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PETALING JAYA: While digitization has become the new normal amid the Covid-19 pandemic, more concrete efforts are required to make Malaysia a regional leader in the digital economy.

Economists said the right steps should be taken if the country is to ensure the success of its digital initiatives, including the much-lauded Malaysia Digital Economy Blueprint. Otherwise, they said, the nation would lose to its regional counterparts.

The draft sets out the direction, strategies and initiatives to drive the growth of the digital economy, which is to be implemented by 2030.

The digital economy is expected to contribute 22.6% to Malaysia’s gross domestic product (GDP) by 2025. In 2019, the information and communication technology sector contributed 289.2 billion RM 213 billion in 2015 (18.1% of GDP).

Lee Heng Guie, Executive Director of the Socio-Economic Research Center (pictured below) said that digital infrastructure, especially high-speed broadband, needs to be further improved for electronic communications and applications that are critical for data transmission, among other things.

Lee Heng Guie, Executive Director of the Socio-Economic Research Center: The digital experience needs to be improved in terms of speed, reliability and coverage to narrow the digital urban-rural divide.  The implementation of the national digital network plan RM21bil (Jendela) must be accelerated.Lee Heng Guie, Executive Director of the Socio-Economic Research Center: The digital experience needs to be improved in terms of speed, reliability and coverage to narrow the digital urban-rural divide. The implementation of the national digital network plan RM21bil (Jendela) must be accelerated.

“Although the mandatory standard for access pricing has lowered broadband prices and increased broadband speed, broadband coverage and speed, especially mobile broadband, is still significantly weaker than our regional competitors,” he told StarBiz.

According to Speedtest Global Index (January 2021), Malaysia’s mobile download speed ranks 94th (out of 140) in the world and 8th among ASEAN nations.

4G cellular network coverage in the Network Readiness Index 2020 also showed that Malaysia ranks 61st (out of 134), lagging behind Singapore, Thailand, India and Vietnam.

Lee said, “The digital experience needs to be improved in terms of speed, reliability and coverage to reduce the digital urban-rural divide. The implementation of the national digital network plan RM21bil (Jendela) must be accelerated.

“For example, all industrial parks should be equipped with a high-speed Internet infrastructure in order to improve business operations.”

Digital talents should also be strengthened. The design paid great attention to developing human capital in order to build agile and competent digital professionals.

If people do not have the skills needed to use the appropriate technologies, it would impact government digitization initiatives.

Bank Islam Malaysia Bhd’s chief economist Mohd Afzanizam Abdul Rashid (pictured below) said that while the digital rollout is imminent, the connectivity and data speed issue appears to be mixed.

Bank Islam Malaysia Bhd Chief Economist Mohd Afzanizam Abdul RashidBank Islam Malaysia Bhd Chief Economist Mohd Afzanizam Abdul Rashid

He said there are areas where connectivity is slow and this could hinder the growth of the digital economy.

In this context, he said that the expansion of the infrastructure was a prerequisite for the successful implementation and implementation of the digital economy, in particular the expansion of the 5G network.

“At the same time, issues of smart device affordability and data tariffs could also be one of the most important considerations to ensure that the digitization of the economy takes an inclusive approach, especially for those living in the low-income class.

“The associated risks to the nation, therefore, are the digital divide, which can exacerbate the extent of income and wealth inequality.

“In a way, it is about realigning the growth strategy, taking digitalization into account, which is intended to change our actions.

“That is why we have to rethink topics such as home office, e-learning and e-commerce in a holistic way in order to advance the digitization of the economy,” said Afzanizam.

Since data security and data protection are basic requirements for building consumer confidence in digital services, protective measures should be taken.

The necessary safeguards should be derived from a combination of internationally agreed approaches, national legislation and industry measures, he added.

According to the Malaysia Computer Emergency Response Team (MyCERT), cybercrime cases had increased by 10.7% per year from 7,962 cases in 2017 to 10,790 cases in 2020. In 2020, more than 80% of total cybercrime cases were due to fraud and intrusion.

Economists agreed that in order to boost the digital economy, relevant policies and conducive regulatory frameworks are critical to attracting Foreign Direct Investment (FDI).

In Southeast Asia, Lee said the policies and measures have encouraged FDI, with billions invested in Gojek and Grab, for example, where ridesharing and delivery companies compete for market share.

Whether Malaysia is on track to become a leader in the regional digital economy as outlined in the blueprint, Koong Lin Loong, treasurer of the Associated Chinese Chambers of Commerce and Industry of Malaysia and chairman of the SME committee, said local businesses take digitization rather slowly, including mastering high-tech skills and applications in research and development (R&D).

Chinese Associate Chambers of Commerce and Industry of Malaysia, Treasurer and Chairman of the SME Committee Koong Lin LoongChinese Associate Chambers of Commerce and Industry of Malaysia, Treasurer and Chairman of the SME Committee Koong Lin Loong

“This becomes clear as the World Bank’s 2018 data showed that Malaysian companies were lagging behind the global average in terms of their digitization pace.

“In a June 2021 report, the World Bank reiterated that only a third of the country’s businesses are digitized, while less than a quarter of them have their own digital team,” he said.

To boost the growth of the digital economy, Koong said the government should ensure that the digital infrastructure provides consistent, reliable and ultra-fast broadband services, adding that this is key to unlocking the potential of the digital economy.

Based on a joint survey conducted by Huawei and the Malaysian government in 2018, he said the biggest challenge facing our SMEs in digitizing was the lack of funding and skills of workers – around 50% of them cited capital as their biggest drawback, while 60% had no idea about relevant financing methods.

Internet speed and price were another major obstacle in Malaysia, where 44% of SMEs reported preventing them from using cloud services.

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