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Malaysia Revokes Order Awarding 5G Internet Contracts

Noah Lee
Kuala Lumpur
2020-06-03
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A woman walks past the headquarters of telecommunications company Axiata in Kuala Lumpur, Oct. 1, 2019.
A woman walks past the headquarters of telecommunications company Axiata in Kuala Lumpur, Oct. 1, 2019.
Reuters

Malaysian officials on Wednesday revoked an order awarding contracts for the 5G telecommunications spectrum to five companies, including two linked to Chinese tech giant Huawei, a day after it came to light that the awards were made in mid-May through an order placed on a ministry website with no public announcement.

In a press statement cancelling the order, Communications Minister Saifuddin Abdullah cited a need for greater transparency in the process, although it was he who signed the May 15 document naming companies that would be permitted to implement the much anticipated technology, which is expected to make network connections considerably faster.

“Based on certain technical issues, provisions of the law and the need for a transparent process, I have ordered the chairperson of MCMC to cancel the Minister’s Order and Determination and to review the said instruments as soon as possible,” Saifuddin in a statement, referring to the Malaysian Communications and Multimedia Commission.

The ministry in May awarded contracts to Altel Communications Sdn Bhd, Celcom Axiata Berhad, Digi Telecommunication Sdn Bhd, Maxis Broadband Sdn Bhd, and Telekom Malaysia Berhad. Foreign equipment suppliers have sought to partner with the Malaysian telecom companies to participate in the roll-out.

Maxis had signed a deal with Huawei, the Chinese firm accused by Western officials of facilitating espionage for the government in Beijing. Last year, U.S. Secretary of State Mike Pompeo had cautioned the Philippines, among other countries, against deploying Huawei technology, especially in matters involving sensitive information.

In February 2019, Maxis and Huawei signed a memorandum of understanding to cooperate in 5G trials in Malaysia, the Reuters news service reported last October. At the time, the Chinese giant also had preliminary 5G deals in place with Celcom, according to Reuters.

5G is the next generation of wireless communication networks designed to provide better virtual connection compared to the previous generations, including higher speed and better reliability.

The communications ministry did not immediately respond Wednesday to a request from BenarNews for comment.

Process questioned

Gobind Singh Deo, who served as communications minister under the previous government led by then-Prime Minister Mahathir Mohamad, has urged the government to explain how the 5G contracts were awarded in May.

“We chose to adopt an approach with greater transparency and accountability in keeping with our agenda for reform and transparent governance,” he said in a statement posted on Facebook.

He said a tender for 5G was to have been issued by the MCMC in the first quarter of 2020.

“This open tender process was significant in that it would have identified the licensees with the best business plans and with the best track records for implementation,” he said. “Reasons must therefore be given for the need for a direct award, the criteria used to select the providers, the revenue to the government and the benefits that Malaysians can hope to achieve.”

During a speech to the 5G Malaysia International Conference in January, Gobind said that the 5G technology industry could add 12.7 billion ringgit (U.S. $2.98 billion) to the country’s gross domestic product between 2021 and 2025 and create more than 39,000 jobs, citing a study by the Malaysian Institute for Economic Research.

In February, Gobind had told journalists that the government would determine which companies could take part in its planned 5G rollout after U.S. officials had pressed for excluding Huawei from providing services.

Saifuddin succeeded Gobind as communications minister in March after Muhyiddin Yassin became prime minister following the collapse of Mahathir’s government.

Malaysia Corruption Watch (MCW), an NGO, lauded the announcement to cancel the order.

“Big projects, which concern security issues like telecommunications, should only be given to companies that have the expertise. MCW was not clear on what was the reason behind this cancellation, but it was the right decision,” MCW President Jais Abdul Karim told BenarNews.

Meanwhile, political analyst Sivamurugan Pandian of the University of Science, Malaysia, said the public wanted the process to be out in the open.

“A tender allows those who bid to compete with others and the best offer will be awarded,” he told BenarNews. “The public prefers transparency with full accountability and competency to reflect a good governance policy.

“The minister’s immediate action to cancel allows some room to address the issue in a more-proper manner,” he said.

Hadi Azmi and Nisha David in Kuala Lumpur contributed to this report.

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