This Race Is a Coup for Mahathir...But Cyberjaya Isn't Up to Speed (int'l edition)

It's a blistering 32C as Michael Schumacher's scarlet Ferrari accelerates out of the final turn and screams past the checkered flag, clinching the final race of the Formula One Grand Prix circuit. He had already secured the driver's championship two weeks before in Japan, but Schumacher's Oct. 22 victory at the Malaysian Grand Prix also put Ferrari on top for the team title. During his victory lap, nearly 90,000 fans roared their appreciation as he cruised the track pumping the air with his fist.

Team Ferrari wasn't the only winner that day. For Prime Minister Mahathir Mohamad, who personally lobbied for seven-year rights to stage the prestigious Formula One event, the race was a vindication. The Premier has a reputation for spending lavishly on megaschemes that all too often turn out to be white elephants, such as the 88-story Petronas Twin Towers and the $3.6 billion international airport. But the $75 million Sepang track, launched in 1999, has already yielded a good return. Last year, it brought in more than $130 million in tourist income for an industry still reeling from the Asian financial crisis. After this year's race, Mahathir proudly told reporters earnings could double.

F-1 racing has soared in popularity in recent years, drawing hundreds of millions of television viewers. And while racing impresario Bernard Ecclestone owns the TV rights, the spin-offs for the host country benefit everyone from hotel owners to makers of earplugs--and in Malaysia's case, local transport companies. The Sepang track is built next to the airport, which has only one 441-room hotel, so fans have to be bused 50 kilometers north to the hotels of Kuala Lumpur, where rates double at race time. But an extra hour of battling traffic is nothing for fans like 37-year-old Johnny Sundhorlm, a duty-free-liquor cashier from Finland who paid $1,700 for a trip to Malaysia ''just to see the race.''

And it's not just tourist dollars Mahathir had in mind. The Grand Prix also helps showcase national carmaker Proton, which is something of a boondoggle itself, surviving thanks to import protections. Proton's parent, state oil and gas monopoly Petroliam Nasional, or Petronas, has a joint venture with Swiss engine maker Sauber, with which it co-sponsors the Red Bull Sauber Petronas F-1 team, ranked eighth this year.

''REALLY PROUD.'' Sepang also pays political dividends to Mahathir. It's probably the only F-1 race that comes complete with a patriotic performance by the navy's marching band and a supersonic demo by the air force. In the stands, nationalism runs strong. Take 18-year-old Farah Zaia, who paid $200 to see the final race. An avowed Ferrari fan, she's nevertheless carrying a Malaysian flag and gushes: ''I'm really proud--when the race is here, the whole world looks at Malaysia.''

In contrast to the roar of the racetrack, the quiet of Cyberjaya is downright eerie. This planned community is meant to be the heart of the Multimedia Super Corridor, Malaysia's much hyped answer to Silicon Valley. More than $3 billion in state funds have already been sunk into the corridor, which extends 50 kilometers from the airport to the Petronas Towers. The only hotel in Cyberjaya, the Cyberview Lodge, hasn't been busy since it hosted a reception for Asia-Pacific Economic Cooperation leaders in 1998. Its ''view'' surveys a bewildering patchwork of six-lane highways leading nowhere and bridges that don't bridge. Nor are there any private houses yet, though ads proclaim that Cyberia townhouses should be ready for occupancy soon.

There are certainly signs of life at Cyberjaya's Multimedia University, which boasts free broadband access in every dorm room, state-of-the-art classrooms, and a digital library. Opened in 1999, the school is designed to churn out skilled info-tech grads. But in the government's haste to build a community geared to the New Economy, Cyberjaya's 5,000 residents, nearly all of them students, still have to drive half an hour to the nearest town for Old Economy services like a haircut. Anis Fatimah, a 22-year-old computer science student, concedes that life on campus is no party, since almost the only distraction is unlimited Web surfing. She figures it's a sacrifice worth making to bridge the digital divide: ''Cyberjaya is a megaproject to upgrade Malaysia in IT. Without it, we'd get left behind.'' She may be right--but it'll be years before Malaysia knows whether this costly gamble paid off.

By Frederik Balfour in Kuala Lumpur

MAP: Malaysia