THE intellectual property and software licence for the MySejahtera app would be sold by the original developer, Entomo Malaysia Sdn Bhd, to the app’s new managers, MySJ Sdn Bhd, for RM338.6 million, CodeBlue reported, citing court documents.

The sum is for a deal that will last until 2025 and is disclosed in legal documents in a suit filed by one of MySJ’s shareholders, P2 Asset Management Sdn Bhd.

Entomo Malaysia was formerly KPISoft Malaysia Sdn Bhd, which developed and owned the proprietary software used to build the MySejahtera app.

KPISoft, founded in 2010, announced its rebranding as Entomo on February 24, 2021.

Although MySJ’s shareholding parties are now embroiled in their own legal battle, it is the information disclosed in P2 Asset Management’s statement of claim that is relevant to the ongoing controversy surrounding development of the MySejahtera app and what the government may have to pay for it.

The controversy surfaced in Parliament’s Public Accounts Committee’s (PAC) hearing where it was revealed that the app was, firstly, developed for the government without a contract, and, secondly, that its developer had sold proprietary and software rights to another private company, MySJ.

This is now forcing the Health Ministry to conduct direct negotiations with MySJ, instead of allowing an open tender for such a high-value project.

The PAC, whose role is to ensure government accountability in projects, is viewing this as a bad precedent.

“Under the licence agreement, KPISoft grants MySJ a non-exclusive, non-transferable, non-sublicensable right and perpetual licence to use the KPISoft software to exclusively develop, own the application trademark for MySejahtera, and test and support the MySejahtera app,” CodeBlue reported.

MySJ, meanwhile, only acquires a licence to the KPISoft software, specifically for MySejahtera and not any other rights or ownership interests, the licensing agreement also stated.

The original equipment manufacturer licence agreement with MySJ is dated October 6, 2020.

MySJ was incorporated on September 23, 2020.

The Covid-19 epidemic began in Malaysia at the start of the year, and in mid-March, the country underwent its first lockdown.

CodeBlue also detailed the scope of services and works for the MySejahtera app for the period of the agreement – five years and three months until December 31, 2025 – covering the MySejahtera app platform and its features.

Under the transfer, MySJ’s first payment to KPISoft would be RM38.6 million for the period from October 1, 2020 to December 31, 2020.

This is for the transfer of the intellectual property fee and service fee.

Annual sums would then be paid, totalling RM338.6 million. This, however, covers only the first 24 million app users.

Thereafter, a rate set at RM1.50 per user per annum, for users “exceeding 1% from the first 24 million users”, will be charged to MySJ as the licensee.

Entomo, meanwhile, had also proposed to the government a public-private partnership (PPP) model for the app in late 2020, soon after its licence agreement with MySJ.

It suggested the PPP model for 15 years until December 2036, also mentioning RM138.9 million as the annual cost to support the current MySejahtera implementation.

Entomo is reported to have described the benefit of the PPP model as ensuring continuity for the people’s use and to ensure that “operations cost beyond the corporate social responsibility (CSR) period is covered without any cost implication to the government of Malaysia”, according to CodeBlue.

Entomo also said the app could be further developed and expanded into a fuller digital platform ecosystem that would include mobile digital health functions, mobile commerce and mobile payment facilities.

The CSR period mentioned is March 27, 2020 to March 31, 2021, which Health Minister Khairy Jamaluddin has said was a free of charge period for the government to use the MySejahtera app. Nothing was paid to KPISoft during this period, he said.

Khairy also said yesterday that the government did not sell MySejahtera to any private company, in response to Opposition Leader Anwar Ibrahim’s concerns that the app, with the private data of millions of Malaysians and users, had been sold off.

Anwar had been reacting to the PAC’s findings from its March 8 meeting with Finance Ministry officials about the Health Ministry’s need to renegotiate development costs of MySejahtera. 

It was revealed by the officials in this meeting that the app was developed without a proper contract, and that the Finance Ministry had since approved for the Health Ministry to conduct direct negotiations with MySJ, which now owns proprietary rights to the app and manages it.

As for the legal troubles within MySJ, P2 Asset Management is suing the company as well as Entomo and another MySJ shareholder, Revolusi Asia Sdn Bhd, for alleged breach of a shares sale agreement (SSA).

P2 Asset Management’s statement of claim is over a 10% equity interest and seeks to nullify Revolusi Asia’s termination of the SSA with the former.

Revolusi Asia terminated the SAA over P2 Asset Management’s alleged failure to secure and produce a letter of award (LOA) from the government to MySJ for the company to be in a “public-private partnership” or “service contract commercial model” with Putrajaya for the continued use of the app.

P2 Asset Management’s argument is that the National Security Council (NSC) on May 21, 2021, had issued a letter agreeing to enter into a “service contract” with MySJ, which amounted to the same meaning and effect as an LOA.

Disagreeing, Revolusi Asia terminated its SSA with P2 Asset Management on September 7, 2021, on the grounds that the latter had failed to secure the LOA within their agreed timeframe.

P2 Asset Management accused Revolusi Asia of breaching the SSA and filed its statement of claim in the Kuala Lumpur High Court in November last year.

The court is to hear the matter in a Zoom hearing on March 31. – March 28, 2022.