vii
TABLE OF CONTENT
CHAPTER
TITLE
PAGE
DECLARATION THESIS
1
DEDICATION
ii
ACKNOWLEDGMENT
iii
ABSTRACT
iv
ABSTRAK
v
TABLE OF CONTENT
vii
LIST OF TABLE
xiv
LIST OF FIGURE
xvi
LIST OF ABBREVIATIONS
xviii
LIST OF APPENDIX
xxii
INTRODUCTION
1
1.1
Prologue-Basic Parameters
1
1.2
ICT and the Global Village
2
1.3
Background of Study
4
1.4
Aim and Objectives of Study
6
1.5
Research Hypothesis
8
1.6
Research Questions
8
1.7
Scope of Study
9
1.8
Research Methodology
10
viii
2
1.9
Epilogue-Significance of Study
12
1.10
Organization of Thesis
13
DECENTRALIZATION OF TECHNOLOGY REGIONS,
GROWTH AND CHANGE AND ITS IMPLICATION
ON THE NATIONAL ECONOMY
15
2.1
Introduction
15
2.2
Evolution of ICT -The Brunt Towards Urban
Area and CBD
16
2.3
Centralization to Decentralization.
19
2.4
Spatial Impacts of ICT on Urban Land Use
21
2.5
ICT and Office Development
24
2.5.1 Location Trend for Front and Back Offices 26
2.6
2.5.2 Back Office Development
29
2.5.3 Off-Shoring – Right Shoring
30
Influential Factors on Choice of Office Location
33
2.6.1 Rental Value and Operating Cost
33
2.6.2 Labor Skill and Labor Cost
35
2.6.3 Physical Requirement
37
2.6.4 Competitive Conditions for an Office Firm 38
2.7
2.6.5 Connectivity
38
2.6.6 Low Telecommunication Rates
39
2.6.7 Low Taxes
40
ICT and Cyber City in the Information Age
42
2.7.1 Planning Aspects of a Cyber City
44
2.7.2 Infrastructure and Network Society
46
2.7.3 Effects on the Contemporary Office Space 47
2.8
Role of Technology in a City’s and Regional
Economy
47
ix
2.9
3
Conclusion
51
MULTIMEDIA SUPER CORRIDOR IN MALAYSIAN
PROSPECT
55
3.1
Introduction
55
3.2
ICT in Malaysia
56
3.3
Knowledge Based Economy
57
3.3.1 The Concept of Knowledge-Based Economy58
3.3.2 Characteristics of a Knowledge-Based
Economy
3.4
3.5
3.6
60
Development of ICT in Malaysia
62
3.4.1 National IT Agenda
62
3.4.2 Developing Labor Force
63
Globalizing of Kuala Lumpur Metropolitan
Area (KLMA)
65
3.5.1 Change in Land use Pattern
66
3.5.2 Development of Cyber Cities in Malaysia
67
Multimedia Super Corridor (MSC)
67
3.6.1 Development of Multimedia Super
Corridor
70
3.6.2 MSC Policies and Incentive
70
3.6.2.1 Bill of Guarantees
72
3.6.2.2 Multimedia Development
Corporation (MDC)
73
3.6.2.3 Financial Incentives
73
3.6.2.4 Non-Financial Incentives
76
3.6.3 MSC Flagship Applications
80
3.6.4 MSC Flagship Application’s Development 81
3.7
Shared Services Development
81
3.7.1 Out Sourcing
82
x
3.7.1.1 Research and Development
3.8
in MSC
83
IT Shared Service and Contact Centers
84
3.8.1 Developed Infrastructure for Shared
and Services
84
3.8.1.1 Facilities Offered in MSC
86
3.8.1.2 Multiple Communication Service
Providers
88
3.8.1.3 Internet Infrastructure and
Optic Fiber Backbone
3.8.1.4 IP Transit Services
88
90
3.8.2 MSC Performance Guarantee
90
3.8.2.1 Telecommunications
90
3.8.2.2 Power
91
3.8.2.3 Chilled Water
91
3.8.2.4 Competitive Cost of Doing
Business
92
3.8.2.5 Office Accommodation and
Land Lease
3.9
3.10
92
3.8.2.6 Payroll
93
3.8.2.7 Telecommunication Tariffs
95
An Overview of MSC and Its Progress
97
3.9.1 Companies Outlook
97
3.9.2 Employment Outlook
99
3.9.3 Technology Focus
100
3.9.4 Financial Outlook
101
3.9.5 Intellectual Property Outlook
104
Conclusion
105
xi
4
EVALUATION OF FACTORS LEADING TO OFFICE
DECENTRALIZATION TO MULTIMEDIA SUPER
CORRIDOR
106
4.1
Introduction
107
4.2
Research Design
4.3
Scope of Data Collection and Analysis
108
4.4
The Survey
110
4.4.1 The Population
111
4.4.2 The Study Area
112
4.4.3 The Questionnaire
113
4.4.4 The Sample Design
116
`
109
4.4.5 Survey Method and Problems Encountered 118
4.5
4.6
5
Analysis Technique
119
4.5.1 Process of Analysis
120
Conclusion
121
THE CHARACTERISTICS OF FIRMS, FACTORS
THAT INFLUENCE OFFICE LOCATION DECISION
AND COMPANY’S RESPONSE TOWARDS MSC
POLICIES
122
5.1
Introduction
122
5.2.1 Basic Characteristics of firms
123
5.2.1.1 Ownership of Firms
125
5.2.1.2 Firm’s nature and Share of business 126
5.2.1.3 Size of firms
130
5.2.1.4 Duration of Current and
Previous Location of Firms
5.2.2
133
Office Division, Location and
Mode of Communication
136
xii
5.3
Ownership of Office Premises
140
5.4
Mode of communication
142
5.5
Use of teleworking and arrangement with
employees
5.6
144
Evaluation of incentives offered by MSC
as location decision
148
5.7
Conclusion
154
6
FACTORS LEADING TO DECENTRALIZATION OF
OFFICE FIRMS
155
6.1
Introduction
155
6.2
Setting up of variables
156
6.3
Factors influencing decision to relocate in the
MSC area
6.4
156
Analysis of Response towards the Bill of
Guarantees
156
6.4.1 MSC Status and Ownership of Companies
158
6.4.2 Location Time period and MSC status
159
6.4.3 Private and Public Listed companies and
location Choice
160
6.4.4 The Location choice of Finance, Insurance
and Real-estate Sectors
161
6.5
The Hypothesis of Study
162
6.6
Method for testing Hypothesis
163
6.7
Factors that drive Firms to Relocate
164
6.7.1 Factors Driving Companies to MSC Area
164
6.7.2 Factors Identified as Driver of Shift by
Respondents
165
6.8
Testing of Hypothesis
168
6.9
Conclusion.
176
xiii
7
CONCLUSION AND RECOMMENDATION
178
7.1
Introduction
178
7.2
Information And Communication Technologies
and Office Decentralization
179
7.3
The Focus of the Study
180
7.4
Major Findings of the Study
181
7.5
Additional Measures to Encourage Offices to
Decentralize towards MSC
7.6
183
The Implication of the Study Findings to Urban
Decentralization Policy
7.6.1
184
The Implementation of Decentralization
Policy
185
7.7
The Contribution of study to Urban Planning
186
7.8
Recommendation for Future Studies
187
7.9
Conclusion
188
REFERENCES
189
Appendices A – B
201
xiv
LIST OF TABLE
TABLE NO
TITLE
PAGE
2.1
Global Economic Cycles
23
2.2
Transition to an Information Society
27
2.3
Top 15 Developing Countries Ranked by Sum of Outbound
and Inbound Foreign Direct Investment as a Percentage of
GDP (1997-2001)
3.1
41
Growth Competitiveness and Network Readiness Index
Rankings 2003-2004
85
3.2
Cyber Cities within the MSC
86
3.3
Asia Pacific Market Sector Summary: 4th Quarter 2002
93
3.4
Loaded Cost per Person
94
3.5
Benchmark Figures of Salary for Technical Staff Employed
by MSC Status Companies
95
5.1
Owner Ship of the Firms; according to sectors
124
5.2
Private and Public Listed companies
124
5.3
Ownership of Firms
126
5.4
Nature of Business
127
5.5
Firm Size in Terms of Employees
130
5.6
Firm Size in Terms of Equity Participation
131
5.7
Time located in this area
133
5.8
Previous Location of Company
134
5.9
Division of Office
137
5.10
Back Office Separate
139
5.11
Premises Rented and Ownership (Front-Office)
140
xv
5.12
Premises Rented and Ownership (Back-Office)
141
5.13
Mode of Communication Front and Back Office
143
5.14
Use of Teleworking in a Company
145
5.15
No of Employees
146
5.16
Days of Teleworking
147
5.17
Mode of Communication with Teleworkers
147
5.18
World Class Physical and Information Infrastructure
148
5.19
Unrestricted Employment of Foreign Workers
149
5.20
Freedom of Ownership
149
5.21
Global Sourcing of Funds
150
5.22
Tax Exemption
151
5.23
Intellectual Property Protection & Cyberlaws
151
5.24
No Censorship of Internet
152
5.25
Globally Competitive Telecom Tariffs
153
5.26
MSC Infrastructure tenders for MSC Companies
153
5.27
One-stop Super Shop MDC
154
6.1
Summary of Response of Companies to Bill of Guarantees
157
6.2
Driver to Move Office from Existing Location
166
6.3
Driver to Move Back-office from Existing Location
167
6.4
Ranks
170
6.5
Provide a world-class physical and information infrastructure
171
6.6
Allow unrestricted employment of local and foreign knowledge
workers
6.7
Ensure freedom of ownership by exempting companies with MSC
status from local ownership requirements
6.8
172
Give the freedom to source capital globally for MSC infrastructure
and the right to borrow funds globally
6.9
172
173
Provide competitive financial incentives; include Pioneer Status
(100% Tax Exemption) for up to ten years or an Investment Tax
Allowance for up to five years, and no duties on the importation of
multimedia equipment.
6.10
6.11
173
Become a regional leader in intellectual property protection and
cyberlaws.
174
Ensure no censorship of the internet.
174
xvi
6.12
Provide globally competitive telecommunication tariffs.
6.13
Tender key MSC infrastructure contracts to leading companies
willing to use the MSC as their regional hub.
6.14
6.15
175
175
Provide a high-powered agency to act as an effective
one-stop super shop.
176
Summary of Mann-Whitney U test
177
xvii
LIST OF FIGURES
FIGURES NO
TITLE
PAGE
2.1
Technology Transitions and the Changing Space Economy
28
3.1
MSC- Cyber cities Area
71
3.2
Malaysia’s International IP Backbone Connectivity
89
3.3
Malaysia’s International Bandwidth Capacity
89
3.4
Office Rental Rates in other competitive areas
93
3.5
Telecommunications Rates for 2 Mbps
96
3.6
Telecommunications Rates for 34 Mbps
96
3.7
Current Operational Status
98
3.8
Paid-up Capital
98
3.9
Employment Outlook
99
3.10
Employment of Foreign Knowledge Workers
100
3.11
Technology Focus
101
3.12
Sales by Companies
102
3.13
Expenditures of Companies
102
3.14
Research and Development Expenditures
103
3.15
Profitable Companies
104
3.16
Intellectual Property Outlook
104
4.1
Research Method Flowchart
108
4.2
The Study Area
115
5.1
Cross Tabulation on Market Share and Nature of Companies
128
5.2
Cross Tabulation on Ownership and Market Share of Companies
129
5.3
Cross Tabulation of Firm Size in Terms of Employees
and Ownership
131
5.4
Cross Tabulation on Firm Size and Market Share
132
5.5
Cross Tabulation on Previous Location and Firm Size
134
5.6
Cross Tabulation on Previous Location and Ownership
135
5.7
Cross Tabulation on Previous Location and Nature of Business
136
xviii
5.8
Cross Tabulation on Office Division and Firm Size
137
5.9
Cross Tabulation on Office Division and Ownership
138
5.10
Cross Tabulation on Office Division and Nature of Business
139
5.11
Cross Tabulation of Land Lease and Ownership
141
5.12
Cross Tabulation of Land Lease and Firm’s Size
142
5.13
Cross Tabulation of Land Lease and Nature of Business
142
5.14
Cross Tabulation of Communication Mode and Ownership
144
5.15
Cross Tabulation of Ownership and Use of Teleworking
145
5.16
Cross Tabulation of Business Nature and Use of Teleworking
146
6.1
Response of Foreign and Local Companies to MSC’s Bill of
Guarantees
6.2
Response of Companies to MSC’s Bill of Guarantees by Time of
Inception
6.3
159
Response of Public Listed and Private Companies to MSC’s
Bill of Guarantees
6.4
158
160
Response of Sector wise Companies to MSC’s Bill of Guarantees 162
xviii
LIST OF ABBREVIATION
ATM
-
Asynchronous Transfer Mode
APCN
-
Asia Pacific Cable Network
APCN2
-
Asia Pacific Cable Network 2
BOG
-
Bill of Guarantee
BPO
-
Business Process Outsourcing
ADSL
-
A Symmetric Digital Subscriber Line
CBD
-
Central Business District
CCC
-
City Command & Control Centre
CCTV
-
Close Circuit Television
EDI
-
Electronic Data Interchange
E-commerce
-
Electronic Commerce
E-community
-
Electronic Community
E-economy
-
Electronic Economy
FDI
-
Foreign Direct Investment
FLAG
-
Fiber Loop Across Globe
GDP
-
Growth Domestic Product
GLC
-
Government Link Company
FIRE
-
Finance Investment and Real estate
HRD
-
Human Regional Development
IBMS
-
Integrated Business Management System
ICT
-
Information and Communication Technologies
IP
-
Internet Protocol
IPP
-
Intellectual Property Protection
ITO
-
Information Technology Outsourcing
IDN
-
Integrated Digital Network
INTA
-
International Association for Urban Development
ISDN
-
Integrated Service Digital Networks
IT
-
Information Technology
xix
ITA
-
Investment Tax Allowance
JV
-
Joint Venture
K-economy
-
Knowledge Economy
KLCC
-
Kuala Lumpur City Centre
KLIA
-
Kuala Lumpur International Airport
KLMA
-
Kuala Lumpur Metropolitan Area
KLSE
-
Kuala Lumpur Stock Exchange
LAN
-
Local Area Network
MDC
-
Multimedia Development Corporation
MESDAQ
-
Malaysian Exchange For Securities Dealing and
Automatic Quotation
MGS
-
Multimedia Super Corridor Grant Scheme
MTDC
-
Multimedia Technical Development Corporation
MMU
-
Multimedia University
MNCs
-
Multi National Corporations
MSC
-
Multimedia Super Corridor
MSCVC
-
Multimedia Super Corridor Venture Capital
MW
-
Mega Watt
NASSCOM
-
National Associate of Software and Services Company
NITA
-
National Information Technology Agenda
NITC
-
National Information Technology Council
PABX
-
Private Automatic Branch Exchange
PMSB
-
Pendinginan Megajana Sdn.Bhd
Psf
-
Per square foot
R&D
-
Research & Development
RM
-
Ringgit Malaysia
RT
-
Refrigerant Ton
SAFE
-
South Africa Far East
SCADA
-
Supervisory Control of Data Acquisition
SDH
-
Synchronous Digital Hierarchy
SMEs
-
Small and Medium Enterprises
SMW3
-
South East Asia, Middle East, Western Europe~
3 Submarine Cable Network
STILL
-
Strategic Trusts Implementation Committee
xx
S&T
-
Science & Technology
TNB
-
Tenaga National Berhad
TM
-
Telekom Malaysia
UPM
-
Universiti Putra Malaysia
U.S.A
-
United Stated of America
USD$
-
United States Dollar
U.K
-
United Kingdom
VoIP
-
Voice over Internet Protocol
VSAT
-
Very Small Aperture Terminal
WAP
-
Wireless Application Protocol
xxii
LIST OF APPENDICES
APPENDIX
A
B
TITLE
PAGE
Questionnaire of Profile Survey- information of
company and respondent
201
List of companies surveyed
205