The government appears to have a gun to its head with the application and data of MySejahtera held as ransom. It is likely that upon this consideration (amongst other things) that the Parliament’s Public Accounts Committee (PAC) recommended a government takeover of the app as the solution.
Although officials from the Health Ministry agree with the PAC’s recommendation, are we supposed to just accept this moving forward and ignore how the legacy issues came to be?
Let it be reminded that the apparent “Corporate social responsibility (CSR) Trap”—which could be due to negligence, oversight, or even intentional—was clearly breaching governance protocols and procurement processes, potentially impacting hundreds of millions of public funds and could have put personal data of millions of app users at risk.
Yet, will no one be held responsible? Just take over the app using people’s money at an exorbitant price, and everyone sings Kumbaya?
Seems a little too convenient, if not negligent of Malaysian authorities if the people involved in putting the government in this mess get away even without being investigated.
The PAC remarked that KPISoft Malaysia Sdn Bhd (original developers of the app and now known as Entomo Malaysia) was appointed to develop the MySejahtera through incorrect procurement standards and procedures.
Given that the non-disclosure agreement (NDA) was reportedly signed between the National Security Council and KPISoft, the signatories of the NDA must be called the explain themselves to the PAC.
However, this could face significant challenges due to the powerful provisions The National Security Council Act 2016 confers upon the council and its members.
For example, Clause 37 states that members of the Council or committee or any person attending any meeting of the Council or committee are obligated to secrecy.
The most troublesome appears to be Clause 38 which states the following:
“No action, suit, prosecution, or any other proceeding shall lie or be brought, instituted, or maintained in any court against the Council, any committee, any member of the Council or committee, the Director of Operations, or any member of the Security Forces or personnel of other Government Entities in respect of any act, neglect or default done or omitted by it or him in good faith, in such capacity.”
In other words, they are immune, even if it’s an act of neglect or default.
This is a clear loophole for governance as any dealings with the NSC is protected, allowing the bypassing of correct procedures.
However, the protection against suits and legal proceedings does not extend to KPISoft/Entomo. Whoever is the signatory for KPISoft should be investigated. It is likely that he or she will know a thing or two, and would likely have a deep-enough connection to be able to reach an audience at the NSC level.
Follow this trail, and more people are likely to be exposed.
As EMIR Research suggested before, an independent commission should be established to investigate individuals from Entomo Malaysia/KPISoft and MySJ Sdn Bhd (the private company appointed to manage and operate the app).
The PAC recommended that the Malaysian Administrative Modernisation and Management Planning Unit (Mampu) take over MySejahtera on behalf of the Malaysian government.
Why wasn’t this considered in the first place? After all, Mampu manages many other apps for the government.
The answer goes back to the “CSR Trap”, where KPISoft/Entomo reportedly entered a commercial arrangement with MySJ on October 6, 2020 (while the CSR deal was still in effect!) and had given MySJ exclusive and perpetual licence through a licensing agreement.
KPISoft/Entomo may get away as reports indicate that there were no agreements signed stating the rules and commitments within the CSR period, aside from the NDA.
This effectively makes MySJ as the “owners” of the app and the government has no choice but to deal with them.
The government “scammed” with an overpriced app
The PAC’s chairman Wong Kah Woh reportedly said that a ceiling price worth RM196 million has been set by the finance ministry to procure MySejahtera over two years, and reiterated that the amount is exorbitant and is anathema to the concept of CSR.
The sum was approved by the Cabinet in November last year.
Health Minister Khairy Jamaluddin noted that the RM196 million ceiling was below the RM300 million that both Entomo Malaysia and MySJ were seeking for.
For context, Entomo reportedly sealed an exorbitant deal worth RM338.6 million with MySJ making MySJ the effective “owner” of the app. So, any deals to sell off the app in its entirety to the government would have to be within this range or more—unless MySJ can renegotiate its terms with Entomo or accept making a loss.
Not only did Entomo enter a commercial agreement with MySJ during the supposed CSR period, but both companies also appear to share the same business address, with high-profile and potentially politically linked individuals as directors in MySJ. There are also questionable and mysterious business figures, as reported by various sources.
With the potentially over-priced buyout of MySejahtera, these are the people that could directly benefit from the takeover.
Previously, Khairy was reported to have said the following: “I can tell you for a fact that the amount that we are negotiating with MySJ is much, much lower than RM300 million. Far lower than RM300 million.”
EMIR Research assumed (for discussion’s sake) that if the figure ends up being between RM80 to 100 million, we opined that this would still mean the government is paying about 10 times the actual development cost if we use the RM8 to 10 million development cost assumption.
At RM196 million, this is a far cry from “far lower” and is now around 20 times the assumed actual development cost.
Of course, the government would downplay this and try to convince the people that this is a good deal. Unlikely anyone would admit that they got conned, what more admitting involvement.
Now, if MySJ gets the deal for the assumed RM196 million, this is already around two-thirds of MySJ’s cost of RM338.6 million.
Other revenue streams for MySJ to recover its investments would likely include various public health expansion plans in MySejahtera, which could be on top of the said RM196 million.
Either way, the point is that Entomo (and potentially MySJ) are the only ones making big money.
The people are the true losers, as the government overspends people’s money, enriching the few, while concerns regarding personal data protection remain.
As noted by leading Malaysian health portal CodeBlue, the ceiling price to purchase the relatively simple app is more that the health ministry’s annual cancer budget.
The PAC’s role is to hold the government accountable for its use of public funds and resources.
Recommending the government to take over MySejahtera is one thing, but the PAC must ensure those involved in getting the government into this trouble are held accountable, as its role should be.
Neither incompetence nor collusion is acceptable, so, heads must roll.
Full ownership of MySejatera remains a question
As reported by CodeBlue on October 4, the health minister said a contract will soon be signed by the parties involved to ensure that the entire MySejahtera app, including its data, is owned by the government.
In other words, before this contract is signed by all parties, does this mean that the app and the data are not yet fully owned by the government?
Let us be reminded of the previously conflicting statements dated March 27, 2022, where the Health Ministry asserts that the Government owns MySejahtera.
Also, Khairy previously revealed that the “ownership of all data and information obtained through the use of the MySejahtera application rests entirely with the government” as this clause was part of the terms and conditions in the said NDA.
Later on, Health Minister Khairy Jamaluddin also reportedly pointed out that the negotiations with MySJ would not continue should MySJ disagree that the government owns the app.
What choice does the government have if they still want MySejahtera? MySJ effectively owns it.
Khairy was also reported saying that “The most important recommendation is that the government must have full ownership of the app which is what has already been done, especially with the contract to be signed.”
As EMIR Research mentioned in “MySejahtera-related ownerships split in three ways” dated April 8, 2022, the app appears to effectively be “owned” by MySJ and collects data that is supposedly owned by the government (but unclear if it has always been having exclusive access to it), running on software developed and owned by KPISoft/Entomo.
Firstly, of course, given that the problem is that the government doesn’t own everything, the obvious recommendation is to own everything. This is akin to saying “if the problem is that you don’t have it, then you should have it”.
It is obvious, and frankly, not helpful.
What was said to be “the most important recommendation” is also a convenient one where justice is not served in terms of price and there are no recommendations to hold those involved accountable.
Secondly, the statement “..which is what has already been done” is in direct conflict with the statement “the contract to be signed”.
If it has not yet been signed, then it has yet to be done. If all parties have not signed this said contract, then the government has yet to own all components related to MySejahtera.
That said, the issues of total ownership and therefore, by extension, complete and exclusive access to data, have long sailed. Whether they sign it now, or a few months later may not make that much of a difference in this aspect.
Thus, the priority now is ensuring that people get a fair price.
As Budget 2023 is being tabled and the prospect of the 15th General Elections looms over the horizon, the government, particularly the finance ministry, might take some time before disbursing the amount.
Given that MySJ might be in a tight spot financially (according to court documents), they might be more desperate for cash flows from the government. Thus, not rushing the deal may shift the negotiations in the government’s favour, allowing them to pressure MySJ with lower purchasing price.
MySejahtera is the most downloaded app in Malaysia which could be why the government is hesitant to do away with the app, despite the historical baggage. If they are insistent on this, then they should be serious in at least two action items: get a much smaller purchasing price and hold those involved accountable.
If we can’t get these two items, then truly the accountability mechanism in Malaysia has failed yet again.
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.