Sarawak telco won’t be white elephant, says academic

KUCHING: An economist says the Sarawak government’s move to set up its own telecommunications company will help bridge the digital divide in the state and spur economic growth.

Academy of Sciences Malaysia fellow Madeline Berma said it would also accelerate the development of digital infrastructure.

She said although setting up a telco involved high costs, it wouldn’t necessarily mean the project would be a white elephant.

Berma was responding to Sarawak DAP’s opposition to the move, describing it as a waste of money.

On Nov 20, Chief Minister Abang Johari Openg said the state government will set up its own telecommunications company within the next two years as private companies were reluctant to expand services in rural areas as it was not profitable.

“So the state government needs to establish its own company and provide incentives for its telco to meet the needs of rural areas and narrow the digital gap,” Madeline said.

However, economist Yeah Kim Leng of Sunway University said the state government should look into public-private partnerships instead of setting up a state-owned company.

He said that while private companies would tend to under-invest in areas that do not generate the desired returns on investment, setting up a company to help under-served populations might not be viable.

“Given the huge capital investment required and viability concerns, it would be less costly and more sustainable for the state government to subsidise the provision of services (by existing telcos) to the rural communities.

“A public-private partnership approach or a strategic alliance with existing companies would be more synergistic given the highly competitive and capital intensive nature of the telecommunications industry,” he said.

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