Malaysia: ICT at the heart of the 10MP

Malaysia

Economic News

22 Jul 2010
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Malaysia’s information and communications technology (ICT) sector appears to be one of the big winners in the state’s latest five-year development plan. The government is preparing to roll out new investments in the industry and looking to the private sector to make greater use of ICT as part of a programme aimed at radically overhauling the country’s economy.

On June 10, Prime Minister Najib Tun Abdul Razak unveiled the 10th Malaysia Plan (10MP), the government’s $72bn road map for developing sustained social and economic growth for the period 2010 to 2015. The objective of the 10MP is to enable Malaysia to become a high-income and high-productivity economy, Najib told the parliament when releasing details of the programme, by securing GDP growth of 6% per annum and lifting per capita income to $12,000 by 2015. Key to the realization of these objectives will be the development of a strong ICT sector, he said.

The plan identifies 12 national key economic areas (NKEAs) that the government believes have the potential to generate high income. Along with ICT these NKEAs are oil and gas, palm oil and related products, financial services, wholesale and retail, tourism, education services, electrical and electronics, business services, private health care, agriculture and “Greater Kuala Lumpur”.

Under the plan, all of these key growth areas are expected to make greater use of ICT, which in turn will increase the role played by the sector in the economy. The plan foresees that by 2015, the ICT industry will represent 10.2% of GDP – up from an estimated 9.8% in 2009. This goal will in part be achieved by the government setting up a business growth fund with a $47m allocation to help bridge the gap between invention and commercialisation of high-tech products. Cloud computing services will be developed to provide small and medium-sized enterprises with critical software applications.

The importance of ICT runs through the 10MP, with the scheme focusing on government promotion of innovation-based growth and production processes that utilise agricultural technology and ICT. It also calls for a strengthened finance sector to benefit from improvements to the country’s communications infrastructure and support to be provided to niche areas in software and e-solutions, creative multimedia, shared services and outsourcing, as well as e-business.

According to Zamzamzairani Mohd Isa, the chief executive officer of Telekom Malaysia, a number of measures contained in the plan would facilitate Malaysia’s shift to a knowledge-based economy.

“As one of Malaysia’s major ICT players, we take the cue from the prime minister’s announcement on the importance of ICT as enabler for the country to leap forward,” Zamzamzairani said. “Deployment of high-speed broadband and ubiquitous broadband for the general population will serve as an enabler for enhancing efficiency and productivity in all the 12 national key economic areas identified,” he said.

Badlisham Ghazali, the chief executive officer of the Multimedia Development Corporation, said that the 10MP set out the role of ICT as “the bedrock for the nation to vault to [a] high-value economy”.

“ICT is one of the national key economic areas in the 10MP,” he said in an interview with the Malaysian Star on June 11. “The imprint of ICT can be seen in the entire blueprint of the plan.”

However, it is as yet unclear how much of an impact the government’s targets will have on the economy. One factor that may place a brake on the goals set out in the 10MP, especially those involving a high level of ICT input, is the amount of private investment required. Under the plan, the government wants to see private investment increase by 12.8% each year and eventually contribute 13.9% to GDP by 2015.

While the government has committed to investing heavily in ICT infrastructure and funding assistance to promote development, the plan does call for the private sector to come through with investments of its own, rather than just enjoying the fruits of state spending.

It might be difficult to achieve the levels of private investment that the government is aiming for, according to the Federation of Malaysian Manufacturers, which estimated that over the past five years private sector investment growth totaled just 2% annually, less than one-sixth of the level targeted under the 10MP.

While the government should be able to put in place the infrastructure needed to promote the greater use of ICT in the economy, it may have its work cut out in getting enthusiasm for the 10MP to translate into private sector investment.

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