The government is moving forward with one of its flagship projects, an initiative that aims to make the information and communications technology (ICT) sector – already a major contributor to the Malaysian economy – one of its largest components. However, if the state is to achieve its goals there are several issues to be addressed.
Currently, the industry represents around 10% of GDP, a figure the government is keen to increase as it pushes to achieve developed nation status by 2020. That plan was given a boost in early July, when one of the government’s lead agencies in its drive to develop the sector unveiled the first major projects in the Digital Malaysia programme, which was initiated by the prime minister, Najib Razak, last October.
According to Badlisham Ghazali, CEO of Multimedia Development Corporation (MDeC), eight of the scheme’s projects have already been approved and will be rolled out in stages. These and other initiatives will generate $10bn in investment value based on a public-private partnership model and will increase ICT’s input to GDP to 17% – $94bn – by 2020, Badlisham announced on July 5. “The investments will be used to create 160,000 jobs, besides providing an additional $2300 in annual income for 350,000 citizens via digital income by 2020,” he added.
Among the projects that have cleared the approval stage are an “Asian e-fulfilment hub”, which seeks to develop Malaysia into a regional centre for servicing cross-border e-commerce shipments and e-payment services for micro-, small and medium-sized enterprises.
At the core of Digital Malaysia is the aim of moving the industry from a supply-focused approach to a demand-focused one; shifting behaviour from being centred on consumption to production; and helping local talent form a high-knowledge, innovative workforce.
According to Fadillah Yusof, the deputy minister at the Ministry of Science, Technology and Innovation, Digital Malaysia will help develop a cohesive digital ecosystem. “These thrusts include initiating more demand-focused activities to leverage on the supply, encouraging internet users to come up with products or services while they consume from digital technologies, and increasing the development of local talent in key industries,” he said. “Previously, our focus was just to drive the industry. Today, our role has evolved to empowering citizens and businesses to use digital technology to enhance their lives and businesses.”
Though the government and its agencies will need to provide more detail on many of the programmes that are in the pipeline, and on how it intends to attract private investment to those initiatives, moving to flesh out Digital Malaysia should encourage the ICT sector.
According to a statement issued by MDeC on July 2, the outlook for that industry should remain positive for the rest of the year, driven by strong domestic demand and higher consumer spending. This prognosis was supported by a recent forecast by the National ICT Association of Malaysia, which predicted growth of 8-10% for the sector in 2012.
One cloud on the horizon is the weakening health of the global economy, exacerbated by the ongoing crisis in the eurozone and the slowdown in China. While domestic demand is expected to remain strong in the near term, Malaysia’s overseas markets for ICT goods and services could experience a contraction in the latter half of this year and into 2013. Depending on how severe this reduction in demand is, the ICT sector’s growth rate may slow, perhaps significantly.
Another possible pothole is the shortage of skilled engineers and entrepreneurs, many of whom chose to live and work overseas, according to Pua Khein Seng, the chairman and CEO of Taiwan-based Phison Electronics. “There is potential in the IT industry in Malaysia; we have talents but many of them are overseas,” Pua said in an interview with the Borneo Post in July. “In Taiwan, we often hear stories of our seniors becoming successful entrepreneurs after graduating, and these instil the belief that ‘I might stand a chance to succeed if I choose to be an entrepreneur.’ In Malaysia, we don’t have these kinds of success stories.”
If the government can attract the sort of investment it is expecting and is able to do more to facilitate entrepreneurial endeavours, the ICT sector may yet be able to write a few stories of its own in the years ahead.