State’s plan to own telco company another white elephant project

Chong Chieng Jen – Picture from SarawakVoice

By John Isaac

THE proposal by Chief Minister Datuk Patinggi Abang Johari Abang Openg for the Sarawak Government to own and operate a telecommunications company will be another white elephant project, wasting hundreds of millions of state funds.

Sarawak DAP chairman, Chong Chieng Jen said there were now four telco companies in Malaysia, competing for business among 32 million Malaysians – namely – Maxis, Digi, Telekom and Celcom.

“For the Sarawak Government to join the fray will be most unproductive and inefficient.

“The justification provided by Abang Jo to set up the State Government-owned telco company was to provide internet services to the rural areas. That is the most unwise reason,” said Chong.

For one, he said the setting up of the telco company will take at least another two years and during that time, the rural people will still be deprived of internet services.

Also, the State-owned telco company will still rely heavily on Government subsidies to provide internet services for the rural areas.

“Due to the small population of Sarawak of merely 3.2 million compared to the whole population of Malaysia which is 32 million, the State-owned telco will not enjoy the economics of scale.

“This will translate into higher cost to the State-owned telco company and will not serve the purpose of reducing internet costs for the people of Sarawak unless the government throws in more subsidies and grants,” he said.

Therefore, he said the most effective solution to resolve the lack of internet service to the rural areas is firstly to identify specific areas which require internet services.

“Next, call for tenders from the four telco companies for the setting up of internet services in these identified specific areas.

“The State Government can then provide the grants and subsidies to the one which provides the most cost effective offer.

“By doing so, the rural areas will enjoy internet services within weeks or months, and not wait for years for the State Government to set up the company and wait for it to operate,” he said.

More importantly, Chong stressed the cost of subsidising a selected existing telco company to provide internet service to the rural area will be a fraction of the cost to set up a telco company and subsidise it to provide internet service to the rural people.

This is the same analogy to the scenario where, if you want to drink milk, just compare the prices of milk sold at different grocery shops and buy it off the shelf.

It does not make economic sense to buy a calf, wait for the calf to grow and then milk the cow. That will take a long time and would be much more costly, he said.

It also does not make economic sense for the State Government to throw in hundreds of millions and even billions to own and operate a telco company, just for the purpose of providing internet service to the rural areas, unless it has some other hidden agenda.

“Therefore, I call on the State Government not to throw good money into bad investments.

“Also, in this internet age, the rural people cannot afford to wait for another few years without internet services,” he added.