IT is hard to imagine how the 7,000-acre Cyberjaya would have looked like some 16 years ago. Tan Sri Mustapha Kamal Abu Bakar, chairman of the master developer Setia Haruman Sdn Bhd, recalls seeing the former oil palm plantation for the first time and thinking to himself how the tract, on which a model intelligent city was conceptualised for the world to see, would turn out.
Driving around Cyberjaya, we see numerous buildings under construction and newly completed ones waiting to be occupied. Houses and apartments are also mushrooming in the area, thanks to growing rental demand from students, especially those attending higher learning institutions in Cyberjaya such as Limkokwing University of Creative Technology, Kirkby International College, Cyberjaya University College of Medical Sciences and Multimedia University.
There is also demand for housing from professionals working with the many multinational corporations located here, for example Dell Global Centre, IBM, HSBC, DHL and Prudential. The Bank Negara Data Centre and the Road Transport Department Data Centre are here as well.
Of the 7,000 acres, about 3,300 acres have been reserved for public amenities and greenery. About 1,087 acres of the rest have been developed while 1,258 acres are in the planning/under construction stage. The remaining 1,300 acres — of which 500 have been designated for enterprises, 360 for residences, 34 for institutions and 104 for commercial projects — are estimated to have a development value of RM4.36 billion in 2016, Mustapha Kamal tells City & Country.
"Seeing is believing. Today, there are more than 60 MNCs, government and private data centres, contact centres, shared services and R&D centres and other facilities in Cyberjaya. We have more than 600 business entities with more than 30,000 knowledge workers here. Come 2016, most of the projects in Cyberjaya will be completed," he says.
However, Setia Haruman knows only too well that it is not just hardware — buildings and infrastructure — that contributes to the success of Cyberjaya. "We are not going to sell to just any company. We want to do business with people who understand what we are doing, who understand the value system involved and our purpose. We want high-impact companies," says Mustapha Kamal.
Shortage of knowledge workers
There is an immediate problem that needs to be solved for Cyberjaya to move forward — a shortage of skilled/knowledge workers to meet the needs of high-impact companies.
"We need more skilled workers as there is a mismatch between demand and supply in the industry. There is no room for failure if we are to move forward. I could easily sell the remaining 1,300 acres, but I have decided to do this [ensure Cyberjaya continues to attract high-impact companies whose demand for skilled workers is met]," explains Mustapha Kamal.
In 2004, Setia Haruman decided to tap Cyberjaya's full potential as a preferred destination for ICT companies. The 2005 to 2011 period saw the "second wave" of Cyberjaya's transformation after study tours to cities such as Dubai and Bangalore emphasised the need for a new approach. Dubai's infrastructure is said to be far superior to that of Bangalore, yet the latter is the preferred destination for ICT companies outside the US.
Mustapha Kamal says this is because India has a large pool of intellectual capital at a reasonable cost as it churns out close to three million graduates a year, about 16% of whom are focused on science and technology. Not surprisingly, big ICT companies such as Infosys Ltd, Hewlett-Packard, Mahindra Satyam and Tata Consultancy Services Ltd and world-class biotechnology companies like Biocon Ltd are present in Bangalore.
"So you see, there is no mismatch between the graduates and what the industry needs in Bangalore. But there is one in Malaysia due to numerous factors. Some companies want to leave Malaysia because there are not enough skilled workers here. We need to churn out graduates who meet the needs of these companies. If we can do that and there is sustainable growth in Cyberjaya, it can be a catalyst for the whole country.
"So, what makes Bangalore a preferred destination outside the US? Bangalore has two parts — the Indian Bangalore and the ICT Bangalore. Campus development with accommodation and offices complete with putting green [ICT Bangalore] is built away from the havoc and bad traffic [of Indian Bangalore]. Our study tour was a blessing in disguise as I could visualise the problems we could face in the future.
"Now I have 1,300 acres for future development in Cyberjaya for which we are targeting high-impact ICT companies with high-value jobs. The infrastructure is ready and we have solved all the teething problems of a new township."
Mustapha Kamal believes now is the time to move to the next level. He wants to be prepared for 2016 — when most of the developments in Cyberjaya are completed — and beyond. "It would be the tipping point for Cyberjaya," he says. Hence, the urgent need to increase the number of knowledge workers in Malaysia.
The rapid growth in outsourcing to India is due to the availability of educated and skilled workers in the country. "We need to have our own skilled workers, otherwise we cannot compete with India and we will continue to expect foreign skilled workers to come here. So there are two things — bring in foreign direct investment or high-impact companies while widening our own talent pool.
"We are capable of doing that. If we can have the two together, our vision of Cyberjaya will be fulfilled," explains Mustapha Kamal.
He says Cyberjaya is well positioned in Asia. It is just 20 minutes from the Kuala Lumpur International Airport and 20 minutes from the Kuala Lumpur city centre via the Maju Expressway. In terms of connectivity and technology infrastructure, Cyberjaya's is better than, for example, Bangalore's. There is also the advantage of English, Malay, Tamil and Mandarin-speaking workers.
Aside from that, says Mustapha Kamal, Cyberjaya is blessed with ample land dedicated to ICT, which similar hubs in India, Singapore and the Philippines lack. "We have the convenience of expanding close to existing buildings on the remaining 1,300 acres. In some other countries, expansion is possible only 3km to 10km away. Cyberjaya is also uncrowded in terms of population, which means more knowledge workers can settle here."
For now, Setia Haruman and the other stakeholders of Cyberjaya are focusing on attracting more people to live and work here by looking into soft infrastructure such as public amenities and transport.
Mustapha Kamal stresses that they are also looking to build the pool of knowledge workers in Cyberjaya by attracting universities, colleges and institutions to set up shop here as well as improving the mix of target jobs.
In short, Setia Haruman is promoting Cyberjaya not only as an international preferred destination for ICT companies but also as an ideal place for Malaysians to live, work, study and play.
"We have invested a total of RM3 billion in repositioning Cyberjaya [including infrastructure and buildings] but come 2016, it will all be paid for. So, now is the time to produce graduates to be gainfully employed by these ICT companies.
"We conducted surveys among the industries to see what kind of skills [mid to long term] are needed today so that we can let the universities know," explains Mustapha Kamal, citing the Talent Supply-Demand Study 2010-2013 carried out by Multimedia Development Corp. The studies were carried out in five different fields and the finding is that demand for IT graduates will exceed supply by 79% this year, he says, adding that this is a huge mismatch.
"The ICT industry faces a big threat from new emerging markets such as Vietnam and Cambodia. For example, Vietnam has made it a national policy to produce one million software engineers. Its aim is to churn out 40,000 graduates a year. Malaysia only produces 8,000 graduates a year," he says.
According to Mustapha Kamal, colleges can produce graduates who are trained knowledge workers that can compete in the global ICT sector through MSC Malaysia's Knowledge Workers Development Institute.
Currently, there are 18,000 students in three international-status universities and two colleges in Cyberjaya as well as 3,000 in ELC International, Sri Puteri and Cyberjaya's secondary and primary schools. Of the 18,000, 40% are foreigners. Two more universities — Islamic University of Malaysia and University Malaysia of Computer Science & Engineering — will open their doors to students this year.
"I believe that if the objective is good, you will be rewarded. It is time to give back. I took a gamble and was rewarded with much more. So, I feel it is time to give back to nation building," remarks Mustapha Kamal.
In the beginning
Work on Cyberjaya started in May 1997 with four developers under Setia Haruman Sdn Bhd (EMKAY Group, UEM Group, Landmarks Group and Country Heights Group) given the responsibility to develop the 7,000-acre tract into an intelligent city with world-class standards and facilities on a fast-track basis. Their first task was to complete the 100-room Cyberview Lodge Resort within 100 days in time to host the Asia-Pacific Economic Leaders retreat in November 1998.
In 2004, EMKAY Group bought over the shareholding of Country Heights Group and Landmarks Group. Today, EMKAY Group owns 75% of Setia Haruman while UEM Group holds the rest.
"The government appointed four developers then so we could develop Cyberjaya fast as we were competing with Singapore. If it had given the job to only one developer, it would have been developed in phases. The four developers were handpicked to simultaneously develop Cyberjaya. It was a green field — an oil palm plantation. No one believed there was going to be a Cyberjaya," Setia Haruman chairman Tan Sri Mustapha Kamal Abu Bakar says.
As the master developer, Setia Haruman is responsible for planning and construction and has the exclusive rights to develop and sell parcels to developers and investors.
The other stakeholders are Cyberview Sdn Bhd, a government-linked company and landowner of Cyberjaya; Multimedia Development Corp to promote MSC Malaysia and be the one-stop agency for MSC-status companies; and the Sepang Town Council. Setia Haruman has a development agreement with Cyberview.
The original business model was for foreign ICT companies to buy large parcels of land complete with infrastructure. However, due to the 1997/98 Asian financial crisis, the dotcom crash in 2000 and the Sept 11 terrorist attacks in the US in 2001, many ICT companies deferred their investments, preferring to rent than buy.
One of the challenges faced was the development matrix: shops and restaurants will not open unless people are there, people will not relocate unless restaurants are open and offices will not open unless people and restaurants are there. Very much a chicken-and-egg situation, remarks Mustapha Kamal. There was also the transport problem. New townships generally are inaccessible by public transport until and after there are people living there and people will not relocate if there is no public transport. Perception was yet another challenge as new townships are deemed dull and boring and, therefore, entertainment and public amenities suffer the "people-first shops-after" dilemma.
EMKAY Group built office spaces to attract tenants to MKN Embassy Techzone (NLA of 1.1 million sq ft) and launched retail shops called Neo Cyber. Dedicated transport services were provided for workers and students at a packaged price round the clock.
The population grew to 50,000 between 2005 and 2011 from 20,000 in 2004. By 2011, accumulative total investment (infrastructure and buildings only) stood at almost RM13 billion with about 11 million sq ft of completed offices, 263 shops, 3,200 residences, five universities/colleges and four schools.
Property prices in Cyberjaya have grown steadily over the years. For example, bungalow land in Perdana Lakeview East is now going for RM145 psf on the secondary market compared with RM74 three to four years ago. Ground floor retail lots in Neo Cyber priced at RM433,000 in 2008 are currently valued at RM1 million while terraced homes in Summer Glades, Perdana Lakeview West, that were priced at RM740,000 three to four years ago have asking prices of RM1.1 million.
This story first appeared in The Edge weekly edition of Mar18-24, 2013.