Documnent of The World Bank FOR OFFICIAL USE ONLY. Report No: PROJECT COMPLETION NOTE (SCL-4450) LOAN IN THE AMOUNT OF US$ 100 MILLION TO THE

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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Exiergy and Mining Sector Unit EAst Asia and Pacific Region Documnent of The World Bank FOR OFFICIAL USE ONLY PROJECT COMPLETION NOTE (SCL-4450) ON A LOAN IN THE AMOUNT OF US$ 100 MILLION TO THE GOVERNMENT OF MALAYSIA FOR THE YEAR 2000 TECHNICAL ASSISTANCE PROJECT June 26, 2002 Report No: This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

2 CURRENCY EQUIVALENTS Currency Unit = Malaysian Ringgit MYR $ 3.8 = US $ 1 (June 2002) FISCAL YEAR January ISt - December 31 ABBREVIATIONS AND ACRONYMS Application (or system) CAS Contingency Plan EPU GOM IT MAMPU PAU Quality Assurance Risk Assessment Y2K Y2K Compliant A set of computer programs designed to perform repetitive procedures, usually on large amounts of data Country Assistance Strategy In the context of the Year 2000 program, a plan for responding to the loss or degradation of essential services due to a Year 2000 problem in an automated system or equipment. It generally describes the steps an entity would take to ensure the continuity of its core processes and business functions Economic Planning Unit in the Prime Minister's Department Government of Malaysia Information Technology Malaysian Administration Modernization Planning Unit in the Prime Minister's Department Project Administration Unit All the planned and systematic actions necessary to provide adequate confidence that a product or service will satisfy given requirement for quality An activity performed to identify risks and estimate their probability and the impact of their occurrence The potential problems that might be encountered by computer hardware, software, etc. in processing year-date information for years beyond 2000; commonly called "The Year 2000 problem", "The Y2K Bug" or 'The Millennium Bug" Unaffected by the change from 19xx to 20xx (also called Millennium Compliant) Vice President: Country Director: Acting Sector Director: Task Team Leader: Jemal-ud-din Kassum Ian Porter Mohammad Farhandi Ramesh Sivapathasundram

3 PROJECT COMPLETION NOTE MALAYSIA YEAR 2000 TECHNICAL ASSISTANCE PROJECT (LOAN 4450-MA) 1. This is the Project Completion Note for the Malaysia Year 2000 Technical Assistance Project for which the Board approved Loan 4450-MA, in the amount of US$100 million on March 30, The loan agreement was signed on March 31, 1999 and became effective on June 23, The Loan closed on December 31, 2001 with only US$11.9 million disbursed (including the 1% front end fee of US$1 million). An amount of US$88 million was cancelled at the request of the Government of Malaysia before significant implementation of the project could be initiated. The last cancellation was effective on Deeember 8, In accordance with paragraph 4 of OP13.55, this note is in lieu of an Implementation Completion Report reflecting the fact that the substantial cancellation took place without meaningful prcject implementation utilizing loan proceeds. 2. The main objective of the project was to assist the Government of Malaysia, in a rapidly nairowing window of opportunity, to a) contain and minimize the disruption in the country's social and economic infrastructure that would be caused by the failure of critical central, state and local govermnent systems to process dates after December 31, 1999; and b) coordinate Y2K efforts in key sectors, monitor closely the evolving overall national situation, and prepare measures to deal with possible disruptions. The project design consisted of two components. The first component was intended to address the Y2K problems in the public sector (Component A, US$124 million). The bulk of this component was envisioned to be the procurement of goods (US$102 million). The second component was intended to help government strengthen the national coordination efforts through coordination of contingency planning, critical services with cross dependencies, national monitoring, dissemination efforts, public inforrnation management, legal planning, and others (Component B, US$10 million). Total project costs wete estimated at US$134 million, including US$100 million to be financed by the Loan 3. The project was appraised in November 1998 and was expected to be presented to the Board in December-of The Country Assistance Strategy (CAS) for Malaysia was also under preparation at that time and was expected to be discussed in late January of 1999 together with two other projects. Given the proximity of dates, a decision was made to include this project as a third project together with the CAS. Subsequently, due to extensive negotiations with Government over the CAS, the board discussion did not occur until March 30, The project became effective on June 23, Faced with this delay, subsequent uncertainties about proceeding with the loan and with the immovable deadline of December 31, 1999, the Government of Malaysia made an intemal decision in early 1999 to finance the activities of the National Y2K project team outside of the World Bank project. The National Y2K project team and its proposed activities represented the entirety of Component B of the project. This decision was only formally transmitted to the Bank in December 1999 with a request to cancel USD 10 million of the loan amount. Similarly given the lead times necessary, GOM utilizing their own budgetary resources, independently launched major Y2K mitigation activities that the loan was expected to fund under Component A of the project 5. Post effectiveness of the loan, approximately US$ 11 million of the loan was disbursed, principally to finance peripheral activities. Activities funded by the Bank loan included management -1-

4 consultants and consultants who conducted Y2K audits and assessments (US$ 2.6 Million); Consolidated replacement of non-compliant PCs ihi Govenmment Deparmfents (US$ 7.5 Million); and public sector awareness raising activities (US$ 0.3 Million). Retroactive financing of pre-effectiveness purchases was considered, however the expedited procurement arrangements Govemment had used for Y2K related purchases precluded this. Govemment formally requested a cancellation of the remaining undisbursed US$ 78 million in December The loan was closed on December 31, 2001 as originally scheduled. 6. In the final report by GOM, on its public sector Y2K remediation activities, GOM indicated that it spent over MYR 582 Million (US$ 153 Million) on all public sector Y2K related activities. 7. Given the nature of the project and the precise timing that was required for implementation, the unfortunate delay in project processing ultimately affected the effectiveness of this project and its implementation. -2- This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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8 Report No.: Type tcr 24437