Push comes to shove, PUsh will fail

  • Govt totally off the mark with its intention to create three competitive bumi ICT companies
  • RM80 million allocated is going to be wasted; Malaysia can’t afford this
Push comes to shove, PUsh will failI WAS really first amused at the news that the Malaysian Government aims to create three globally competitive ICT companies by 2015. Which genius came up with this hare-brained idea, I thought.
 
You cannot simply manufacture three globally competitive ICT companies within the next 1,100 days. It also talks about creative companies which is likely digital content, be it movies, animation, games.
 
That same morning of the announcement on Nov 7, I happened to have met a leading tech entrepreneur who said the news left a bitter taste in his mouth.
 
“Forget about all this 1Malaysia and innovation talk then. This is racial. Becoming innovative and being globally competitive does not flourish or work along racial lines,” he told me.
 
Having built his business into one with millions in revenue over the years, the entrepreneur naturally felt he had done enough to warrant focused attention from any such initiative by the Government to create global ICT companies.
 
Reflecting on the entrepreneur’s feelings, I started to get angry and felt this initiative was going to be a waste of time, effort and money. But it is never a good idea to write an opinion piece when one is angry. So I waited a few days.
 
And then my co-founder A. Asohan got an interview with Ashran Ghazi, chairman of the New Entrepreneurs Foundation (MyNEF) to get a true picture of what is going on with this PUsh (Pemangkin Usahawan or Entrepreneur Catalyst) initiative.
 
“PUsh is about upgrading the quality of bumiputera technopreneurs and businesses so that they would be able to compete better,” said Ashran.
 
“MyNEF’s idea is not about creating three giant global ICT companies – you don’t become global just by merging into a big company,” he admitted. “Our focus is on encouraging mergers and acquisitions (M&As) between mid-tier companies with the rights kinds of synergy so that they can become larger companies that can compete in overseas markets.”
 
So, after reading about what Ashran hopes the initiative will result in, this is what I think.
 
Whatever disconnect there is between the original intention and the Government’s final announcement, this initiative will fail and the money allocated to it will be wasted -- RM50 million of tax-payers’ money and the RM30 million that Jamaluddin Bujang, CEO of Malaysia Venture Capital Bhd (Mavcap), has to carve out from the funding he will receive next year from the Government.
 
It will fail because it has been tried before and flopped then. A leading bumiputera CEO reminded me that in 1999, a similar effort was mooted and with government-linked corporations (GLCs) as the anchor customers for the batch of bumiputera ICT companies.
 
“It went nowhere because even the GLCs cannot risk having their ICT operations given on a silver platter to some companies just because they are bumiputera,” he tells me.
 
Can you imagine companies like CIMB Bhd, Maybank Bhd or SapuraKencana Petroleum Bhd, one of the world's largest integrated oil and gas services and solutions providers, giving portions of their IT business to the three companies that come out of this exercise?
 
Incidentally, Datuk Seri Shahril Shamsuddin, the president and Group CEO of SapuraKencana knows a thing or two about how tough it can be to build a competitive regional tech company. In its heyday, Sapura Technologies was touted as a bumiputera ICT company with the potential to be a globally competitive company. It failed.
 
And, PUsh will fail -- even if you pull Datuk Badlisham Ghazali out from the Multimedia Development Corporation and have him head one of the three companies; or even Nazrin Hassan out from Cradle Fund Sdn Bhd.
 
Even with their track record and leadership skills, they will struggle to create the right culture and to integrate the cobbling together of various companies into these three new companies.
 
It will fail because competition in ICT is global and brutal. Only the very competitive will survive. Badlisham made this point during the inaugural DNA-TeAM Disrupt series in September.
 
It will fail because other established bumiputera ICT companies such as Mesiniaga Bhd and Heitech Padu Bhd will not want to be part of this initiative. They are already struggling to break out of their dependence on the government and GLC business.
 
Can they afford to be distracted by this? I say they will even be hostile to the three new companies to be formed.
 
It will fail even if all the listed GLCs are encouraged with moral suasion or stronger means to support these three new companies by giving them their ICT business.
 
Nothing will lead more to the sure death of these three companies than this actually. To know that you surely will get business every year from some of the largest companies in the country is a sure way to kill one’s drive, competitive spirit and customer focus. You will have no fear of losing key customers even if the customers are not satisfied with your services.
 
How to build a globally competitive company in this manner? Which leading management tome speaks of this and served as the inspiration for this idea?
 
And it will fail because it will not attract top talent. Not even top class bumiputera ICT talent will join its cause.
 
Do you really think any self-respecting bumiputera will want to join the three companies that come out of this? There are thousands of top bumiputera talents in the many multinational and domestic companies. They compete and earn a living on merit.
 
Do you really see any of them wanting to join this cause? Not if they are driven to succeed on merit, not if they are winners. So, what kind of talent would be left to join these companies?
 
And it will also fail because it will attract all the opportunists out by the hordes. A new generation of dealmakers will arise, approaching every bumiputera ICT and creative company out there, promising the founders great valuations for their companies. “Just leave it to me to do the negotiations on valuation.” Wink.

And it will fail because even when the Government has given its support to leading self-made bumiputera ICT entrepreneurs, they have let themselves and the Government down.
 
The Skali Group was given a RM200-million Managed Portal Services contract by the Government in 2008. It was a massive bet taken by the Government on them and I felt the Government did the right thing. By then, Skali and its founders Tengku Farith Rithauddeen and Aimi Aizal Nasharuddin had already spent 11 years in the tech industry and were seasoned entrepreneurs.
 
But Skali has not leveraged on that big win to take itself to the next level and create its own products and intellectual property.
 
As a non-bumiputera but 110% proud Malaysian, I for one am sick and tired of this nonsense because it drains you of your energy when you see it happening and because you just know it will not achieve its purpose.
 
Waste of time, waste of effort. The Malaysia I want to help build cannot afford this.
 
But if the proponents of this think that the RM80 million of tax-payers’ funds will not go to waste, let’s have a debate then. We can host it at our January DNA-TeAM Disrupt and stream it live.
 
Let Malaysians judge if the idea has merit.

Related Stories:
 
Malaysia’s racial policies rears its head in ICT sector
 
Let’s focus on what we can change, says MDeC head honcho

 
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