is Malaysia technologically advanced?

Malaysia previously was set to achieve a high-technology nation status by 2030 in the National Policy on Science, Technology and Innovation 2021-2030 (NPSTI 2021-2030).

However, looking at the current situation of Malaysia in comparison to other Asean countries, achieving the status only by 2030 might be deemed too late for us to bounce back in competing with the other Asean members.

Malaysia could craft a strong competitive path by offering the best package in between.

On top of the need for Malaysia to have better stability in politics and a unique package to attract investments, advancements in technology, infrastructure and a good supply of high-skilled workers at a lower cost than Singapore could be attractive to distinguish Malaysia from Vietnam and Indonesia.

The establishment of the High-Tech Council, which reports directly to the National Science Council, chaired by the PM, is a good initiative by the government to address these issues. On top of that, with SMART (specific, measurable, achievable, relevant and time-bound) goals and followthrough on the tracking, measuring and reviewing processes, Malaysia would come back stronger on its track to become a high-technology nation sooner than 2030.

Ultimately, Malaysians must always support Malaysians at every step of the way to realise this achievable aspiration. Criticisms should be constructive instead of destructive. The spirit of “togetherness” in embracing technology by the government, industry players, academia and the rakyat would be vital to remain competitive in the region and Malaysia could eventually become a high-income nation.

Malaysia’s Digital Transformation continues to drive demand. for U.S. technologies in the information and communications technology sector (ICT). as Malaysia seeks to become the digital hub in Southeast Asia. Malaysia is focused on the development of connectivity, satellite broadband, digital infrastructure for buildings, 5G ecosystems, and smart automation. This provides U.S. companies an opportunity in the near term to supply cybersecurity and digital technology.
Malaysia is strategically situated in the heart of the region. with easy access to other growing markets and robust infrastructure, connectivity, and economic stability. The ICT sector is one of the fastest-growing sectors in the Malaysian market, currently contributing 19.1 percent of the country’s GDP (2019) and is expected to reach 22.6 percent by 2025.
Based on a report from GlobalData Market Opportunity Forecasts, ICT spending in Malaysia will reach $25.2 billion by 2023. This spending will be supported by a growing rate of digital adoption and cloud computing in Malaysia. The leading growth areas in the ICT sector. include cloud computing, data analytics, storage, cybersecurity, business process outsourcing, and mobility. with the highest compound annual growth rate (CAGR) of 21 percent during the forecast period.
The manufacturing sector in Malaysia continues to be the highest contributor to total ICT spending. This trend is expected to increase from 18.4 percent to 18.5 percent of the total ICT revenue between 2018-2023. Government policies, such as the Industry4WRD policy, play an essential role in promoting digitalization throughout all economic sectors and industries. Industry4WRD aims to transform the manufacturing sector and related services in the next five years.
In 2021, the Government of Malaysia (GOM) launched the MyDIGITAL (https://www.idc.com/getdoc.jsp?containerId=prAP47491421) initiative as a comprehensive approach designed to anchor the country’s digital economy by 2030. This initiative serves as part of the government’s plans to transform Malaysia into a digitally-driven, high-income nation and a regional leader in the digital economy. MyDIGITAL is implemented via the Malaysia Digital Economy Blueprint and will take place in three phases. Phase One (2021-2022) is focused on strengthening the foundation of digital adoption. Phase Two’s (2023-2025) aim is to drive inclusive digital transformation. Phase Three’s goal (2026-2030) is to make Malaysia a digital content and cybersecurity lead in the regional market.
As part of the effort to accelerate innovation and create an efficient digital ecosystem, the GOM sets out four key digital infrastructure projects under MyDIGITAL that will be executed via Malaysia Digital Economy Blueprint. These projects will be implemented through Public-Private Partnerships in which the private partners with suitable financial capacity and technical competency will contribute via capital and skills injection. The four key projects are as follows:

$5.06 billion is to be invested over five years through the National Digital Network (JENDELA) project to strengthen existing connectivity.

$39 million to be invested by several telecommunications companies to strengthen connection to the international subsea cable network until 2023.

$3.57 billion is to be invested over 10 years for the implementation of 5G nationwide. This is expected to create approximately 105,000 job opportunities.

$2.85 – $3.57 billion to be invested by Cloud Service Provider (CSP) companies over the next five years to increase data storage space, reduce operating costs and improve analytical efficiency.

Opportunities

Cybersecurity: Malaysia’s cybersecurity industry, which can include the Internet of things, Big Data Analytics, cloud computing, and Artificial Intelligence, is ranked third globally and is ranked third among 193 countries in terms of its commitment to cybersecurity, according to the 2018 Global Cybersecurity Index. The estimated value of Malaysia’s security services market in 2021 is Artificial Intelligence $6.37 million. The top 10 percent of job opportunities in Malaysia are related to cybersecurity.

Cybersecurity is identified as one of the top priorities for the GOM due to the drastic increase in cybersecurity threats. In 2019 alone, Frost & Sullivan reported that the potential economic loss in Malaysia due to cybersecurity incidents is $12.2 billion. This loss is more than 4 percent of Malaysia’s total GDP of $2.96 billion.

In the past, Malaysian companies have not prioritized cybersecurity due to budget cuts. However, the current global pandemic is pushing more companies to go digital, thus creating demands for cybersecurity solutions to protect the vulnerability of their companies.

In 2020, the GOM launched the Malaysia Cyber Security Strategy (MCSS) 2020-2024 with an allocation of $4.3 million to step up national cybersecurity preparedness and upgrade the country’s cybersecurity measures. This cyber strategy outlines five pillars to guide and improve the country’s cybersecurity management in the next five years.

The first pillar is to boost the management of national governance and cybersecurity by improving Malaysia’s critical ICT infrastructure. The second pillar focuses on bolstering the enforcement of current cybersecurity laws by reviewing related legislation and formulating laws on cybersecurity. The remaining pillars are focused to empower innovation, improve cybersecurity talents in Malaysia, and leveraging regional and international cooperation to protect the country’s cyberspace.

This cyber strategy also identified eleven critical national infrastructure sectors. They include national defense and security, banking and finance, ICT, energy, transportation, water, health services, government bodies, emergency services, and food and agriculture.

Data Systems Integration: The GOM has identified data system integration as a critical tool to accelerate digitalization across all industrial sectors with the implementation of digital technologies such as artificial intelligence, the Internet of Things (IoT), and Big Data Analytics (BDA), and cloud computing.

Cloud Computing: Cloud adoption is primarily concentrated among Malaysia’s larger enterprises, while adoption among SMEs is relatively low. Microsoft’s Digital Transformation Study, however, found that 79 percent of businesses in Malaysia acknowledged cloud computing as essential for digital transformation. According to 81 percent of companies in Malaysia, cloud computing and the decreasing cost of devices have made it more affordable for companies of any size to transform digitally. To encourage the adoption of digital technologies, the GOM is offering wide-ranging incentives. These incentives include tax breaks for the E&E sector and related intellectual property, automation equipment capital allowance for services, provision of incentives for digitalization, and innovation efforts as well as a $4.6 billion Industry Digitalization Transformation Fund.

Internet of Things: The IoT industry is expected to contribute $2.2 billion to the gross national income of Malaysia by 2020 and $9.8 billion by 2025. Malaysia is in an excellent position to seize the economic opportunities generated in IoT due to the country’s high penetration rates in mobile and internet, an established E&E sector, and strong support from various government initiatives.

A major challenge in the growth of the national IoT industry is the lack of a comprehensive IoT ecosystem with no standards in technology and concerns about the level of security and privacy in the country. To tackle this issue, the GOM established The National IoT Roadmap, which aims to drive Malaysia to be the premier regional IoT development hub, with the objective of creating a national ecosystem that enables the use and industrialization of IoT as a new source of growth for the national economy.

Big Data Analytics: The BDA software market in Malaysia is forecasted to reach $138 million by 2021. BDA revenue is expected to achieve a CAGR of 8.8 percent over the year 2016 to 2021 forecast period. BDA is identified as an essential tool for the growth of businesses through several digital adoptions and implementation processes.

Data Centers: The data center industry in Malaysia is expected to grow over the next five years due to strong growth from both local and international providers. Malaysia’s data center market size is likely to reach revenues of more than $8.0 million by 2025.

Malaysia is becoming a regional hub for many businesses, and this is driving more organizations to invest in cloud systems, which are, in turn, driving the need for more local data centers. The high concentration of international CSP in Singapore has led some to choose Malaysia as a secondary market location for business continuity and disaster recovery and to support their primary sites in Singapore.

The primary drivers for data center services include increased demand for cloud services, a higher focus on the digitalization of businesses, and government expansion of digital policies. U.S. companies such as IBM, Microsoft, and Amazon Web Services and local participants, such as TM One and AIMS, are some of the cloud vendors that are expanding their infrastructure and availability in Malaysia. On April 20, 2021, Microsoft announced that the company will establish its first data center in the Greater Kuala Lumpur area. The project is estimated to cost $1 billion.

Smart Cities: Smart Cities, an important government initiative that incorporates various leading industry sectors, e.g. ICT, Greentech, smart grid, transportation, and infrastructure, and touches on key policy issues such as 5G, cybersecurity, and RE are currently being discussed in the private and public sectors. The three main pillars of Smart Cities are Smart and Sustainable Solutions, Smart Planning and Smart Infrastructure and Technologies

Based on the ASEAN Smart City Network (ASCN) goals of facilitating cooperation on smart city development, catalyzing bankable projects with the private sector, and securing funding and support from ASEAN’s external partners, the United States established the U.S.-ASEAN Smart Cities Partnership (USASCP) to develop and explore activities and programs that will benefit the ASCN. The concept note for the ASCN can be viewed here.

The USASCP is intended to be a flexible, responsive, and multi-year commitment to ASEAN. The Partnership will be able to help address smart city challenges across a range of sectors especially in the areas of infrastructure, energy, and information, and communications technology. The Partnership will consider the ASEAN Smart Cities framework and draw upon individual Smart City Action Plans to inform specific programming and activities. Of the 26 ASCN pilot cities, four are in Malaysia.

5G in Malaysia: One key focus of the MyDIGITAL initiative is to bring forward the plan to roll-out next-generation mobile 5G technology from 2021 to 2022. Deployment of 5G will provide Malaysia with digital connectivity and robust infrastructure as 5G can deliver higher multi-Gbps peak data speeds, ultra-low latency, increased reliability, massive network capacity, and a uniform user experience for subscribers. In 2021, the GOM established a special purpose vehicle (SVP) under the Ministry of Finance, Digital Nasional Berhad (DNB), that would be responsible for the development of 5G infrastructure nationwide and the management of Malaysia’s 5G spectrum.

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