Give Licence; Take back Licence!

Energy, Water & Communication Minister Lim Keng Yaik said "The government will withdraw some licences given to firms to offer high-speed Internet services using WiMAX technology as the market is too crowded".

The licences, for 2.5 gigahertz (GHz) and 3.5 GHz spectrums, will be taken back over a five-year period.

"There are too many WiMAX players. When you have too many players, they will kill each other," Keng Yaik said.

"Majority of them, after two to three years of obtaining the assignment don't have more than 10 customers and some don't even have any customers," Dr Lim.

Too many? When you first approved all of them didn't you take into consideration that this would be the scenario? Some of them have no customer at all? Ali Baba-ism didn't work?

The government gave licences to four companies to operate the 2.3GHz airwave. They are Bizsurf (M) Sdn Bhd, MIB Comm Sdn Bhd, Asiaspace Dotcom Sdn Bhd and REDtone-CNX Broadband Sdn Bhd.

Eight companies have licences to use WiMAX-related equipment while four firms won the permit to use the 2.5GHz and 3.5GHz airwaves.

It is disappointing to note that some licence holder do not have a single customer. Even Time.com who was given the 3G licence had not operated and had now sold the 3G spectrum to DiGi, who was not granted the licence. So you can see that those who merit the licence are not given and DiGi had to pay some $600 million to acquire the 3G spectrum from Time.com. That's how money is made without lifting a hand to invest. All you need is political patronage and thereafter, sell the rights to someone who deserved by merit but was discriminated.

On another concern is the fact that if licence can be issued and taken back at will by the authority, how could investors be confident on investing here?

Let's take another issue... Minister in the Prime Minister's Department Nazri Aziz said "There will be no bumiputra recruitment quota for multinational corporations (MNCs)." Nazri said "this was because the country would lose its competitiveness if the Government should impose such a policy."

Now if we are to consider the statement from Keng Yaik, shouldn't investors and MNCs be fearful of the ability of the authority who may at a later date decides otherwise?

This is a similar dilemma Singaporeans are facing when considering to invest in Iskandar Development Region (SJER).

At the present moment, the State Government wanted investments in SJER and are luring the Singaporeans.

The Mentri Besar is offering olive branches to potential investors and were even prepared to forego the 30% Bumi equity. But Singaporean government had a bad experience when their investments by Temasek Holding in Pantai Hospital were questioned by none other than Khairy Jamaluddin at the UMNO General Assembly two years ago and ultimately caused Khazanah to acquire the stakes from Temasek who had to exit to mitigate the political risks. That's why till today, no Singaporean firms had yet to take up the opportunities in SJER even though there are so much exceptions promised by the State government.

The Arabs too had learned a lesson or two such as that of Port Klang Free Zone (PKFZ). Jebel Ali Free Zone (Jafza), a Dubai-based Free Zone operator had to withdraw their management concession for PKFZ because of bureaucracy, interference by politicians and others with vested interests, deliberate incorrect minuting of meetings and even attempts at tax evasion by the Malaysian negotiators. The separation was acrimonious.

Noel Gulliver, Jafza's man, who was PKFZ general manager was forced out from his office and taken to the Immigration Department. Graham Lovett, Gulf Managing Partner of Clifford Chance in an e-mail to Chuck Heath, Jafza International senior vice-president (international operations) expressed his distrust of the Malaysian negotiators. Graham Lovett expressed his grave concern that "... Jafza did not and does not want to be a party to any tax problems with the Malaysian government ... Lovett expressed his concerns that "...they are not acting in good faith." In a letter to Transport Minister Datuk Seri Chan Kong Choy, Heath said red tape had hampered the progress of the free trade zone as among others, Jafza had to deal with 27 government departments involved in the client approval process. Heath wrote: "There has been a total lack of government planning ... He added that there is a lack of transparency... "Unfortunately," Heath added, "without radical surgery in cutting out the above obstacles, we feel this project is doomed to failure.“ Jafza officials had also met the PM to express the anomalies and shortcomings in PKFZ.

The whole mess in PKFZ is testimony as to why foreign investors shy away from Malaysia. We add the case of Pantai Hospital and WiMAX, and many others, the list will be voluminous.