably somewhere between these two figures; perhaps 2.5 million users at June 2000, or just over one in ten Malaysians.
The nation has an ambitious project to create a Malaysian “Silicon Valley”. Launched in 1996, the Multimedia Super Corridor (MSC) will stretch south from the largest city, Kuala Lumpur (KL), all the way to the new Kuala Lumpur International Airport (KLIA). The MSC is arising from a 15 kilometers long by 50 kilometers wide strip of land carved from a former palm tree plantation.[3] KLIA, completed in 1998, is futuristic, glass-enclosed and surrounded by rain-forest—maybe the world’s first eco-airport. So far only one phase has been completed. There are plans for two more terminals as demand rises. In fitting with its location at the tip of the MSC, the airport is so computerized that supposedly sales and inventory levels of all the shops it contains can be calculated within a day.
In addition to the airport, other landmarks include the Petronas Twin Towers (the world’s tallest twin towers) in southern KL, and the ‘intelligent cities’ of Putrajaya — the seat of the new federal government hosting government ministries and the Prime Minister’s residence — and Cyberjaya — the main town of the MSC.
The vision for the MSC is to create an oasis for Information Technology companies that will make Malaysia a multimedia hub and propel it into the hi-tech age. The government is providing a range of incentives to attract companies to the MSC. Over 350 companies had achieved the coveted MSC status.[4] Some 100 international companies including well-known heavyweights as Alcatel, Cable & Wireless, Ericsson, Fujitsu, IBM, Intel, Lotus, Lucent, Nokia, NTT, Oracle, Siemens and Sun have committed to the scheme. However few have yet to build their facility partly because of the sharp downturn in the Malaysian economy from the Asian financial crisis and partly because the underlying infrastructure — roads, fiber optic cable, etc. — is still being installed. One that has, is Japan’s NTT. Its MSC facility is NTT’s largest overseas Research and Development centre outside Silicon Valley.
Telekom Malaysia is hard at work installing the MSC communications infrastructure. The Asynchronous Transfer Mode (ATM) backbone has a 40 Gbps switch capacity. A variety of broadband customer access technologies will be offered including Fibre-to-the-Home, ADSL and high-speed wireless. Rapid national and international connectivity is assured through a 622 Mbps link to Telekom Malaysia’s domestic backbone and over 300 Mbps to the Internet backbone. Telekom Malaysia will guarantee quality of service, offer globally competitive tariffs and provide various complementary services such as web hosting.
Located at the center of the MSC in Cyberjaya, the Multimedia University (MMU) is the first of its kind in the world. Focusing exclusively on a high-tech curriculum, the campus was built in 19 months and accepted its first students in 1997. There is also a sister campus in the city of Melaka. The two units already have some 9’000 students with a planned enrolment of 12’000 by 2002. There is a strong international flavor with students from 31 countries and faculty representing 23 nations. Students can enroll for undergraduate degrees in traditional subjects such as Electronics, Information Technology, Software Development, Data Communications and Engineering as well as more esoteric areas such as Entrepreneurship, Digital Media and Digital Art. And, in keeping with Malaysian fondness for the word, there is a Bachelors Degree in Multimedia. It is envisioned that MMU will play the same role that Stanford University does for Silicon Valley: a breeding ground for high-tech research and a steady supply of skilled techies for MSC businesses.
What sets the MSC apart from similar schemes in other countries is its planning and scale. While other nations can boast of high-tech agglomerations such as Silicon Valley in the USA or Bangalore in Southern India, these grew piece mill, without much initial government support. In contrast, the MSC is the brainchild of the Malaysian government — which is offering numerous incentives for companies to settle there — and is underpinned by a three phase plan spanning some twenty years. And while many other governments are developing so-called technology parks, they pale in comparison to the size and scope of MSC.
MSC is the creation of a first-world environment in a developing country. In many ways, Malaysia is probably one of the few countries where this could happen. It is a unique developing nation with an unusual set of circumstances. Malaysia’s per capita income of some US$ 3’000 straddles it somewhere between the first and third. It is not quite as rich as Asian tigers such as Singapore, Hongkong, South Korea or Taiwan but neither is it as poor as other South East Asian developing nations such as Indonesia, Thailand or the Philippines. Nor is the government as cash-strapped as a typical developing country. And unlike advanced developed countries, where governments seemed to be ailing from sclerosis, the Malaysian government retains the lead role in driving economic development.

Table 1: Between first and third worlds

Economy	Population (m)	GDP per capita US$	Telephone lines per 100 inhabitants	Mobile subscribers per 100 inhabitants	Internet users per 100 inhabitants
Hongkong SAR	7	24’612	57.6	63.6	32.7
Singapore	4	21’413	48.2	41.9	45.1
Taiwan-China	22	12’387	54.5	52.2	28.9
Korea (Rep.)	47	6’829	43.8	50.0	33.9
Malaysia	22	3’333	20.3	13.7	11.5
Thailand	61	1’859	8.6	3.8	1.6
Philippines	75	898	3.9	3.7	0.8
China	1’267	768	8.6	3.4	1.3
Indonesia	209	605	2.9	1.1	0.5
India	998	435	2.7	0.2	0.4

Note: GDP is for 1998, all other data refers to 1999.

Source: ITU.
There are a number of programs to assist budding dot coms. These include R&D grants, incubation, training and venture capital financing. One hope is that world-renowned high tech companies will rub shoulders with Malaysia companies. This will help sharpen the skills of so-called Malaysian “technopreneurs”. Success should breed more success: as the number of companies grows, others will feel they cannot afford to be left out. It is hoped that international companies will establish their Asian headquarters at MSC, one reason for the closeness of the airport. In order to attract them, there will be wide-open spaces, efficient transportation options, and environmentally-friendly, high-tech housing — in short, first world living. As if that is not enough, there will also be a Disney-like theme park in the new e-Village. This planned content creation oasis will be where Hollywood meets Silicon Valley with the development of films, television and radio programming, interactive software and online publishing.
It is too early to tell whether the MSC will be a revolutionary success or a colossal failure. Right now it is a huge construction site with mountains of dirt, hundreds of trucks, partially erected buildings and mazes of superhighway interchanges. The gut instinct is that there is something special going on here. The strong government leadership and dynamism of the Malaysian population suggest that this is going to work. Even at this early stage, the dedication and enthusiasm surrounding the project are infectious and leave many, particularly those from developing countries, in awe. After all, for someone from Nigeria or Trinidad, Silicon Valley seems irrelevant; a developed country phenomenon they just can’t relate to. But to see a fellow developing country build a high tech hub out of a tropical jungle, that sinks in. Indeed one emphasis of the MSC is to be a test-bed for appropriate, low-cost communications technologies suitable for developing countries.
[1] It states that Internet subscribers grew by 9 per cent a month in the first half of 2000 and that Internet access revenues increased by 40 per cent in the same period. See Telekom Malaysia. “Telekom Malaysia Announces Half Year Results 2000”. Press Release. 29 August 2000.
[2] “Baby Steps For Our Net Generation.” Jaring Internet Magazine. May 2000.
[3] Malaysia is the world’s largest exporter of Palm Oil. In 1999 it produced 10.6 million tonnes of the product; export value was RM 19.5 billion. Source: Department of Statistics. “Key Statistics-Malaysia.”
[4] MSC status is conferred by the Multimedia Development Corporation, established to oversee the development of MSC. MSC-Status allows companies to benefit from a number of government initiatives including unrestricted employment of local and foreign workers, exception from foreign investment limits, 10 year tax holiday and no import duties.
See the Malaysia Case Study.