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Gambit in Malaysia

Malaysia is making a major effort to become Asia's gateway to high technology. But the competition for the title is stiff.

PALO ALTO, California--High-tech companies were summoned to hear a business proposal last week in Silicon Valley, but it was no ordinary pitch.

The presentation came from the prime minister of Malaysia, Dr. Mahathir bin Mohamad. In a rather extraordinary road show, the head of state came to California to promise a sympathetic business climate in hopes of drawing investment in his government's ambitious plan to create a "Multimedia Super Corridor" for high-tech research and development.

The campaign--which included a public presentation at Stanford University--underscores the pace and intensity of the Asian economic juggernaut, which is turning increasingly to the high-technology sector. But with that expansion has come competition among various nations throughout Asia to make new alliances with U.S. technology companies of which Malaysia is only one.

Judging by the prime minister's appearance here, Malaysia has definitely made an impression with its new campaign. But it remains unclear where Silicon Valley will decide to send its business in the longer term.

Sun Microsystems is considering a software development center in the area, but many who attended see the project as more an opportunity to sell than to invest.

"We're probably not big enough to consider this yet," said Macromedia chairman Bud Colligan at a private meeting between Prime Minister Mohamad and Silicon Valley CEOs hosted by Channel A, which is dedicated to offering marketing consulting services to Asian groups who want to reach the American market.

Colligan feels that Malaysia is a significant market for his company's multimedia authoring tools. (Colligan sits on the board of CNET: The Computer Network.)

Networking giant Cisco Systems sees itself as both a potential supplier to the Malaysian complex as well as a possible investor in a research facility, spokesman Bob Michelet said.

Situated in Kuala Lumpur, the Multimedia Super Corridor is intended to be a centrally located incubator for high-tech companies looking to penetrate the Pacific Rim and Asian markets.

For high-tech manufacturers already active in Malaysia, the government encourages "dispersal and automation"--urging them to move labor-intensive operations elsewhere or to reduce their work forces through automation. The goal: To free technically skilled workers to move into research jobs.

Malaysia already is a high-tech manufacturing center, but Prime Minister Mahathir is eager to move beyond making chips, motherboards, and computers. MSC is a cornerstone to his strategy to make Malaysia a developed nation by the year 2020.

Silicon Valley executives liked that message, particularly a list of "ten guarantees" hitting most of their hot-button issues--high-speed telecommunications infrastructure with competitive pricing, a ten-year tax holiday, cyberlaws to protect intellectual property.

And Malaysia astutely positioned itself. First, through a a day-long event at Stanford's Graduate School of Business and then by getting the chiefs of companies like Microsoft, Oracle, Silicon Graphics, Netscape Communications, and Hewlett-Packard (which has more than 4,000 employees in Malaysia already), to sign on for an advisory panel for the Multimedia Super Corridor.

Most impressive to the technology executives was the government's high-level commitment. Mahathir, who looks 20 years younger than his 71 years, has put the weight of his administration behind the plan.

"The basic philosophy of the government has always been the same, and we have gained strong popular support in the 1995 election," Mahathir said. "It's a reasonable expectation that 30 years from now, Malaysia will have the same philosophy."

Pehong Chen, chairman of BroadVision, an Internet technology firm, concurred with that assessment of Malaysia's political climate.

"The political stability of the country has been pretty remarkable," said Chen, a Taiwan native whose company is based in Silicon Valley.

The biggest obstacle to Malaysia's ambitious plan may be a shortage of Malaysian engineers to work in the proposed research and development park.

"A university is essential," said Irving Ho, architect of Taiwan's well-known Hsinchu Industrial Park, which shares many of MSC's goals as a high-tech research center. Ho, now the chairman of Silicon Valley's Enterprise Link Technology, said he had emulated the relationship between Stanford University and Silicon Valley in building the Taiwan science park.

"You need the raw material, and the raw material is college graduates in engineering and science," Ho said, pointing out that even Silicon Valley today has shortages of technical talent.

The prime minister acknowledged Malaysia's shortage of trained technicians. "We know we are weak in knowledge workers, and that's why we are making it possible for knowledge workers from elsewhere to come in and work without undue hassle."

Malaysia plans to build a new university within the Multimedia Super Corridor, but its plans go beyond that.

"We're not starting from a green field," said J. Jegathesan, deputy director of the Malaysian Industrial Development Authority, which promotes investment in Malaysia. Manufacturers like Intel and Matsushita already do some R&D work in Malaysia. In addition, the many Malaysians studying aboard are a talent pool that can be tapped.

Malaysia, a country of 20 million people, will inevitably have its efforts compared to neighboring Singapore's, a tiny island city-state of 3 million people that has wired itself and positioned itself as a high-tech mecca. Singapore, which has run out of land, is now spreading its influence through investments throughout the region.

Malaysia has land and human resources that Singapore's does not possess, and the Malaysians subtlely distance themselves from Singapore in other ways.

"They very consciously differentiate themselves with Singapore and the perception of censorship," said Greg Slayton, president of virtual reality toolmaker Paragraph International, citing the Malaysian promise of "No Internet censorship."

Singapore entrepreneur Wong Toon King, managing director of publisher SilkRoute Ventures agreed: "You'll never get Singapore saying that."

Execution will determine Malaysia's success, King said, who is interested in expanding in Multimedia Super Corridor.

"Their agencies have never worked together before," he said. "But with the prime minister's involvement, they have the political will. The key will be talent. How to attract it is their major issue."

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