CONFIDENTIAL Report No.16 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT PROJECT PERFORMANCE AUDIT REPORT MALAYSIA FIRST TELECOMMUNICATIONS PROJECT (LOAN 560-MA) May 28, 1975 Operations Evaluation Department FILE COPY  PROJECT PERFORMANCE AUDIT REPORT MALAYSIA FIRST TELECOMMUNICATIONS PROJECT (LOAN 560-MA) TABLE OF CONTENTS Page No. Summary PROJECT PERFORMANCE AUDIT MEMORANDUM Introduction 1 The Project 1 Project Implementation 3 Impact of the Project 5 The Evolution of the Telecommunications Department (TDM) 7 The Bank's Role 9 Conclusions 10 Attachment: PROJECT COMPLETION REPORT 1. Basic Data 1 2. Project Description 1 3. Objective 2 4. Project-Achievement 2 5. Final List of Goods 3 6. Allocation of Loan Proteeds 3 7. Construction Schedule 3 8. Project Cost Estimates 3 9. Consultants' Performance 4 10. Organization and Management 4 11. Financial Summary and Results 4 12. Auditors 7 13. Other Points and Special Features 7 Annexes 1. Construction Schedule 2. List of Goods 3. Allocation of Loan Proceeds 4. Project Cost Estimates 5. Income Statements (Unaudited) 6. Balance Sheets (Unaudited) 7. Funds Flow Statements (Unaudited) Note: Currency Equivalent 1968-1971: US$ 1.00 = M$ 3.00 (average) 1972: US$ 1.00 = M$ 2.82 1973: US$ 1.00 = M$ 2.41  SUMMARY Loan 560-MA of September 1968 was intended to make a small con- tribution, US$ 4.4 million, to the costs of a US$ 49 million three-year (1968-70) expansion program of the Telecommunications Department of Malaysia (TDM),to be largely financed by internally generated cash and bilateral foreign loans. Although it had been nearly two years in pre- paration - partly because of the Bank's reluctance to accept Malaysia's refusal to make the-Department autonomous-- the project was ill-defined in the Bank's appraisal report and actual costs cannot be precisely isolated. Most of what was originally envisaged seems, however, to have been accomplished, without major unit cost overruns and along with some other works, by September 1973, when the loan was finally closed, nearly two years behind original schedule. The near doubling of project imple- mentation time was mainly due to inadequate initial time allowance (espe- cially for a program where the Bank was financing selected complementary items to those financed bilaterally) and TDM's initial slowness on pro- curement, as well as staff shortages and land acquisition problems. TDM's system grew much slower than expected in the early years and achieved only 8% average annual growth between 1968 and 1973 in main lines and telephones connected, but the new long-distance and interna- tional facilities, particularly crucial to the newly formed Federation of Malaysia, were completed with only about a year's delay from original schedule, long-distance service has greatly improved, and by 1973 the net annual increase of main lines reached nearly 15,000, so that the recorded waiting list as of the end of that year was not greatly in excess of one year's new supply. Although telecommunications service remained considerably worse in East Malaysia than in the peninsula, partly due to difficulties of transferring staff to the former, TDM did succeed in integrating East Malaysia into its system; the lower quality of service there is a main factor explaining postponement of the unified tariff structure which was expected to be introduced for both areas together. Despite great difficulties encountered in its introduction - mainly due to shortages and high turnover of accountants - the new commercial accounting system required, under the Loan Agreement, to be introduced by December 1972 could yet turn out to be the Bank's most useful contribution to TEM. The changeover required major staff re- orientation and there have been great delays in finalizing the books, but 1971 accounts were submitted to the Auditor-General in December 1974 and much of the rest of the backlog is expected to be overcome during 1975. Preliminary unaudited figures do indicate that TEM has earned each year more than the 8% on average net fixed assets required under the Loan Agreement, and reestimation of the incremental financial rate of return to the project assisted with Loan 560-MA yields a figure of 22%, compared with 17% projected at appraisal. Significant use of the new accounting system for management purposes has yet to be achieved, and the accounts do not yet present clearly flows to and from Government. - ii - Because of the difficulties with early operation of the new accounting system, audited accounts have not been provided to the Bank as required and, despite numerous discussions of the matter, TDM has been very slow to comply with Bank requirements for prior approval of documents regarding tenders in excess of US$ 50,000 and for progress reporting; the latter has continued to be a problem under the second project assisted with Bank Loan 753-MA of June 1971. Minimization of Bank financial involvement, as agreed with the Malaysian authorities in 1968, did serve to introduce TDX usefully to use of bilateral sources of foreign finance but it also limited the influence that the Bank had with the agency. Substantial manpower was devoted to the operation, but the Bank did not always set a good example, for instance with its imprecise appraisal report and overly complex initial reporting requirements. PROJECT PERFORMANCE AUDIT MEMORANDUM MALAYSIA FIRST TELECOMMUNICATIONS PROJECT (LOAN 560-MA) Introduction This memorandum presents the results of an audit of the project supported with Loan 560-MA to the Federation of Malaysia, which was signed in September 1968 and closed, fully disbursed, in September 1973. It is based on the project's Appraisal Report and the attached Completion Report (PCR) complemented and substantiated by reviewing Bank files, discussion with relevant Bank officials, and a brief mission to Malaysia. The Project Contacts leading to the request for a Bank loan to cover part of the foregin exchange requirements of Malaysia's 1968-70 telecommunications expansion program began early in 1966. A first appraisal mission visited Malaysia in April-May,1967. At that time, the Federation of Malaysia, com- posed of East Malaysia (Sabah and Sarawak) and West Malaysia (Malaya) had just been formed. East and West Malaysia are separated by approximately 500 miles of sea. A second mission reappraised the project in November- December,1967, mainly to include investments in the states of East Malaysia, not considered at the time of the first appraisal. The loan, for US$ 4.4 million equivalent, was signed on September 27, 1968. The borrower and guarantor was the Government of the Federation of Malaysia, and the beneficiary and executing institution was the Telecommuni- cations Department (TDM) of the Ministry of Works, Posts and Telecommunica- tions of Malaysia. The loan became effective on November 8, 1968. This was the first Bank loan for telecommunications in Malaysia. It has since been followed by a second operation (Loan 753-MA of June 1971). The project which the loan helped finance was the 1968-70) segment of the TDM's expansion program under the First Malaysia Plan (1966-70). The project consisted mainly in installation of approximately 40,000 lines of new automatic local telephone switching equipment in West Malaysia, Sabah and Sarawak, together with supporting cable and line plant and subscriber installations, long-distance links (mainly microwave) including connections between East and West Malaysia, and telegraph and telex equipment with new switching facilities (PCR, p.1). The project contained two institution-building objectives. One of them was explicit in the loan agreement and referred to the design and im- plementation of a system of commercial accounts for TDM as a means of providing it with appropriate management tools. The second was developed during project preparation and appraisal and was aimed at integrating East Malaysia fully into the operation and planning scope of TDM. - 2 - The original closing date of the loan was December 31, 1971. Two successive extensions postponed closing until September 30, 1973. The total cost of the project was initially estimated at US$ 49 million equivalent. The Bank pressed Malaysia to finance as much of the investments as possible from bilateral sources, with contracts awarded on the basis of international competitive bidding (as required by TDM procedures). Thus, although the second appraisal mission considered a Bank loan of US$ 12 million, by the time the final appraisal report was issued the total sum had been reduced to US$ 4.4 million (or 9% of total project cost) in view of the availability of additional bilateral financing. A major issue during project preparation and appraisal was the Bank's proposal that TDM should become an independent body run on a com- mercial basis. This proposal was not accepted by the Malaysian Government, because it felt that recent experience in the country in similarly reor- ganizing the electric power utility, also assisted by the Bank, had raised doubts as to whether an independent status was likely to bring better over- all performance, and because it thought TDM had enough problems for the time being in integrating the telecommunication systems and management of the various states into a single organization without having to change its basic structure as well. Bank pressure on this issue was strong, resulting in a breakdown of discussions early in 1967. Finally, the Bank agreed that for the time being it would be enough for TDM to design and implement, within a reasonable but pre-established period, a system of commercial accounts that would provide financial information appropriate to direct and assess the performance of the telecommunication system as a commercially- oriented public utility,,even if TDM remained a Government Department. The new accounting system involved an important change in emphasis from the traditional government budgetary control based on "cash" accountability, to a system that focuses on costs and areas of responsibility. This solu- tion was accepted by the Malaysians, the terms of reference of the studies to be undertaken were agreed upon, and the way was opened to successfully undertake and complete loan negotiations. TDM expected to include in the project a large and sophisticated HF radio station to provide improved international circuits independently of Singapore. The Bank argued that the radio station did not appear to be the best solution either economically or technically. Malaysia dropped it, but at a somewhat later stage proposed to include a satellite earth station. The Bank again opposed the initiative on the same grounds, but Malaysia, anxious to establish her own rubber market and to make Kuala Lumpur a finan- cial center went ahead with it with other financing. There were three main loan covenants. First, the Borrower should establish by December 31, 1972, an effective system of accounting and financial management in the TDM; to that end it would retain or obtain adequate advisory staff which, with the support of TDM's own personnel, would design and implement a commercial accounting system following the terms - 3 - of reference already agreed upon. Second, after this accounting system came into operation, the Borrower would adjust the telecommunications tariffs so as to obtain an annual rate of return of not less than 8% on the value of TDM's net fixed assets in operation. Third, after the new accounting system was in operation, the Bank would receive TDM's annual accounts audited by Malaysia's Auditor General or an independent accountant accepted by the Bank; these audited accounts would be pro- duced not later thanfivemonths after the close of TDM's financial year. The loan agreement also included TDM's obligation to submit to the Bank drafts of the invitations to bid, specifications and all other tender documents together with a description of the intended advertising procedure, in advance of all tenders for procurement of US$ 50,000 equiv- alent or more to be financed under the Bank loan. For contracts under US$ 50,000 equivalent it was required that TDM submit for Bank consider- ation only the bid analyses, recommendations of award and related infor- mation before awarding contracts or issuing letters of intent. Besides the general covenants on reporting obligations, the Bank issued specific directives for quarterly reporting which, after some modification to adapt them to TDM's existing recording practices, were agreed upon by all parties. Project Implementation The final costs of the project, excluding TDM installation costs, have reached US$ 59.8 million equivalent, which can be compared with the original estimate of US$ 38.7 million-1 (PCR, p.3); most of this difference represents an increase in ppject scope (especially in local cable plant) rather than in unit prices.- The final cost can be broken down as follows: local telephone switching and associated line and subscriber plant US$ 14.6 million (24%), long distance and international links and switching US$ 23.7 million (40%), telegraph and telex equipment including subscriber equipment US$ 1.4 million (2%), consultants US$ 0.2 million (0.3%) and cables and miscellaneous US$ 19.9 million (33%). No construction schedule was established at appraisal. Initial progress was slow, and by the time the project should have been completed (December 31, 1970) only one-fourth of the expected number of lines of local exchange equipment had been installed and less than 10% of the Bank's loan had been disbursed. Most of the Inore important long-distance links were 1/ US$ 49 million equivalent less US$ 10.33 million equivalent of transfers to capital of salaries and installation costs of the TDM. 2/ As the project was extended beyond 1970, it coincided with works of the Second Plan (1971-1975) and thus TDM had difficulty in separating costs into those properly belonging to the project and others involving the same types of works. The estimation of real cost overruns, if they were incurred, becomes an impossible task with the available data. completed with only about a year's delay and progress on the local systems speeded up later so that at the final closing date (September 30,1973) almost 90% of the expected new local exchange lines had been built and most of the other parts of the project were well advanced. Thus TDM did finally build roughly what it had originally intended, although delays made it necessary to carry part of the project from the First Plan (1966-70) forward to the Second Plan (1971-75). Several factors explain this large delay of almost three years, which practically doubled the project implementation time. First, TDM was slow in starting procurement, which can be partly accounted for by the fact that the major items of the project were financed by various bilateral agreements that had to be completed and that TDM was unfamiliar with the Bank. Second, substantial delays (some up to one year) were experienced in the acquisition of sites and in constructing buildings; construction was under the charge of the Ministry of Public Works, and coordination was sometimes difficult. Third,- TDM stated it was suffering from some shortages of engineers in functions where this caused further delays. Fourth, deliveries themselves fell behind schedule, due to problems in the suppliers' countries (e.g. the dock strikes in England), and difficulties with domestic suppliers which had started operations only in recent years. Fifth, TDM was slow in specifying some of the final pieces of equipment to be bought (e.g. the billing computer). Finally, the initial deadline was in itself too tight; Bank staff today recognize that 38 to 44 months is the minimum-time required from the time drafts for tenders are prepared until the installation of a major switching or transmission component is completed. The original closing date was set at just 38 months after the loan became effective, and it could well have been expected that procurement under the Bank loan would lag behind procurement based on several inter- dependent bilateral agreements. Thus, although a significant part of the delay remains TDK,'s re- sponsibility, probably a large proportion of it must be attributed to factors which lay beyond TDK's control. This was also the feeling of Bank supervi- sion missions, which thought that the successive extensions of the closing date were justified and that, after initial delays, TDM was doing increas- ingly well and deserved continuing support. Loan covenants were in general complied with, except on two sub- jects. First, TDM has never submitted quarterly reports which came close to the contents agreed with the Bank, in spite of special efforts made by the Bank to adapt its reporting requirements to TDM's possibilities, and of numerous reminders and discussions. Audited financial statements have only just begun to materialize and are so far available only for 1971 and 1972. The information available on the project's progress has been obtained directly by the Bank missions in situ. Second, TDM failed many times to submit in advance their terms and specifications for tenders involving more than US$ 50,000 as required by the loan agreement. TDM argued that the urgency for supplies had made it impossible to go through the whole proce- dure, expecting that the cost would be under US$ 50,000, or forgetting to sub- mit the documents on time. - 5 - As expected at appraisal time, TDM did obtain technical assistance to support the installation and commissioning of new equipment. Impact of the Project During project implementation, Malaysia's telecommunication system expanded at a moderate pace in terms of growth rates in Asia for the same period. The local telephone networks expanded from approximately 85,000 main connections in service at the end of 1967 to almost 137,000 at the end of 1973, a growth rate of 8% p.a.; whereas at appraisal it was expected that 40,000 new lines would be added to service in 1968-70 (or an average of some 13,000 lines p.a.), only 18,450 lines were added during the three-year period (an average of some 6,000 lines p.a.) and ,in the extended period 1968-73 total growth (including parts outside the project) was of some 51,000 new lines or roughly 8,500 p.a. average. The last two years (1972 and 1973) were the only ones in which the net in- crease of lines was near or abpve the average originally expected for the 1968-70 period (1972: 11,584 lines; 1973: 14,891 lines). The proportion of lines which were connected to automatic exchanges increased from 89% to 95%. The number of telephones (all stations) increased, in the same period, from 146,000 to 235,000, or 8% p.a. These figures include development under the project itself and part of the period of the Second Plan (1971-1975). In each year from 1968 to 1972 (with the exception of 1970), the number of net new lines added to the system was less than the number of waiting applications at the end of the preceding year. The waiting list increased at a rate of 12% p.a., almost doubling in 1968-73. Thus in asbolut numbers, increases in supply have tended to lag behind overt demand.! In relative terms, however, supply has remained at 87-90% of overt demand throughout the period; as net new lines increased by more than 12% in the last year of the project, the waiting list by the end of 1973 was equivalent to only one year's expansion, a significant improve- ment over the two years' equivalent expansion in 1968, and itself a rather good standard for a country at an early stage-of system development. So in relative terms the situation of overt unsatisfied demand has tended to improve. Probably there was a large hidden demand for new connections, which is only gradually emerging as the rate of installations increases. There is a high mobility of telephone subscribers as a result of new indus- trial and commercial centers throughout the country. This inhibition of unsatisfied demand to show up as new applications was clearly identified in the business sector by the appraisal mission for the second telecom- munication loan in 1970; it is also likely to be significant in the un- explored residential sector. 1/ Where "supply" is the total number of main lines in service and "overt demand" is main lines in service plus waiting list at the same date. - 6 - Thus, unless TDM can achieve in the next years a sustained growth well above the 1968-73 average, tariffs will have to be reviewed. This revision will also be necessary to integrate East and West Malaysia under a single tariff structure (which was expected at appraisal to be done during the project but not yet been introduced, in part because stand- ards of service are still lower in East than in West Malaysia)and to take account of the impact on the cost structure of the recent expansions in the system. There is no information available within the Bank on system growth separately in East and West Malaysia after 1971. The number of telephone lines in service in East Malaysia grew from 12,900 to 15,800 in 1968-71, or at 7% p.a. The number of telephones (all stations) in- creased in the same period from 20,400 to 27,300, or about 10% p.a. The waiting list increased from 2,200 to 4,500 (20% p.a.), and it amounted by the end of 1971 to the total net new supply of subscriber lines in the last four years, a substantial deterioration from the 1968 figure of some- what over two years. Supply amounted by the end of 1971 to 78% of overt demand, less than the figure at the start of the project (85%). Overall, these figures suggest that in East Malaysia supply tended to diverge from demand in relative as well as absolute terms, which is especially unfor- tunate since from the start this part of the country had substantially poorer overall telecommunication services than West Malaysia; the problem was apparently largely due to shortages of trained staff in the East, com- bined with difficulty in transferring staff there from the West. Also, there are no figures available on the amount of long dis- tance telephone traffic; Bank missions, however, have estimated the pro- portion of long distande calls which are dialed directly by the subscri- bers (STD) to have risen from approximately 55% in 1968 to roughly 90% in 1973. The trunk network was considerably improved under the project, both with respect to the circuits within West and East Malaysia and to the links between these two parts of the Federation. During the project period, the number of telex subscribers in- creased from 174 to approximately 380, or 17% p.a., not far below the appraisal forecast of 20% p.a. National telex calls increased at a rate of 31% p.a. (1968-71), and overseas telex paid minutes at 38% p.a. (1968-71), both figures well above the appraisal's forecast of 20% p.a. for total telex traffic. The number of domestic telegrams increased by 9% p.a. in 1968-71 and the number of overseas telegram words by 4.5% p.a.; this is approxi- mately a 7% growth p.a. in telegraphic traffic, close to the2 % forecasted at appraisal.1/ Overseas telephone calls increased 20% p.a.- Malaysia's density of almost 2.0 telephones (all stations) per hundred inhabitants at the end of 1972, is roughly comparable to that of Turkey, Syria, Ecuador and Peru and to the average for all Asia, is above the levels of India (0.3), Indonesia (0.2), Afghanistan (0.1), Thailand (0.6) 1/ Assuming 25 words per international telegram. 2/ No forecasts are given in the appraisal report. - 7 - and the Philippines (1), but still far below neighboring Singapore (10), Israel (20), Japan (32) Australia (34) or Sweden (60). The Evolution of the Telecommunications Department (TDM) The Government of Malaysia and the Bank were particularly .n- terested in the institutional improvement of TDM, and some of the most important matters discussed in relation to the project were of institutional nature. The TDM did integrate the East Malaysia telecommunications adminis- tration with that of West Malaysia, thus achieving one of the institution- building targets of the loan. The organizational structure (see Annex 8 to PCR) has been improved considerably with the help of a Swedish consulting firm (partly financed with the Bank loan) beyond what was required by loan agreements. Planning, maintenance and general administration have been streamlined and are likely to support more effectively the next stages of system development. Considerable experience has been gained in the use of bilateral sources of funds, a form of financing which had not been fully tapped earlier. The training facilities have become one of the best in developing countries. Legislation to permit operation on the basis of commercial accounting was passed in April 1971, and a new accounting system was designed by a team of Australian consultants (financed under the Colombo Plan) and implemented on schedule by December 1972, a commendable achievement in light of the difficulty of the change and of staff shortages. A revaluation of assets was also completed in 1972. Finally, American and Canadian advisers, financed by the Malaysian Government, assisted TDM in budgetary matters. At appraisal it was feared that parts of the long distance net- work would collapse due*to overloading and standards below international agreements, but TDM improved the critical segments substantially and no major disruption was experienced. TDM's labor productivity has been slowly improving. Total TDM staff per 1,000 telephones (all stations) dropped from 64 at the end of 1967 to 59 at the end of 1972. It is estimated that in 1973 about 3/4 of total staff was actually allocated to the telephone system; this would give a figure in the neighborhood of 44 telephone staff per 1,000 telephones, which is probably better than average forAsiabut still below European standards. At appraisal time it was estimated that total staff would in-, crease by 4% p.a.; in practice it has grown at almost 7% p.a. Thus, although overall system growth and service improvements have been below expectations, they have constituted a step in the right direction and were accompanied by structural and operational organizational changes which, if allowed time and adequate staffing to consolidate, are likely to be of lasting benefit to the agency. The implementation of the new accounting system, a particularly difficult task, has been an important achievement. However TDM's institutional development has been below expecta- tions on two matters. - 8 - First, TDM had serious staffing problems. So,e difficulties were noted at appraisal time, but the main trouble came from the severe shortage of senior staff required for the implementation of the new accounting system. In April 1973 (when the new accounting system was already designed and partly implemented) there were 10 positions.for class 1 accountants, of which barely 5 were filled; at a lower level the situa- tion was better: of 125 posts for class 2 accountants, 106 (85%) were filled. These difficulties originated mainly from the scarcity throughout the country of qualified accountants who were attracted by the substan- tially higher salaries in the private sector, lack of adequate training in the field, the requirement that all staff pass an examination in ad- vanced Malaysian language, and the trend to increase rapidly the propor- tion of Malaysian natives in Government posts. Another factor that ex- plains the difficulties in getting this kind of expertise is the fact that all accountants in the Malaysian Government belong to the staff of the General Accounting Office, which has the power to transfer them among agencies, a situation that has resulted in a high turnover of accountants. Thus the implementation stage of the commercial accounts has been effect- ively slowed down; for example, the accounts of 1971 were only closed in March 1974, and submitted to the Auditor-General in December, and those for subsequent years are expected to be submitted only during 1975. None- theless, the Bank feels staffing problems are now less severe and is-reason- ably confident that accounting will achieve continuity and meet deadlines appropriately. Second, the difficulties in having reliable financial informa- tion have been compounded by the arrangement whereby borrowings for tele- communications development (including Bank loans) are credited to the Government rather than to TDM and retained in the former's debt portfolio. TDM's financial requirements are separately and independently made avail- able to TDM as a single-line budgetary appropriation. Although this arrange- ment had been accepted by the Bank, it has the disadvantage that TDM's financial statements cannot show the complete financial situation of tele- communications. For instance, at appraisal it was expected that in 1968-71 TDM would generate a surplus and transfer M$ 13 million to the Government; in the final estimates for 1968-73, there is instead a net transfer of M$ 24.1 million from the Government to TDM, but this figure includes dis- bursements from the Bank's first loan and from bilateral sources, minus service on earlier debts incurred for telecommunications development. In this light, TDM seems to have been substantially self-financed during the period of project execution. The Bank has suggested to the Malaysian Government the need to credit all borrowings for telecommunications directly to the TDM. The Minister of Finance has the formal instruments to implement this measure. It is conceivable that the existing financial practices are a partial explanation of the very slow pace at which the Bank loan was disbursed. In spite of these limitations, the attached PCR attempts to assess the financial performance of TDM during project implementation based on provisional information and concludes that the financial results were - 9 - generally satisfactory. The rate of return on net fixed assets has been above 8% in each year, as required by one of the main loan covenants. The incremental financial rate of return to the project (taken as a minimum estimate of the economic return) was estimated at 17.2% at appraisal, based on the costs and revenues attributable to the project from 1968 to 1987. Provisional figures for the years 1968-72 have been used by the Bank to reach a likely actual figure of 22%. The Bank's Role The Bank's participation in this project has to be understood in terms of the circumstances under which the loan was negotiated, and the relative importance of Bank funds in the financing of the project. TDM did not really request a loan from the IBRD; rather, the total amount of Bank lending to Malaysia was determined through preliminary contacts between the Government and the Bank, and only then were projects selected among Government agencies in order to complete the required amount. Some of the projects chosen reflected the fact that the agencies had already prepared investment plans and projects that were suitable for international financing, as in the case of TDM. Thus, the Department had to follow the Government directives and accept a Bank loan. Also, Government and Bank request that bilateral sources had to be fully tapped before Bank funds could be used resulted in the loan financing only 9% of the initially estimated cost, and then just an assortment of small project components. Under these circumstances, it is not surprising that TDM could not under- stand why the Bank was interested in the totality of the investment program and expected to have an influence on the general institutional development of TDM. This problem is reflectedin the difficulties that arose with the Bank's reporting and procurement documentation requirements. The Bank's Projects Department at the time was left with the rather unhappy task of dealing with an agency that was a reluctant Borrower. By and large, the Bank understood that its leverage with TDM was small, and concentrated its intervention on the issues related to project implementa- tion and the setting up of the new accounting system. Since the Bank con- sidered that the investment was being carried out tolerably well and its guidelines for procurement were never violated as far as the relationships of TDM with the suppliers were concerned, it did not press TDM very bard to make good the failure in reporting on the project's progress and on procure- ment. However, initially established reporting requirements were too com- plicated, and TDM did not consider them useful for their own management. Nonetheless, once reporting forms agreeable to both parties had been developed, TDM still failed to report and this situation has continued in the second loan as well. One occasion in which the Bank did take a strong position was during project preparation, when it pressed very hard for TDM to become financially and administratively independent. This solution is today accepted by Bank staff as being generally desirable, but there is evidence that telecommuni- cation systems can also be run effectively as government departments. The high pressure exerted on the Malaysian Government on the issue of TDM - 10 - independence is currently recognized by the Bank as having been inappro- priate. At present it is only required that telecommunications be run on a basis which allows commercial management and an adequate assessment of performance. This is what, in the end, was required from TDM and in this audit the adoption of the latter view on sector organization is thought to be an important improvement. The difficulty in staffing accounting posts would not necessarily have been solved by running TDM as an independent body, as it resulted basically from the extreme shortage of qualified accountants throughout the country. The Bank also rightly rejected project components (HF radio sta- tion, satellite earth station) required to give TDM independence from Singapore in international communications but for which no technical or economic studies had been prepared. At appraisal time, the project description was too imprecise, thus imposing substantial difficulty in later stages of the project cycle, including supervision, the preparation of the completion report and this audit. We agree that the project should have been described in terms that recognize the fact that a telecommunications development program has to be adapted every year to changes in demand and other circumstances while retaining a consistent long-term horizon and structure. But we would also insist that such a broad description should be supported by a very precise statement of what, at the outset, the telecommunication authorities plan to do -- exchange by exchange, for instance -- even if this detailed con- tent will have to be changed every year; this approach would have given a clearer picture of the project without introducing unwanted rigidity. In this sense, the appraisal report for the second telecommunications loan is a satisfactory examplet Overall, the Bank's main contribution to the development of TDM, aside from its relatively minor financial help, has been in the establish- ment of a commercial accounting system, an improvement that was indispens- able at the level of development attained by TDM in the late 1960s. The Bank's contribution in the technical and economic aspects of telecommunica- tion in Malaysia has been less important. The Bank's dedication to this first telecommunications operation in Malaysia was large: nine missions (not all for this sector only, though) visited the country before the loan was signed, and supervisions since then have been frequent. However, to assess whether the whole effort has been worthwhile would require a broader perspective than the one affordedby this audit. Conclusions Overall this project was moderately successful. The physical con- struction goals have been roughly achieved, but in approximately double the time originally expected. Some of the main institutional improvements, especially on the important accounting side, have taken much longer than planned and have yet to consolidate in the next few years; only then will the extent to which the Bank's non-financial influence has been a lasting one become fully clear. Adherence to agreed standards for reporting and - 11 - Bank approval of bidding documents was not achieved, and the administra- tion of the second telecommunication loan seems to be suffering from the reporting problem as much as the first one did. TDM management still does not receive regular and timely accounting information to the extent the Bank hoped it would soon get from the revised systems. During project implementation, the Malaysian telecommunication system and services .improved significantly although they are still well behind demand for new telephone connections. The organizational structure has been modernized and is likely to be a good support for the next stages of system development. The Bank's supervision has centered in the substance of the project while tolerating, though not silently, repeated breaches of TDM's reporting and procurement obligations towards the Bank. These problems may have been partly brought about by the Bank's relatively small significance in the program. The Bank's attitude at times has been somewhat mild on these issues. On one of the occasions where it did take a firm position, the Bank did so on a point it was unable to sustain on good foundations and which led to a commendable retreat but only after having caused loan preparations to come to a stop. Imprecise definition of the project at appraisal time compounded the difficulties of ex-post assessment brought about by the lack of periodic TDM reports and accounts.  INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION PROJECT COMPLETION REPORT Mjaysia - Loan 560-MA First Telecommunications Project 1. Basic Data Borrower : Malaysia Beneficiary : The Telecomunications Departmant (TDM) of the Ministry of Works, Posts, and Telecogmrtuications, which operates the telecommiunications sysiucera in Malaysia w~ould execute the w~ork. Guarantor : Malaysia Loan Amount : US$4-4 illion Date Loan Signed : September 27,,1968 Effective Date : November 8, 1968 Closing Date : December 31, 1971 as per Loan Agreement. The Loan was fully disbursed on September 30, 1973. Period of Grace : Three years Term of Loan : Twenty years Interest Rate : 6 1/2% po. annum Commitment Charge : 3/4 of 1% per annum Amortization : The principal of the Loan will be paid from March 1,1 1972 through September 1, 1988 in accord- ance with the amortization in the Loan Agreement Exchange Rate : Appraisal - US$1 M$ 3.00 Current - US$1 =M$ 2.38 Appraisal Report No. and Date : TO-662a of August 20, 1968 Fiscal Year : January to December Joint Financing : Not applicable 2. Proect Description The project is part of TDM's Expansion Program under the First Malaysia Plan and would be executed during the last three-year period (1968 1970). The project consists of the following: (1) approximately 40,00 lines of new automatic local switching equipment in West Malaysia, Sabah, and Sarawak; - 2 - (2) telephone subscribers' outside line plant and telephone installations; (3) long-distance microwave, cables and overhead lines and switching installations, including links between West and East Malaysia, and subsidiary and junction networks; (4) additions to and redeployment of existing radio, cable and open-wire facilities for long-distance and Junction networks, provision of sys- tems for servicing new areas and for improving present facilities; (5) telegraph and telex equipment and subscribers' installations; (6) additional common facilities for technical and administrative services; and (7) the strengthening of TDM's planning and implementation of the project and of future development. The project was expected to be completed by December 1970. The project was finally completed in September 1973. 3. Objective The TDM's expansion program under the First Malaysia Plan (1966 - 1970) of which the project is the three-year (1968 - 1970)-slice aims at meeting the essential outstanding demand for telecommunication facilities and at providing good and reliable communications throughout and between the states of Malaysia. These facilities are necessary for trade, trans- portation, and industry as well as for government requirements. 4. Project Achievement Within the original three-year (1968 - 1970) project period, the total exchange equipment capacity was increased by about 8,600 lines (5% of project's target), and about 18,000 connections (40% of project's target) were made. The shortfall was due mainly to initial procurement delays. The pace of progress increased thereafter and by September 1973, when the project was finally completed, the total exchange equipment capacity was increased by about 35,000 lines, and the total additional connections made were about 65,000. TDM installed a 400-line teleprinter exchange and connected about 200 additional subscribers. Further reliable large groups of long-distance cominication links were commissioned between Sarawak and West Malaysia. Subsidiary routes linked to the main cities ware brought into service, thereby extending good quality telecom:unication facilities to a large part of the country. Details of the works completed and the commissioning dates are set out in Annex 1. -3- S'.zistical data highlighting TDM's performance during the period (1968 - 1973) of execation of the project are given below: End Year 1968 1969 1970 1971 1972 1973 Auto Capacity 96,212 97,927 102,097 108,647 121,202 133,132 Total Capacity 107,172 109,367 113,537 118,587 130,312 141,062 Auto Lines 81,38 88,874 93,786 100,992 113,565 129,715 Total Lines 91,313 99,141 103,763 110,019 121,603 136,94 % increase over previous year 8.6 4.7 6 11 12 Total Stations 156,354 168,827 178,570 191,192 211,659 235,124 Total Waiters 10,618 11,939 13,740 11,924 13,674 20,681 5. Final List of Goods The list of goods procured with the Bank Loan is set out in Annex 2. 6. Allocation of Loan Proceeds The original and final allocation of the Loan proceeds is shown in Annex 3. 7. Construction Schedule The appraisal report does not include a schedule of construction nor does it clearly define all the items of work to be undertaken under the project. A list of the various items completed under the project with dates of completion is set out in Annex 1. 8. Project Cost Estimates The estimated costs of the project, at the time of appraisal, and the final costs of the project are set out in Annex 4. Although the cost of the items imported directly using the Bank Loan funds is identifiable, the calculation of accurate final costs for the project is rendered practi- cally impossible because TDM has been unable to allocate a large number of other local cost items which are common to the continuing project between 1968 - 1970 and for the following one being executed between 1971 - 1975. The final cost (M$ 142.21 million) of the project as prepared by TDM and shown in Annex 4 can, therefore, only be considered as an estimate and could be subject to significant error. 9. Consultants' Performance A consultant firm, the Swedish Telecommnication Consulting AB (SWEDTEL) was retained at the end of 1969 to assist TDM in stream-lirihg the organizational structure and improving operational methods. SWEDTEL submitted their recommendations in August 1970. These recommpnendations. were progressi-vely implemented over a period of two years. The perform- aace of the consultants was satisfactory. 10. Organization and Management TDM's technical organization has operated effectively during the project'period. The consultants' recommendations on headquarters reorgan- ization were implemented. There are now six branches -- operations, stores and workshops, external services, development, accounts, and admin- istration and training-functioning. (Annex 8) The Director-General assisted by two deputy directors-general, oversees the operations of these six branches. Work methods and routines for construction and installation, maintenance, comnercial and stores have been adapted ensuring more effective coordina- tion of the different,operations. The difficulties of implementation of the accounting system after it was introduced were being caused by difficulties in retaining an adequate number of accounting staff at TDM. The differential between Government and private sector salaries seems to be the major reason why the accountants have been leaving TDM. Government agreed during negotiations to retain them on a contract basis and the Bank has repeatedly asked the Government to implement this undertaking. Although this has not yet been implemented and local staff, when available, have only stayed for a short period of time and the training received has not benefited TDM, there are indications that the present key accounting personnel might stay long enough to bring the accounts up-to-date. 11. Financial Summary and Results The financial results of TDM's operations I/ have been generally satisfactory during the project period with rates of return on net fixed assets in operation around 10%. With negligible interest payments net profit has also been quite satisfactory. 1/-. Prior to 1971 the Government system of accounting was used to record the financial transactions of TDM and an attempt has been made to make a pro forma presentation for that period. From 1971, the accounts prepared according to the new commercial accounting system have been used to present TDM's financial result (Annex 5), financial position (Annex 6), and changes in the financial position (Annex 7). The statements presented which are unaudited are very tentative and should only be used as an indication of order of magnitudes. Some financial indices are given below: - - - M$ millions - ---- 1968 1969 1970 1971 1972 Revenues : Actual 85.6 91.4 104.6 117.5 128.8 : Appraisal 82.7 89.6 97.4 106.1 116.8 : Actual 20.4 19.6 25.5 4o.3 41.9 : Appraisal 20.4 20.1 19.7 19.2 22.1 : Actual 10.8 9.6 10.7 15.0 8.0 : Appraisal 9.9 9.1 8.2 7.5 8.1 Operating Ratio: Actual 7.7 78 74 66 66 : Appraisal 74 75 77 '78 78 The financing-plan prepared at the time of the appraisal covered the three-year construction period of 1968 - 1970. The table below compares the financing plan of the appraisal with the actual for 1968 - 1970, and with the actual for 1968 - 1972, by which time the project was substantially completed and most of the project expenditures incurred. 1968 - 1970 1968 - 1972 Actual Appraisal Variance Actual Variance Uses of Funds Construction 139.2 98 156.9 100 (11) 296.0 90 89 Working Capital 3.0 2 .6 - 1/ 33.6 10 1/ Total Uses 142.2 10 157.7 05 (10) 3T 00.5 109 Sources of Funds From Operations 113.1 79 -123.7 78 (9) 261.1 79 111 Less: Debt Service 7.4 5 15.9 (10) (54) 7.4 2 (54) To Governent - - 13.0 8) - - - - Subtotal 105.7 74 94.8 60 12 253.7 77 168 From Govermnent 4.2 3 - - 1/ 24.1 7 2/ Bank Loan 560-MA .2 - 13.2 8 - .2 - - Other Loans 32-.1 23 49.5 32 (35) 32.1 10 35 Subscriber Deposits - - - - - 19.5 6 1/ Total Sources 142.2 100 157.5 100 (10) 329.6 100 109 1/ Denominator small or zero and ratio large or infinite. - 6 - For the 1963 - 1970 period total uses of funds wore 100 below the appraisal eUtimfiate. The physical achievement during this pariod was less thn 25 of the project and this indicates that a substantial part of the Ec ; fiiUOS in this period was for works outside the proect. The financing plan iade during the appraisal projected that 40% of the funds would coyre from borrowings, (8% from the Bank and 32% from bilateral loans and suppliers credit:) and 604 from cash generation which would be n3t of significant notional transfers to Government. Mainly due to the slow progress in implementation of the project funds made available as borrowings were only 23% of total sources of funds. Funds generated from operations were 9% below appraisal estimates and were made up by less debt service resulting from the lower amount of debt, and notional transfers from Government (instead of projected transfers to Government). For the 1968 - 1972 period, total uses of funds were more than 100% above the estimate-mainly due to increased construction expenditures which includes exDendicures for the first as well as the second telecorn- ications project and the continuing works in the 1968 - 1970 period. / Borrowings only financed 10% of requirements, the balance being made up by Government (7), subscriber deposits (6%), and internally generated funds from operation-s (net of debt service) (77%). The Government contribution (7%) shown includes Ian funds such as the Bank Loan incurred by Government on behalf of TDM and su'pplementary budgetary contributions to meet the net TDM requirements for funds. It appears as if availability of funds has not been a constraint and that Goverment has been willing and able to cover the small additional financing requirements. The patterns of financing have been rather different from that expected at the time of appraisal with the result that the fiscal impact has been negative. For the 1968 - 1970 period, a net transfer to Government of M$ 13 million was expected compared to an actual not transfer from Goveriurient of 11$ 1,,.2 million due to lower internally generated funds. For the 1968 - 1972 period the net transfer from Government was M$ 24.1 million. The present arrangement whereby the Government carry on their own portfolio loans contracted on behalf of TDM and provide funds to meet TIE's requirements makes the capital structure differ from commercial facilities. 1/ The cost of items imported directly for the Bank-financed project are easily identifiable; however, the calculation of accurate final costs for the project is rendered practically impossible because of the need to allocate a large number of local cost items common to both the project and the program. -7- 12. Auditors According to the Loan Agreement TDM's accounts and financial state- ments should be audited by the Auditors General or by independent auditors acceptable to the Bank. The Bank has not yet received any audited accounts and accordingly it is not yet possible to evaluate the adequacy of this procedure. However, the question will be followed up under Loan 753-MA. 13. Other Points and Special Features The project has been satisfactorily completed. No further inventory of the project is necessary. Public Utilities Department, Central Project Staff August 197L ANNE 1 Page 1 of 2 KALAYSIA TELECO-rUNICAkTIONS DEPARTMENT (TDM) Construction Schedule A. Long-Distance Microwave Main Routes Completion Date 1. Kuala Lumpur - Johore Baru - Singapore June 1973 2(a). Kuala Lumpur - Kuantan January 1970 (b). Kuala Lumpur - Kota Baru January 1971 3. Kota Kinabalu - Tawan December 1971 4. Kuching - Sibu June 1970 5. Kuching - Simanggang June 1970 B. 'Microwave, UHF T F - Subsidi!a Routes 1. Penang - Butterworth July 1970 2. Ipoh - Taiping July 1970 3. Taiping - K. Kangsar January 1971 . Ipoh - Sitiawan December 1969 5. Ipoh - Kampah March 1971 6. Ipoh - Telok Anson January 1972 7. Kuala Lumpur - Fraser's Hill January 1971 8. Kuala Lumpur - Kuala Selangor January 1972 9. Kuala Lumpur - Klang December 1968 10. Johore Baru - Pontian September 1971 11. Beaufort - Labum February 1974 12. Lawas - Limbang February 1974 13. Miri - Bakenu February 1974 14. Sibu,- Binatang August 1973 C. Troposcatter 1. West Malaysia - Sarawak June 1970 D. Teleprinter Exchange 1. Kuala Lumpur April 1974 ANIVZX I Pago 2of 2 E. Local Automatic Exchanges Lines 1. Kuala Lumpur - Unit 3 8,000 January 1970 2. W. Malaysia - ARKS 590 June 1970 3. Kuala Trengganu 1,000 August 1971 4. Kota Kinabalu 5,000 April 1973 5. Kuantan 2,000 June 1973 6. Kajang 600 March 1972 7. Kota Bahru 2,000 April 1972 8. -Kampa 600 April 1972 9. Setapak - Unit 2 2,000 September 1973 10. Sibu 3,000 August 1972 11. Telok Anson 1,000 January 1973 12. Batu Pahat - Unit 1 1,600 January 1973 13. Batu Pahat - Unit 2 2,000 April 1973 14. Klang - Unit 2 1,000 March 1973 15. Butterworth- Unit 2 1,000 April 1973 16. Sarawak - ARKS 480 June 1973 17. Penang 1,400 June 1972 18. Klang 300 June 1973 19. Seremban 1,000 June 1973 TOTAL 34,570 MALAYSIA TELECOM"NMUNICATIONS DEPARTMNENT (TDM) List of Goods CATEGORY I NUMBERS 1. Switchboards (various sizes) 1,425 2. Battery eliminators 5, 000 3. Subscribers carrier equipment 1,350 4. Telephone instruments (push 1P500 button & portable) 5. Public call office instruments 1,000 6. Protectors with fuses 4,000 7. Distribution boxes 3,000 8. Poles iron 8,250' 9. Telephone cables (yds.) 32,400 10. G.I. wire (cwts.) 400 11. Drop Wire (yds.) 1,00,000 CATEGORY II 1. Microwave equipment - Main routes 2. Microwave, UHF, VHF equipment - Subsidiary routes CATEGORY III 1. Telex equipment 400 lines CATEGORY IV 1. MDF exchange equipment (fuse 4,964 and arrestor strips) 2. Mobile crane 1 3. Hewlett Packard Microwave 1 link analyser 4. Trailer mounted winches 20 5. Manhole covers 3,000 6. Aluminum ladders 20 7. Cable drum trailers 17 ANNEX 3 MALAYSIA TELECOIMUNICATIONS DEPARTIENT (TDM) Allocation of Loan-Proceeds - -- -- Millions -- -- -- OriginalFinal CategoryUS 1. Local telephone subscribers' network and outside equipment (overhead line materials, private automatic and manual branch exchanges and special telephone sets) 1.6 4.8 1.97 5.45 2. Long-distance network equipment (trunk overhead lines and wire junctions, Sarawak microwave link) 1.4 4.2 1.82 5.04 3. Telegraph and telex equipment (Kuala Ltumpur automatic exchange and accessories) 0.3 0.9 0.21 0.58 4. Miscellaneous (transport, tools, mechanical aids, power accessories, equipment for accounting and billing) 0.6 1.8 0.3 0.83 5. Engineering and planning services 0.1 0.3 0.1 0.28 6. Unallocated 0.4 1.2 - - Total 4.4 13.2 4.4 12.18 MALAYSIA TELECOMMUNICATIONS DEPARTMENT (TDM) Project Cost Estimates (M$ millions)- ORIGINAL FINAL Category Class of Plant Bank Others Total Bank Others Total Forzign Local Foraign Local I Local Line Plant 608 - 3o0 803 $.45 - h.0o 9.65 II Long Distance 4.2 - 2.90 7o1 5.o - 3.4o 8.h III Telegraph/Telex 009 - 0.20 1.1 0.58 - 0oO2 0.60 IV Miscellaneous 1.8 - 0.80 2.6 0.83 - 0.80 1.63 V Consultants 0.3 - 0.20 o.5 0.28 - 0.28 VI Unallocated 1.2 - 0080 2.00 - - - VII Stitching..Local - 21.67 7.24 28.91 - 1670- 8.70 250h0 VIII International Serviees - 1,98 .48 2o46 - 1.87 .39 2.26 IX Transmission Equipment - 250O3 19.66 44.69 - 2637 21.35 45072 X Teloprintere - 0089 0.05 0094 - 2o65 0016 2.81 XI Miscellaneous (including cables) - 12,67 4.65 17032 - 25.46 20.16 6562 TOTAL 13.2 62.24 4o48 115.92 12.18 71.05 58.98 142.21r MALAYSIA TELECOMMUICATIONS DEPARTMENT (TDM) Income Statements (Unaudited) (M$ millions) Pro Forma - TDM Telecommunica- -- - - Estimated - - - - tions Fund Year ending December 31: 1967 196T 1969 1970 1971 1972(Est.) Reve rraes Telephones 62.6 68.4 71.7 85.h 92.6 108.2 Telegraphs 8.6 9.0 9.3 9.5 8.7 8.9 Telex 3.3 4.2 4.7 5.4 6.5 6.1 Miscellaneous 5.4 h.0 5.7 4.3 9.7 5.6 Total revenues 79.9 85.6. 91.4 104.6 117.5 128.8 Expenses Operations, Maintenance. and Administration 56.1, 58.4 62.9 68.2 54.8 59.2 Depreciation 12.1 13.1 14.6 16.7 22.4 27.7 Less: special expenses to capital (1.4) (0.5) (0.4) (0.5) - - 4, staff cost to capital -7 ) 6 ) (60) - - Total expenses 61.1 64.8 70.7 77.4 77.2 86.9 Operating income before interest 18.8 20.8 20.7 27.2 40.3 41.9 Less: interest 0.5 0.4 1.1 1.7 - - Net Profit 18.3 20.4 19.6 25.5 40.3 41.9 Rate at return (%) 10.5 10.8 9.6 10.7 15.0 8.4 Operating ratio (%) 77 77 78 74 66 66 July 23, 1974 MALNCI'A TELECOMMUICATIONS~' JMPART1EN~ (TDM) Balance Sheets (Unaudited) (YL i ons) Pro Forma - TDM4 Telecommunica- - - - - Estimated - - - - tions Fund Year ending December 31: 1967 60 69 1970 f9~ 1 7Tst1.) ASSETS Fixed Assets Gross plant 273.6 299.7 341.3 393.4 463.3 535.5 Less: depreciation 95.7 103.8 123.h 140.1 174.0 188.6 Net fixed plant in service 177.9 190.0 217.9 253.3 289.5 346.9 SEACOM investment 7.7 9.8 9.8 9.8 - - Work in progress 6.8 10.4 18.6 24.1 - - Current Assets Cash - - - - 4.9 2.6 Accounts receivables 6.5 7.2 7.5 9.3 36.9 38.8 Inventories 8.5 8.5 9.0 10.4 17.3 17.3 Other - - - - 0.3 0.3 Total current assets 7 5-777'6 7 i7T7 0-.3 0F3 TOTAL ASSETS 207.4 226.8 262.8 306.9 349.0 407.3 LIABILITIES Equity Capital 195.8 214.6 234.6 265.5 265.9 283.9 Retained earnings - - - - 40.3 82.2 Total equity T97 214.6 237 6 '273' 3062 3 Subscribers' Deposits - - - 15.5 19.5 Pension & Gratuity Provision - - - - 6.4 14.0 Long-term Debt 3.3 4.1 19.8 31.4 - - Current Liabilities Accounts payable 6.1 6.7 7.8 9.4 21.0 7.7 Current maturities 2.2 1.4 0.6 0.6 - - Total current liabilities73 8TT -77 . - T . T.5 -7 TOTAL LIABILITIES 207.4 226.8 262.8 306.9 349.0 407.3 July 239 1974 MALAYSIA TELECOFMUNICATIONS DEPARTMENT (TDM) Funds Flow Statements (Unaudited) (M$ millions) Pro Forma Actual Total year ending December 31: 1967 1965 1969 1970 1971 1972(Est.) T958770 196772 Sources of Funds Net income before interest 18.8 20.8 20.7 27.2 40.3 41.9 Depreciation 12.1 13.1 14.6 .16.7 22.4 27.7 Pension and other - - - - 7.2 8.4 Total internal cash generation 30.9 33.9 i7.7 43.9 70.0 '77- 113.1 261.1 Government contribution 18.1 18.8 20.0 30.9 1.9 18.0 69.7 89.6 Subscribers' deposits - - - - 15.5 4.0 - 19.5 Borrowings 0.5 3.0 17.1 12.2 - - 32.3 32.3 Total sources 49.5 55.7 72.4 87.0 87.4 100.0 215.1 402.5 Applications of Funds Capital works 28.1 31.8 49.8 57.6 71.8 85.0 139.2 296.0 Total debt service 3.1 2.6 2.5 2.3 - - 7.4 7.4 Variation in working capital - 0.9 0.5 1.6 15.6 15.0 3.0 33.6 Payment to Goverment 18.3 20.4 19.6 25.5 - 65.5 65.5 Total applications 49.5 55.7 72.4 87.0 87.4 100.0 215.1 402.5 It=-- - =- = Debt service coverage 10.0 13.0 14.1 19.1 - - July 23, 1974  Annex 8 MALAYSIA: DEPARTMEWT OF TELECOMMUNICATIONS GRGAMlZATION CHART MINISTER OF WORKS POSTS AND TELECOMMUNICATIONS DIREC7OR GENERAL DEPUT HEADOVARTER R G A N I Z I O N TD- DIRECTOR DIRECTOR DIRRECTSlR DO!IE !i D1ETRDRCO TORES/ ADMINISTRATION/i D ECTORAD IO TELEPHONES EXTERNAL/ SERVCES ACCOUNT5 WORKSHOS TRAINING SPECIAL DUTEES SC C O N T O LLER C O N OL ERS COTCLE N LE CNROLR COTOLEOOTOLE ONR RCNROLRCONTROLLER COELRO LE CONTROLLER OV CATIA N ACCIO NTANT OR AND C ONT LER CNTETSS N sPECIAL DATSES PLANNING AONESRCTION MTAINTEN/ANCE SPECIAL SERV/CES PLANNING CONSTRUCiIDN NETWORK ITINAC TEAFFIC TRAFFIC 3PO5T, 4 POTS ---------- ---...---- ---------- -- -- --- ..... ...... REGIONAL OR GA IZATION REPAONAL DIRECTOR EGAIONL DIRECTOR REGIONAL DRRECTOE SABAH SARAWAK SELAN/GOR L NTROLLERS CONSRLLERS ONROLER5 COTOLLER OT A/SLLER CONTROLLER CNTRALSER VTTEOE TERNGGNU T 5OLIADE5