Setting Up A Telecommunication Company Will Be Another Wasteful Project

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Press Statement By Chong Chieng Jen:

Abang Jo’s proposal for Sarawak Government to own and operate a tele-communication company will be another white elephant project wasting hundreds of millions of the State Government fund.

There are now 4 telco companies in Malaysia, competing for the business amongst 32 million Malaysian population, namely Maxis, Digi, Telekom and Celcom. For Sarawak Government to join the fray will be most unproductive and inefficient of the public fund.

The main justification provided by Abang Jo to set up the State Government-owned telco company is to provide internet services to the rural area.

That is the most unwise reason because:

  1. The setting up of the telco company will take another 2 years to be in operation. During such time, the rural people will still be deprived of internet services.
  2. The State-owned telco company will still be relying heavily on Government subsidy to provide internet services for the rural area.
  3. 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 economy of scale of the other 4 players in the country. This will translate into higher costs to the State-owned telco company and will not serve the purpose of reducing internet costs for the people of Sarawak unless the government throw in more subsidy and grant.

Therefore, the DAP Sarawak proposes, the most effective solution to resolve the lack of internet service to the rural area is thus:

  1. Identify the specific areas in the rural area which the government is minded to provide internet services to the people thereat;
  2. Call for tender from the 4 telco companies for the setting up of internet services in these identified specific areas. The State Government can then provide the grant and subsidy to the one which provides the most costs effective offer.

By doing so, the rural area will be enjoying their internet services within weeks or months, and not wait for years for the State Government to set up the company and further delay in waiting for the company to run its operation.

More importantly, the costs of subsidizing a selected existing telco company to provide internet service to the rural area will be a fraction of the costs of setting up a telco company and thereafter subsidizing the telco company 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 for milk. That will take a long time and much more costly.

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 area, unless the State Government has some other hidden agenda.

Therefore, I call on the State Government not to throw good money into bad investments. Furthermore, in this internet age, the rural people cannot afford to wait for another few years without the internet services.

Chong Chieng Jen
DAP Sarawak Chairman