Privatization and Deregulation
Privatization and Deregulation of the following: Voice, Cable, Television, Radios, Cellular/PCS, Computer Hardware and Software and others.
The Malaysian telecommunication and was previously highly regulated but since the inception of the NEP plan in the 1970’s the GoM (Government of Malaysia) has since made a concerted effort to liberalize the telecommunications industry. With the privatization of the government telecommunications department in 1987 and the formation of the National Telecommunications Policy (NTP) in 1994 the market has been fully opened. The GoM’s Master Plan for the telecommunications industry provides guidelines for competition, interconnection charges, tariff rates, network development, etc. At the end of 1995, all operators signed interconnection agreements with Telekom Malaysia to provide seamless communication without regard to carrier yet most carriers have not signed agreements among themselves. Telekom Malaysian is Malaysia's largest telecommunications service provider.
The GoM’s issue of eight new licenses in 1995 raised concerns over whether the industry had become over-licensed and the Malaysian telecommunications industry is still in a turmoil as issues regarding over-licensing and overcrowding are debated. There was a proposal to rationalize the industry by reducing the current six full-service providers to three main operators however, the aim was to minimize duplication of resources and excess capacity, optimize network utilization and reduce the loss in foreign exchange due to expensive high-tech equipment. Failure to reach any agreement of rationalization among the operators, led the GOM in July of 1995, to reverse its decision and allow all six operators to continue to operate in the open market. Now that pressure to rationalize has been eliminated, there many predict that a development of strategic alliances between the operators will ensue. The sharing of infrastructure is already being done as companies realize that it is cheaper to lease an existing network than build their own. Most companies with networks have an over-capacity and are more than willing to lease their excess capacity.
The computer and software markets are fully deregulated though restrictions do exist on participation in government bids, equity restrictions on setting up manufacturing facilities. These barriers are relatively small and do not pose an insurmountable barrier but do encourage the establishment of joint ventures and local distributorships with Malay companies. 1
Market Competitiveness -High/Low Comparative Basis
Table of Market Competitiveness
| Area of Competition | Current Status of Competition |
| Domestic Leased Lines | Competition but Telekom Malaysia dominant |
| International Leased Lines | Competition but Telekom Malaysia dominant |
| Domestic VSAT | Monopoly |
| International VSAT | Fully competitive among Intelsat providers |
| Domestic Telephony | Competition but Telekom Malaysia dominant |
| ISDN/Switched Digital Services | Competition but Telekom Malaysia dominant |
| International Frame Relay | Competition and foreign firms in market |
| Mobile Data | Highly Competitive |
| Mobile Paging | Highly Competitive |
The decision to allow all six companies to operate in the open market should ultimately benefit consumers will be able to choose the best service at the lowest prices and help determine who will survive in the competitive market. The players in the industry are aware of the limited markets and therefore their need to identify marketing niches in the industry. As a result, strategic alliances will likely emerge - similar to a recent alliance between Time Telekom and Sapura
Some foreign companies have entered the telecommunications market and provided much needed capital /investment, management expertise and technology. With aid from these foreign parties, a few of the smaller companies have been able to make significant inroads into the industry. Analysts find it difficult to predict the future of these operators but one thing is certain - market forces will eventually determine which operators will survive in the long run.6
