The EPF PC scheme: A step forward?

The Employees Provident Fund (EPF) PC scheme is touted as a convenient and hassle-free way for consumers to pick up a brand new computer, using their EPF withdrawal capabilities. The entry of Pos Malaysia, the government noted, can help deliver PCs to the remotest corners of Malaysia and in effect be a useful tool to spread Information Communication Technology (ICT) among the population. Currently, the country's Internet penetration rate is at about six percent. With Pos Malaysia having a presence in every small town in the country, a delivery mechanism and infrastructure already exist, which the government hopes could be modified into parcelling out PCs to customers. It sounds good on paper except for the glaring fact that Pos Malaysia do not have any experience in the PC business.

Then it got a little more convoluted. Pos Malaysia in turn, appointed OdaSaja Sdn Bhd as its sole agent who in turn started reaching out to PC vendors in the country urging them to jump onto the bandwagon of selling an approved range of branded PCs to EPF contributors, with a commission promised for each unit sold. The government has also appointed BSN as another distributing agent in the PC scheme. To an observer, the big picture is now being cluttered with non-IT entities wanting to get involved in this business with proposals already in the air about adding on transaction and commision fees on top of the PC price. OdaSaja wants a 7.5 percent commission to process orders while BSN has suggested a RM100 fee.

As of Oct 31, some 214,000 EPF contributors had applied to withdraw their contributions to buy PCs since the scheme was introduced in April. And out of this number, over 140,000 applications involving RM453 million were approved, assuming the average cost of a PC is RM3,000. And if all the 214,000 applications were approved, then EPF will fork out RM642 million to pay for the computers, with the above players gaining significant revenue from this enterprise. These non-IT entities, it is obvious, aim to siphon away business from PC vendors who don't sell the approved PC brands. The companies participating in the EPF scheme are Compaq, IBM, Hewlett-Packard, Acer, Gateway, Dell, Apple, I-Berhad, Mimos Smart Computing and Sapura IT Distribution.

Already, there is an uproar among PC vendors over the appointment of Pos Malaysia and BSN as "middle-men" in the EPF scheme. The Malaysian Computer Jointventure Association (MCJA) claims PC dealers have gotten a bad deal since Pos Malaysia got involved in the sale of PCs. Of interest is the claim by the association that dealers in the outskirts have lost up to 40 percent in sales profits while those in the urban areas have lost about 20 percent since the introduction of the PC scheme. It is estimated that there are about 5,000 PC dealers in the country.

If these claims are true, then the clone PC market in Malaysia is in for a rough ride. International Data Corporation analyst Yvonne Yong says, based on current statistics, the local home PC market is evenly divided between branded and clones. What the PC scheme will do, if successful, is essentially drive many PC retailers (many of them who deal in a variety of clone PCs) out of business. It is a convenient way for PC giants like Compaq, IBM, Gateway and the remaining eight companies participating in the EPC scheme to grab a bigger slice of the home PC market. Vendors either join up as resellers of these brands or be driven out of business. This seems to be the message. With discontent arising among PC retailers about why non-IT firms can now interfere in the PC market, the situation has not blown over yet.

One of the major grouses one hears about this scheme, which by itself, is an excellent way to reach out to Malaysians who may not have the means to fork out RM3,000 upfront for a computer, is why Pos Malaysia is wedged into the whole mechanism. Ask observers what they think of it, and most would give a shrug of the shoulders, perhaps a knowing smile and say "This is Malaysia". The suspicions are there that this could be one way government-controlled companies could get a slice of the PC sales revenue. Why such suspicions? Answer -- there was no discussions with relevant IT organisations like PIKOM before the appointments of Pos Malaysia and BSN were made.

Based on what a prominent software engineer-turned-entrepreneur told Malaysia.CNET.com recently, the political, social and cultural environment in the country is still mired in a top-down approach, an attitude which unfortunately has spilled into one sector (ICT) Malaysia hopes to excel in the 21st century. Pasarborong Online director Dr Nik Rushdi Nik Hassan who was one of the pioneers of the Multimedia Super Corridor, and even wrote some of the Prime Minister's inaugural announcements concerning the MSC in 1994, says the prevailing notion among bureaucrats is that some sort of control is seen as desirable, even in the IT sector. Perhaps this mindset has encroached upon the entire EPF PC scheme. We hope that there is a better ending to this scheme than the earlier one that BSN and Jaring initiated.