How Cyberjaya became Malaysia’s ‘failed Silicon Valley’

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Hi readers,

We all know what Silicon Valley is and where it’s located: It’s the global high tech and innovation hub in Northern California.

A proper history or study of that place is beyond today’s note. But naturally, its success certainly inspired other countries including Malaysia to follow suit.

We have two so-called Silicon Valleys. The first is the notorious “failed” one located in Cyberjaya, a city near the capital Kuala Lumpur. The second is Penang, a state known as the “Silicon Valley of the East.”

Between the two, Penang more closely resembles Silicon Valley because Malaysia’s second-richest state is home to a robust tech manufacturing sector and a growing startup community. That said, progress has been slow and that place has its fair share of problems.

Cyberjaya, on the other hand, was supposed to eclipse Penang. This was part of former Prime Minister Mahathir Mohamad’s grand idea of having a “multimedia super corridor” (MSC).

Mahathir had a penchant for ambitious projects. Cyberjaya was one of them, and it has attracted some big names over the years. But the city is host to a mishmash of regional headquarters, research and development hubs, and call centers. Innovation, too, never quite took off.

In Malaysia, two things usually stand out: ego and lack of policy smarts. In the case of the former, a new prime minister will usually have his own version or idea of what his predecessor started.

This was the case for Bangsar South, which is the brainchild of Mahathir’s successor, Najib Razak. There’s also no innovation in Bangsar South, just SaaS companies that have made it their headquarters and call center hub.

As for the lack of policy smarts, let’s go back to Cyberjaya. When Mahathir was in power, his government granted multinational tech companies MSC status to entice them to set up shop in the city.

This came with a few important incentives, including 10 years’ tax exemption. But funnily enough, a company didn’t need to be based in Cyberjaya to be deemed an MSC. So what was the point then? In fact, the MSC status is still around and has been renamed as “Malaysia Digital.”

Another thing is that government agencies now do not need to be solely based in Cyberjaya. They have satellite offices in Bangsar South – the more connected “hub” to Kuala Lumpur.

So what’s in it for Cyberjaya, you might ask. Who knows, really? But until someone can really crack the whip, it will keep making headlines for being Malaysia’s “failed Silicon Valley”.

— Emmanuel Samarathisa, journalist at Tech in Asia

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