KUALA LUMPUR, March 28 – Court documents show the MySejahtera developer agreed to transfer the Covid-19 app’s intellectual property and software license to MySJ Sdn Bhd for RM338.6 million in a deal until end 2025.
P2 Asset Management Sdn Bhd, a MySJ shareholder, is suing MySejahtera developer Entomo Malaysia Sdn Bhd (formerly KPISoft Malaysia Sdn Bhd), Revolusi Asia Sdn Bhd (another MySJ shareholder), and MySJ for alleged breach of a share sale agreement.
According to P2 Asset Management’s statement of claim filed in the High Court here on November 24 last year, MySJ entered into a license agreement with Entomo Malaysia on October 6, 2020.
The license agreement stated that Entomo Malaysia is to transfer the intellectual property of the MySejahtera mobile app to MySJ and to grant MySJ the license for the software, for which MySJ is to pay Entomo Malaysia RM338.6 million.
This payment is described as the aggregate fees for the transfer of intellectual property of the app and the licensing fees for the software.
License Agreement Between Entomo Malaysia And MySJ For Five Years, Three Months
A supporting affidavit filed by Entomo Malaysia (formerly known as KPISoft Malaysia) last February 9 disclosed the OEM Software license agreement dated October 6, 2020 between Entomo Malaysia and MySJ, the licensee – both of which have the same business address at Q Sentral in Kuala Lumpur.
The license agreement states that KPISoft is the developer and owner of its proprietary software, the KPISoft software that was used to develop the MySejahtera app for the Malaysian government.
Under the license agreement, KPISoft grants MySJ a non-exclusive, non-transferable, non-sublicensable right and perpetual license to use the KPISoft software to exclusively develop, own the application trademark for MySejahtera, and test and support the MySejahtera app.
However, under the agreement, MySJ only acquires a license to the KPISoft software specifically for MySejahtera “and does not acquire any other rights or ownership interests.”
KPISoft shall also retain all right, title, and interest in and to the KPISoft software, the trademarks, and the services, among others, unless expressly provided otherwise in the agreement.
The scope of services and works for the MySejahtera app for five years and three months under the agreement lasting until December 31, 2025, is as follows, described as “software as a service”:
- User on-boarding, hub, dashboard and profile, QR
- Admin web console
- Mobile apps in iOS, Android and Huawei
- Fully managed Cloud
- L1, L2 & L3 user support
- Hotspot tracker (Google Maps)
- Business and offices on-boarding, location QR generation, reports
- Web console for business/ offices
- Check-in feature for users in mobile app
- Contact tracing from movement date for MOH (Ministry of Health)
- Fully managed Cloud
Covid-19 Disease Control
- Risk assessments – Day N, location and mental health, announcements Covid-19 statistic, profile QR, deep linking to third party services
- Admin web console for MOH, analytics and reports
- Travel QR, digital HSO (home surveillance order), lab form printing at POE, mobile HSO
- Web console for districts and state health office to complete quarantine
- District and state dashboard analytics
- User complaint flows – imagine, location, tagging
- Complaints routing module based on district
- Complaint ID, auto template and reports, backend admin for the Royal Malaysia Police (PDRM)
- MySJ IC/ name lookup for e-Penjana programme, cross connect between the data centres, message broker Q for name/ IC updates from MySejahtera app and user lock post updates
- Daily reports on MySJID and Pincode wise check-in
- Flow for users returning to Malaysia to provide travel and quarantine preference information to the National Disaster Management Agency (NADMA) for quarantine location planning
- NADMA will have a backend record and statistics function
The license agreement requires MySJ to pay KPISoft RM38.6 million for the period from October 1, 2020 to December 31, 2020 as transfer of the intellectual property fee and service fee, with annual sums to be paid subsequently, totalling RM338.6 million.
The fees for KPISoft software are as follows for the first 24 million users:
For users exceeding 1 per cent from 24 million users, the following user rate shall apply automatically and the additional amount shall be charged to MySJ, the licensee.
The price per user per annum is set at RM1.50, which is the price for users and platform service fee under the KPISoft platform.
Entomo’s MySejahtera Proposal: Digital Health, Digital Commerce, Digital Payment
Entomo Malaysia’s February 9 supporting affidavit disclosed its recommendation paper to the government on a public-private partnership over MySejahtera titled “MySejahtera: Proposed Way Forward, By Way of Public-Private Partnership (PPP)”.
According to P2 Asset Management’s statement of claim, Entomo Malaysia’s proposal to the government for a public-private partnership was made in November or December 2020.
The proposal, as sighted from the supporting affidavit by Entomo Malaysia (formerly known as KPISoft), stated that the MySejahtera CSR commitment incurred KPISoft more than RM47.8 million from April to November 2020.
According to a graphic of the implementation cost of MySejahtera, on a monthly rate, the app’s software as a service (SaaS) cost 48 sen per user, totalling more than RM41.8 million across those eight months.
MySejahtera check-ins cost RM1 per business per month, totalling RM4,368,000 from June to November 2020. Covid-19 disease control cost RM105,000 per month, totalling RM840,000 from April to November 2020.
MySejahtera Traveller cost RM445,002 from June to November 2020, while MySJID cost RM222,500 from July to November 2020.
MySJ Quarantine cost RM148,334 from October to November 2020, while MySejahtera Aduan’s monthly rate was RM74,167 but did not incur any costs from April to November 2020.
The total MySejahtera platform fee amounted to RM47,868,002 until November 2020.
“To ensure that MySejahtera continues to benefit the various government agencies and be available for the rakyat’s use, KPISoft is proposing a public-private partnership (PPP) model, to ensure that operations cost beyond the CSR period is covered without any cost implication to the GOM (Government of Malaysia),” Entomo Malaysia said in its proposal.
“Through the PPP model, KPISoft shall undertake to expand the current application into a digital platform ecosystem envisaged to catalyse mobile digital health transcending public and private domains, mobile commerce, as well as mobile payments facilities.”
Health Minister Khairy Jamaluddin said in a statement yesterday that the government did not make any payment to KPISoft during its CSR initiative from March 27, 2020 to March 31, 2021 in developing the MySejahtera app for the government.
Entomo Malaysia said in its proposal to the government that beyond management of the Covid-19 pandemic, MOH could also use MySejahtera to track vaccination distribution, tracking and monitoring; manage other infectious diseases like dengue and hand foot and mouth disease; predictive analysis for cluster formation; and integration with existing applications like eCovid and SIMKA. SIMKA is MOH’s Public Health Laboratory Test Result System.
The company also said data obtained from MySejahtera could help government agencies in “data intelligence”, citing potential usage of the data by Bank Negara Malaysia and the Ministry of Finance (MOF) to project economic recovery and growth of the country post-Covid.
Entomo Malaysia proposed that the PPP approach start from December 2020 as soon as the government agrees to its proposal. The company also suggested that the PPP span over 15 years from December 2020 till December 2036 to “justify return of investment”, pointing out that it costs about RM138.9 million annually to support the current MySejahtera implementation.
According to its proposal, Entomo Malaysia envisioned a digital services ecosystem on MySejahtera, encompassing digital health, digital payments, and a “shared economic model for businesses, tech startups, and gig economy.”
MySejahtera, said Entomo Malaysia, could provide digital payment facilities for government payments and more than a million businesses.
Public and private health or wellness businesses could make available digital services and products on demand for MySejahtera users.
As part of the PPP model implementation, Entomo Malaysia proposed that MySejahtera comprise two main components: existing modules and new modules or services with commercial elements.
“The business model will be based on customer empowerment where customers have greater independence, control, and convenience when opting for the services offered through the platform. In other words, customers will have more choices or alternatives offered through this digital ecosystem and are able to make a choice to pay for value-added services.”
Entomo Malaysia said it would establish a special purpose vehicle (SPV) – MySJ Sdn Bhd – to exclusively provide the MySejahtera service and the three proposed new commercial components of digital health, digital commerce, and digital payment.
For digital health care on MySejahtera, Entomo Malaysia proposed services that could be provided by public and private health or wellness businesses, such as doctor’s consultations at a patient’s home, nursing, physiotherapy at home, elder care (assisted living, nursing care, adult day care, and home care), lab tests with samples collected from a patient’s home, and medication delivery with digital prescriptions. The company proposed a transaction fee of 10 per cent of total transaction costs.
On digital commerce, Entomo Malaysia suggested that MySejahtera focus on industries related to health care, like healthy food options, ingredients, and fitness and lifestyle, in order to differentiate MySejahtera from other existing online shopping platforms like Lazada or Shopee. Entomo Malaysia proposed a 3 per cent transaction fee of the overall transaction.
With regards to digital payments, Entomo Malaysia proposed payments via scanning QR codes, similar to e-Wallets, noting that MySejahtera had already onboarded more than a million businesses over the last five months. MySejahtera can partner with an existing payment gateway system or DuitNow to enable money to go directly into the merchant’s bank account. Entomo Malaysia suggested a 0.2 per cent merchant discount rate.
The ubiquitous MySejahtera app contains the personal details – such as name, IC number, and phone number – and the check-in data of 38 million registered users at public premises, including Malaysians, foreigners, and travellers to the country with a 32.4 million population, as well as the health data of positive Covid-19 cases or close contacts and digital coronavirus vaccine certificates.
Throughout the past two years of the pandemic since 2020, the government has mandated MySejahtera check-ins at public premises, punishing non-compliance with a maximum RM1,000 compound under the Prevention and Control of Infectious Diseases Act 1988 (Act 342).
Dispute Over NSC’s ‘Service Contract’ May 2021 Letter
A dispute between P2 Asset Management and Revolusi Asia arose over differing interpretations of a letter issued by the National Security Council (NSC) on May 21, 2021.
P2 Asset Management described the NSC’s letter as agreeing to enter into a “service contract” with MySJ for the continued use of the app.
On December 31, 2020, according to P2 Asset Management, it entered into a share sale agreement (SSA) with Revolusi Asia where the latter would sell additional MySJ shares to P2 Asset Management, representing 10 per cent equity interest. As of that date, Revolusi Asia was the legal and beneficial owner of 100 per cent of shares in MySJ.
In exchange, P2 Asset Management would “facilitate to obtain a letter of award” (LOA) from the government to MySJ in respect of a “public-private partnership” or the “service contract commercial model” for the continued use of the app.
Parties agreed that the LOA from the government be achieved within 60 days from the date of the SSA on December 31, 2020, or within an “extended period” of another 30 days.
P2 Asset Management would then pay Revolusi the purchase consideration for shares in three tranches: RM10 million within seven business days from December 31, 2020 (first tranche), RM9.2 million within 21 business days from December 31, 2020 (second tranche), and RM76.8 million within 90 business days from the date of receipt of the letter of award.
Upon payment of the third tranche, P2 Asset Management would be entitled to nominate and appoint an executive director of MySJ.
P2 Asset Management argued that the NSC’s May 2021 letter, although not termed an LOA, amounted to an LOA in accordance with the SSA and that the letter “has achieved what the LOA has intended to achieve or more.”
However, Entomo Malaysia and Revolusi Asia contended that P2 Asset Management had failed to obtain the LOA as at May 2021, according to the first two defendants’ defence filed on January 14 this year.
“The 2nd Defendant contends the Plaintiff always had been aware that the letter of 21-5-2021 from the NSC when the same was issued and the letter neither is nor had never been considered by the Plaintiff or the 2nd Defendant as having achieved the objective of obtaining the LOA as prescribed by the SSA.”
On September 7, 2021, Revolusi Asia terminated its SSA with P2 Asset Management, maintaining that the termination was lawful. P2 Asset Management accused Revolusi Asia of breaching the SSA.
P2 Asset Management’s Demands
P2 Asset Management is seeking to nullify the termination of the SSA and for a declaration that the SSA is valid, subsisting, binding and in full force.
The company also sought a declaration that the NSC’s May 2021 letter constituted an LOA as defined by the SSA and an order for Entomo Malaysia, Revolusi Asia, and MySJ to accept the NSC’s letter as the LOA.
P2 Asset Management further wants a court order for Entomo Malaysia and/ or Revolusi Asia to immediately take steps to transfer 10 per cent MySJ shares to it.
P2 Asset Management also sought an order to restrain Entomo Malaysia, Revolusi Asia, and MySJ and their directors from diluting shares in MySJ; causing any fundamental change in the composition of MySJ; and prejudicing the commercial interests of MySJ, including MySJ’s interests in the license agreement.
Entomo Malaysia and Revolusi Asia asked the court to dismiss P2 Asset Management’s claim. Entomo Malaysia has also filed to strike out P2 Asset Management’s January 22 amended statement of claim.
In a written submission filed last January 24, MySJ sought to strike out the plaintiff’s action against it on the basis that P2 Asset Management initiated the lawsuit due to the alleged breaches of the SSA by the first two respondents – Entomo Malaysia and Revolusi Asia – and that MySJ was merely the subject matter of the transaction.
A Zoom hearing before High Court judge Ahmad Fairuz Zainol Abidin has been scheduled on March 31.
Checks on the Companies Commission of Malaysia (SSM) show that P2 Asset Management was incorporated on November 3, 2020, with Johor Bahru-based Yap Zi Jing listed as a company director, along with 29-year-old Johnathan Jaya-Sudhir and 26-year-old Gregory Jaya-Sudhir, who are also based in the southern state.
According to Entomo Malaysia’s and Revolusi Asia’s January 14 defence, Jaya Sudhir Jayaram was appointed as the chief business development officer of MySJ after the execution of the SSA. Besides Revolusi Asia and P2 Asset Management, Hasrat Budi (whose sole shareholder is property developer EcoWorld Malaysia) is another shareholder in MySJ.
MySJ was incorporated on September 23, 2020, according to SSM records. MySJ’s board of directors include EcoWorld Malaysia executive chairman Liew Kee Sin and executive director and chief financial officer Heah Kok Boon, former Sapura Energy Bhd CEO Shahril Shamsuddin, Bersatu disciplinary board chairman and non-executive chairman of Sime Darby Plantation Megat Najmuddin Megat Khas, as well as Anuar Rozhan and Raveenderen Ramamoothie. The latter two had founded KPISoft.
Khairy said in a statement yesterday that the government “decided” on November 26, 2021, that the MySejahtera app belongs to the government and that “MOH was appointed as the primary owner of the app”.
At Parliament’s Public Accounts Committee’s (PAC) meeting on March 8, an MOF official said MOH needed to renegotiate development costs of MySejahtera after MOF approved direct negotiations to appoint MySJ – pursuant to Cabinet approval on last November 26 – because “there was no proper contract” throughout the entire development of the app.
This is the second part of CodeBlue’s investigative series on MySejahtera:
- PAC Report: MySejahtera Developed Without Contract, App’s Ownership Unclear With New Company
- Singaporean Company Is MySejahtera Software Owner’s Sole Shareholder
- More Court Documents Show MySJ Owns MySejahtera Platform, IP Rights
- MySejahtera Scandal Not Unique, France’s Covid-19 App Under Prosecutor Probe