Mahathir's High Tech Folly

It looks like just another road in the Malaysian hinterland, flanked by the sleepy palm-oil plantations that have operated here for decades. Yet heavy trucks and powerful earthmovers rumble along it daily, shaking the ground as they go. They are heading for huge construction sites nearby, giant clearings where the scarred red earth bears the tracks of heavy vehicles. Here men are digging enormous trenches, preparing hundreds of kilometers of fiber-optic cables. Others are building new roads, new buildings--sleek structures that stand in sharp contrast to the traditional Malay villages they displaced.

This is one of the most ambitious state-run projects ever conceived in Asia. And despite the ravages of the region's economic crisis, construction goes on. It's Malaysia's Multimedia Super Corridor (MSC), the brainchild of Prime Minister Mahathir Mohamad. Mahathir set out to build--from scratch--Asia's version of Silicon Valley, a huge zone stretching 750 square kilometers, an area slightly larger than Singapore (map). The project, started in the mid-1990s, was to cost $20 billion and take two decades to finish. It promised fiber-optic networks, research facilities, tax breaks, and new "cyberlaws" to any multinational setting up shop. Malaysia would provide the best incubator on the planet for high-tech businesses and create an environment in which a native high-tech industry could take root and boost the country into the ranks of developed nations by 2020.