The Health January/February 2023 | Page 19

JANUARY-FEBRUARY , 2023 | THE HEALTH

OVERPRICED APP ?

PAC chairman Wong Kah Woh reportedly said that the Finance Ministry set a ceiling price worth a whopping RM196 million to procure MySejahtera over two years .

How was this figure reached ? What was the valuation process to justify this hefty price tag ?

One way for MySJ / Entomo to recoup their investment and prevent further losses is to create more modules that they could charge the government , or sell everything at a premium . Even if the combined losses of MySJ and Entomo Malaysia are worth RM94 million and it ’ s their interest to sell everything at cost-plus , the value of a company and its assets isn ’ t determined by the total losses incurred .

As explained in the EMIR Research article “ MySejahtera : Investigating Costing FairPlay ” dated May 19 , 2022 , according to court documents , MySJ shareholders have agreed to a minimum of 30 per cent profit margin at all times .

Referring to the meeting minutes provided as supporting documents in the court documents , this could be related to the fee that MySJ charges the government and the fee that Entomo Malaysia charges MySJ .

Therefore , however absurd MySJ ’ s costs may be ( which appears to be mostly due to its financial obligations to Entomo ), they would have to be repaid through fees paid by the government , i . e ., taxpayer ’ s money .

Whatever the amount ends up being , comparisons with other countries and expert opinions point to it being highly overpriced .

EMIR Research has reported previously that Singapore ’ s SafeEntry digital check-in system and TraceTogether app and tokens were reportedly developed and acquired at S $ 13.8 million ( roughly RM45 million ).

That is assuming acquisition costs are accounted for , which would have profit margins built in . Even then , RM45 million is still far from RM196 million . This wouldn ’ t be the case if it was truly a “ free ” CSR deal , or minimal cost if the app was developed in-house .

For some indications of KPISoft ’ s actual costs , according to reports , KPISoft incurred over RM47.8 million throughout its “ CSR commitment ” from April to November 2020 .

Even that could be questionable . Expert opinion reported in technology ecosystem news portal Digital News Asia ( DNA ) pointed to a cost of not more than US $ 238,000 ( RM1 million ) to develop the first three modules of MySejahtera , after studying its features .

A press statement released on March 29 , 2022 , by a Malaysian software developer offered to not only replicate MySejahtera but also improve it , for about RM6 million . EMIR Research ’ s sources indicate the total development cost could be around RM8-12 million .

A Malaysian-born technocrat in New Zealand reportedly developed New Zealand ’ s initial contact tracing app design proposal within two weeks , and the inventor charged no royalties for it . Is there a high-value novelty in the MySejahtera app that only KPISoft / Entomo could deliver ?

If the government is paying well above market price despite this information , is it because there is something that either Entomo and / or MySJ is holding , owning , or having knowledge of that gives them stronger negotiating power against the government ?

MOVING FORWARD Evidently , we are left with more questions than answers .

Unlike geopolitical and / or economic repercussions potentially associated with cancelling the East Coast Rail Link ( ECRL ) project , it could be that in the case of MySejahtera , it is the associated applications , rights or data that are “ being held as ransom ”.

Whatever it may be , the government appears to be held at gunpoint and finds total acquisition as the only option . While these questions remain unanswered , the expansion of new modules to bring back relevance to the app should be stopped until the necessary investigations are satisfactorily completed and presented to the public .

As suggested before , if the Malaysian government already owns the data ( as it claims ) and if there are ways to securely migrate ( and integrate ) all data to a new app , then the government should change the platform , relieving the government from its perpetual dependency on MySJ / Entomo , or from the need to make a costly procurement .

As for the new platform / app , the government should then proceed with an open tender .

If there are contractual penalties that we are not aware of , then the investigation becomes ever more important as contracts that breach the law is null and void and illegal conducts can invalidate the deal altogether , relinquishing the government from penalties .

In line with Prime Minister Datuk Seri Anwar Ibrahim ’ s brand of administration that is reformed , the MySejahtera debacle must be investigated fully and thoroughly , detailed and transparent explanations provided by the authorities on all the questions raised , better deals are formulated and those in the wrong are held accountable . – The Health

Dr Rais Hussin and Ameen Kamal are part of the research team of EMIR Research , an independent think tank focused on strategic policy recommendations based on rigorous research .

THE direct and obscure appointment of KPISoft / Entomo in a contract-less CSR deal with only a non-disclosure agreement ( NDA ) to govern data ownership ( which we know nothing about or if it is still legally enforced ) is the catalytic domino piece that led to subsequent commercial , technical , and legal “ traps ”.

Without a contractual obligation , nothing stopped Entomo Malaysia from entering a commercial agreement with MySJ during the supposed CSR period .

Nevertheless , one might wonder what is the purpose of the NDA then . Was the NDA breached when KPISoft / Entomo was dealing with MySJ ?

According to Sunway University economics professor Dr Yeah Kim Leng and as reported in a local daily on Dec 1 , 2022 , urgency and security reasons are some of the reasons that could make the open tender process infeasible .

No doubt the government could use the Covid-19 pandemic to justify urgency , but that doesn ’ t explain the lack of contracts or the opting for a CSR deal .

FOR some historical context , KPISoft , now known as Entomo Malaysia ( Entomo ) was the directly-appointed app developer , in what was initially understood as a Corporate Social Responsibility ( CSR ) deal with the government .

However , during the supposed CSR period , Entomo reportedly entered into a lucrative commercial agreement ( OEM licence agreement ) with MySJ , making MySJ the effective ‘ owner ’ of the app .

This is likely why the government directly-appointed MySJ as the app manageroperator . They may not have a choice .

The rights transferred to MySJ from Entomo include the non-transferable and nonsublicensable licence to use KPISoft software ( owned by Entomo ) to exclusively develop , test and support the app and own the app ’ s trademark .

Entomo ’ s deal with MySJ ensures there was no need or use for open tenders , as no one else can legally operate MySejahtera other than MySJ . Thus , the government was “ trapped ” into dealing with MySJ .

GOVERNANCE CONCERNS

Most curiously , both MySJ and Entomo Malaysia share the same registered address and similar business address at Q Sentral — the same building but on different floors . Although Entomo Malaysia ’ s directors are

It is unthinkable that there were security reasons behind the direct appointment either . The need for data security and privacy calls for a clearly-defined and legallyenforceable agreement .

JUSTICE MUST BE SERVED

This is why EMIR Research dubbed the entire scandal a “ CSR Trap ”, and the absurdity of the case points to either incompetence or collusion . See “ Confusion ” On MySejahtera : Incompetence Or Collusion ?” dated April 25 , 2022 , for details .

Someone ( or a group of people ) overlooked ( deliberately or accidentally ) simple governance and due-diligence procedures , or they were “ conned ” with a bad deal . If there are other explanations for how the government ended up with the MySejahtera debacle , then it ’ s time the new administration lets the cat different from MySJ , Entomo Malaysia ’ s single shareholder , Entomo Pte Ltd in Singapore , appears to share a common director with MySJ .

Needless to say , questionable insulation issues bring up governance concerns , as MySJ and Entomo may not be completely independent of each other .

For example , an individual named Raveenderen Ramamoothie is a director in MySJ and Entomo Pte Ltd . Note that Raveenderen is also one of the founders of KPISoft , which is now known as Entomo Malaysia .

As the sole shareholder , Entomo Pte Ltd has a controlling stake in Entomo Malaysia . It is reasonable for investigators to speculate if this is a typical characteristic of a proxy company .

The potential conflict of interest could be preventing MySJ from getting the best deal from Entomo , which could explain why MySJ ’ s biggest cash flow dent comes from its owing to Entomo .

Analogically , at worst , this could be akin to the left and right hand dealing with each other , and the person who owns both hands is “ laughing to the bank ” as someone else ( the government ) is paying for what could be “ orchestrated ” transactions . See the EMIR Research article “ Intense acrobatics surrounding MySejahtera deals ” dated March 30 , 2022 , for more information .

out of the bag .

The issues raised warrant further probing and EMIR Research did recommend that an independent commission be formed for the investigation .

Was there any investigation on the companies and individuals involved ? What actions can be taken regarding the breached governance process ? What are the considerations of the Public Accounts Committee ( PAC ) to make its recommendation ?

Taking over the app in its entirety is an obvious and convenient solution to the ownership issue , but we cannot sweep massive things like this under the rug . Justice would not be served as the exorbitant cost will be paid using public funds , and there are no recommendations to hold those involved accountable .

Someone must pay for this mess ; it shouldn ’ t be the Malaysian people .