THE GOVERNMENT’S RM15 BILLION SPV TO BUILD THE NATION’S 5G INFRASTRUCTURE SUSCEPTIBLE TO ABUSE AND CORRUPTION

 

MEDIA STATEMENT

THE GOVERNMENT’S RM15 BILLION SPV TO BUILD THE NATION’S 5G INFRASTRUCTURE SUSCEPTIBLE TO ABUSE AND CORRUPTION

28th FEBRUARY 2021

1. Recently, the government announced the MyDIGITAL initiative that seeks to achieve a slew of targets in 3 phases until 2030.

2. While we commend the government’s efforts to expedite 5G in order to strengthen the country digital economy and improve the competitive edge of local startups and relevant industries, there is great concern surrounding the RM15b plan to build a 5G infrastructure nationwide within 10 years and to deploy it through a government-owned special purpose vehicle (SPV) instead of through an open tender process. Furthermore, this entity will be allocated with 5G spectrums to own and manage all 5G-related infrastructure.

3. Not to mention, such high expenditure will only yield 4.6% increase of the digital economy’s contribution to the GDP which currently stands at 18% (RM270 billion) whereas the size of the global digital economy has already reached more than USD12 trillion according to some estimates.

4. The government’s plan to develop a 5G infrastructure amounting to RM15 Billion through a government owned Special Purpose Vehicle (SPV) without an open tender is worrying and has raised many concerns. The same SPV is then also given the responsibility to own, deploy and manage the 5G infrastructure.

5. Questions come to mind with regards to the SPV who will be solely responsible to deploy the nation’s 5G infrastructure – placing the nation at greater risk since 5G is an essential component of the economy as we usher the era of the Fourth Industrial Revolution.

6. Firstly, competition will naturally force companies to come up with the most innovative, cost-efficient, and intuitive products/services to gain consumer/market share, however, as the single provider and owner of 5G infrastructure, development of 5G services in Malaysia will depend solely and exclusively on the timeliness and competence of the SPV to deploy 5G infrastructure that is stable, comprehensive, high quality, and affordable.

7. Fitch Solutions in its recent statement also mentioned, “Elevated costs associated with a single-entity rollout would likely be passed on to operators in the form of higher wholesale costs; in turn, operators would find it difficult to extract higher margins from selling services to their customers. Lower profits would also mean less funds for operators to invest into service development, weakening the ability of the operators to differentiate themselves from their rivals”. The higher wholesale costs may also be passed on the consumers themselves.

8. Secondly, does the SPV have the expertise to manage the 5G infrastructure? Even as professional are appointed to run the SPV, what are the safeguards in place to ensure that the management will be free from political pressures?

9. As far as current trend dictates regarding key positions of government-linked companies, politicians will invariably occupy board seats of this SPV as a way to curry favor among Members of Parliament.

10. Thirdly, question also remains on whether regulatory oversight can truly be implemented by MCMC fairly taking into account the regulator will be overseeing a government-owned entity whose shareholder may be a sitting member of the cabinet, thus creating conflict of interest.

11. Fourth, there is also another matter of sustainability and efficiency in the long run. Over the years, we have seen the government spending billions of taxpayers’ money to cover bailouts of many government-linked companies owing to gross inefficiencies and failed leadership.

12. Recent history has shown how a government-owned entity like 1MDB was seriously misused to fulfil personal and political gain, how can this current government guarantee that this SPV will not become 1MDB 2.0 and become a vehicle to further the interest of the few?

13. Without an open tender process, the 5G infrastructure plan may be in tatters similar to the Bestari.Net project that was implemented by Tan Sri Muhyiddin Yassin when he was the Minister of Education.

14. Further clarity is needed on the SPV such as how the RM15b will be raised, governance structure, oversight committees, scope of SPV assets i.e., telecommunication towers, fiber etc., and wholesale pricing regime.

15. Furthermore, as the SPV’s responsibilities are of great interest to the public, there is a need for MCMC to conduct a public inquiry on this matter in tandem with Article 55 of the Communications and Multimedia Act 1998.

16. Unless further details are outlined to comfortably guarantee that this SPV will not be misused and become a conduit for personal gain as well as a public inquiry is conducted, PEJUANG urges the government to retract the intention to form an SPV and immediately call for an open tender to ensure our resources are managed efficiently for the wellbeing of rakyat and country, as well as to secure a better future.

    ARMIN BANIAZ PAHAMIN - CHIEF ECONOMIC BUREAU
    PARTI PEJUANG TANAHAIR