ICT industry sees bright prospects in 2018-2019

Last update: 24/12/2018

By Azlee Nor Mahmud

KUALA LUMPUR -- Bright prospects await the information and communications technology (ICT) industry in 2018 and 2019 as it looks forward to an anticipated leap, amid a renewed focus from the country’s new leadership.

According to the National ICT Association of Malaysia (PIKOM), the ICT industry has made remarkable progress and quadrupled in value since 2007, and would welcome any changes that further boost it.

Meanwhile, the value of the ICT contribution to the gross domestic product (ICT-GDP) and e-commerce of non-ICT industries, which has been used as a benchmark in measuring the performance of the industry, has been on the uptrend.

“The ICT-GDP has been on an upward trajectory since 2010 when it registered RM105.7 billion in GDP contribution.

“Based on the average annual growth rate (AAGR) of 7.8 per cent from 2010 to 2017, PIKOM projects the ICT-GDP in 2018 to reach an estimated RM192 billion,” it said in its ICT Strategic Review 2018/2019 Report.

In 2017, the ICT industry contributed RM247.1 billion to the economy, equivalent to 18.3 per cent of GDP. 

With the ICT industry extending and expanding the size of the digitised ecosystem, PIKOM is confident that the domestic ICT industry will generate positive growth in the medium to longer term especially with the continuing emergence of Big Data, Analytics, Artificial Intelligence and Robotics being drivers of the 4th Industrial Revolution.

In his new role as the Minister of Communications and Multimedia, Gobind Singh Deo expressed the need to make internet access a constitutional right for all Malaysians.

Towards this objective, his ministry has made a call to all telecommunications service providers to double the speed of internet access but at reduced rates. 

Enabling the whole country with a population of 32.4 million to enjoy more affordable broadband access will have a significant effect on efforts to create a digitalised Malaysia.

Malaysia's ICT industry will benefit greatly from this move which is expected to create job opportunities, enhance business and make the ICT industry more dynamic.

The value of the e-commerce sector has more than doubled from RM37.7 billion in 2010. 

“PIKOM expects e-commerce to continue on an aggressive growth track to record RM96.5 billion in 2018 based on an AAGR of 12.5 per cent from 2010-2017,” it said.

PIKOM expects the e-commerce sector to contribute strongly to the industry as more consumers move towards online shopping.

The e-commerce gross value-added grew by 14.3 per cent to RM85.8 billion in 2017 from RM75 billion in 2016, with e-commerce of non-ICT industries being the main contributor at RM68.9 billion.

International Trade and Industry (MITI) Minister Datuk Darrell Leiking said the growth was the result of the nation’s efforts to strengthen the e-commerce industry, and MITI together with the country’s digital economy driver Malaysia Digital Economy Corporation (MDEC) are committed to taking the industry a level higher. 

On June 8, 2018, the implementation of the Mandatory Standard for Access Pricing (MSAP) came into full effect, enabling fixed broadband services to be reduced in price by at least 25 per cent by Dec 31, with higher speeds also made available. 

In October, the Malaysian Communications and Multimedia Commission (MCMC) announced four new starter packages under RM100 by Telekom Malaysia, Maxis, TIME.com and Celcom. 

Besides dropping prices, the telcos have also offered higher speeds for existing plans at the same price, with some even offering 10 times more speed.

On another note, the Communications and Multimedia Ministry in September proposed the setting up of a Commission for Start-ups and Venture Capital to streamline current efforts made by stakeholders to develop Malaysia's flourishing start-ups and the venture capital industry. 

“Through this Commission, Malaysia will be able to develop young and future talents in new technologies like artificial intelligence and robotics,” said PIKOM.

On Oct 31, 2018, Prime Minister Tun Dr Mahathir Mohamad launched Industry4WRD, which is the National Policy on Industry 4.0, a strategic approach to boost the participation of Malaysia's small and medium enterprises (SMEs) in the manufacturing sector via higher productivity, contribution, innovation and more high-skilled workers.

The objectives of this policy are to increase productivity in the manufacturing industry per person by 30 per cent from RM106,647 to RM138,641; to elevate the absolute contribution of the manufacturing sector to the economy from the current RM254 billion to RM392 billion; and to improve Malaysia's position in the Global Innovation Index from 35th to among the top 30.

Another policy objective is to achieve a higher percentage of high-skilled workers in the manufacturing sector from 18 per cent to 35 per cent.

“The new government is putting in place policies, measures and plans to address the ICT needs of the nation, for instance, with the MSAP paving the way for more affordable high-speed internet services, an increasing number of SMEs will be able to join the burgeoning e-commerce ecosystem and market their products beyond borders with a vibrant e-commerce market in place,” said PIKOM.

It said the breakthrough Industry4WRD is a timely new policy to empower SMEs in the manufacturing sector to adopt Industry 4.0 and boost their productivity, adding that its an important move as the SME segment needs to be the backbone of the economy.

Gobind had pointed out that Malaysia was one of the top three ASEAN countries expected to contribute 75 per cent to the cybersecurity market share by 2025.

Quoting a recent Frost & Sullivan digital talent study, the minister said the demand for cybersecurity talents in Malaysia would hit 10,500 personnel by 2020.

Meanwhile, Malaysia ranked fifth among the top 10 developing economies in Asia for its readiness to support online shopping, based on the 2018 United Nations Conference on Trade and Development (UNCTAD) Business to Consumer (B2C) e-commerce index.

 In its report on the B2C E-Commerce Index released on Dec 10, it said Malaysia has had strong B2C sales contribution to its GDP since 2016 and was among the top five countries including the United Kingdom, China, Ireland and Thailand.

"This is because the government partnered Chinese e-commerce company, Alibaba Group Holdings Ltd, to establish a dedicated e-commerce technology park, the Digital Free Trade Zone (DFTZ), the first such facility in South East Asia,” said UNCTAD, adding that the digital readiness had attracted foreign direct investments in the B2C sector.

So far, Alibaba has invested US$100 million in Malaysia.

Malaysia became the first overseas e-hub, which Alibaba founder Jack Ma calls the Electronic World Trade Platform (eWTP). 

The eWTP concept envisions the creation of digital free-trade zones where small and medium-sized enterprises (SMEs) can easily plug into global trade via e-commerce. 

“The zone would offer simple and straightforward regulations, lower barriers for entry into new markets and provide small businesses with easier access to financing,” according to Alibaba.

MITI said more than 120,000 online businesses are registered with the Companies Commission of Malaysia.

Among others, the number of SMEs registered with ‘Go eCommerce’, a platform that provides online training and education modules to guide SMEs to adopt e-commerce and transform their current businesses to potential e-commerce exports, has exceeded 20,000.

The implementation of the DFTZ Pilot Project has further accelerated the growth of e-commerce activities by providing a platform for local SMEs and enterprises to conduct their business and services. 

To date, more than 5,000 Malaysian SMEs from across the country and various sectors of the economy are participating in the DFTZ, said MITI.

The government remains steadfast in encouraging other industry players such as eMarketplaces and local and international logistics players to participate in the DFTZ.  

Industry partners on board the DFTZ include Alibaba.com (China); Lazada SEA (ASEAN); JBM (China); eRomman (the Middle East); eBay (the US); ecommerce.asia (Malaysia); BuyMalaysia (Malaysia); and Jocom (Malaysia), it said.

On Nov 12, 2018, Malaysia signed the ASEAN Agreement on Electronic Commerce, a concerted effort among 10 countries to smoothen cross-border e-commerce transactions by reducing barriers and lowering entry costs.

MITI  Secretary-General Datuk Isham Ishak said the agreement was expected to streamline regional trade rules governing eCommerce to promote greater digital connectivity and lower operating barriers to entry for businesses.

“This will enhance the regional trade architecture for eCommerce, realise freer movement of eCommerce goods across Southeast Asia and support the regional expansion of companies based in ASEAN,” he added.

-- BERNAMA