Matching grants to help telecommunication industry scale up

BUDGET 2020 shows that the government is steadfast in its effort to not miss out on the global digital bandwagon.

One encouraging proposal is the plan to provide matching grants for digitisation efforts and building up the necessary infrastructure.

This will help companies and entrepreneurs scale up and allow the required telecoms infrastructure to be built, which is central to the success of digitalisation.

That is why some weeks ago the National Fiberalisation and Connectivity Plan (NFCP) was launched and this will see telecoms connectivity reaching 98% of populated areas.

About half of the Rm21.6bil for NFCP will be funded via the Universal Service Provision fund and rest by the players.

There are several other matching grants that we announced for SMES, manufacturing plants, and to pilot projects on digital applications.

“The matching grant concept is seen as an effective way to fund projects, mostly small ones. This is a good way as those companies that put in money will work hard to see that the projects deliver returns. This is as opposed to the government dishing out contracts where there is usually no guarantee on project delivery,” says an expert.

The matching grant will help the telecoms players in infrastructure rollout and those to benefit include Telekom Malaysia Bhd, Maxis Bhd, Axiata Group Bhd, Digi.com Bhd, Time dotcom Bhd. Often these players are not willing to move beyond major cities for fear of no economic gains.

“We fully support this (matching grant concept) as it allows faster rollout to meet the NFCP targets,’’ says Telekom Malaysia Bhd managing director/group CEO Datuk Noor Kamarul Anual Nuruddin.

Maxis Bhd added that “an important pillar of the country’s digital economy is connectivity. The various digital related grants that have been announced in the Budget provide further impetus to fast track the adoption of various technologies and drive innovations.’’

Time dotcom Bhd CEO Afzal Abdul Rahim added that whilst it was a step in the right direction, the government has to make sure there is meaningful coordination of the incentives.

“It would also help if the private sector was roped in and held accountable in achieving national goals. We need to ensure that the objectives of demand side stimuli are achieved. The incentives should be thoughtfully disbursed. There should also be close monitoring along the way so we know we are hitting the objectives,” he said.

For the SMES, an expert said the purpose of the allocation has to be clearly spelt out so that there are no abuses.

“Does moving up the digital bandwagon mean just buying handphones or creating websites? It should move beyond that. We are talking about creating a digital economy and SMES are important components of this economy,’’ he says

Finance Minister Lim Guan Eng announced that the government through the MCMC would finance at least half of the required investment for the NFCP with corresponding investments by the private sector telecoms players via a matching grant mechanism.

He also announced an allocation of Rm25mil to set up a contestable matching grant to spur more pilot projects on digital applications such as drone delivery, autonomous vehicle, blockchain technology and other projects that leverage on our investments in fiber optics and 5G infrastructure.

The government will also provide a 50% matching grant of up to RM5,000 per SME company that to adopt digitalisation measures for their business operations. To automate business processes a sum of Rm550mil will be provided via smart automation matching grants to 1,000 manufacturing and service companies each to automate their business processes. The grant will be given on a matching basis up to Rm2bil per company.

It would also help if the private sector was roped in and held accountable in achieving national goals.

Afzal Abdul Rahim