September 23, 2023

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Preparing Malaysia for its Digital Future

Digital Transformation in Malaysia

Malaysia has had great successes in industrialising since the 1970s. This transformation has made an agro-based Malaysia into an Asia Pacific smartshop, Malaysia’s Finance Minister recently stated.

Today, places like Penang, the Klang Valley and southern Johor are regional manufacturing hubs fulfilling global demand. These hubs contributed to the rapid rise of Malaysia, making it one of the Asian economic tigers in the 1990s.

However, by the early 2000s, Malaysian manufacturing, especially the electrical and electronics (E&E) sector began to hollow out due to the opening up of China and the emergence of new economies with lower cost structure.

The hollowing out effect has led to the premature deindustrialisation of Malaysia. Low-value services are expanding in place of manufacturing, while within the manufacturing sector itself, high-tech high-value manufacturing growth is stagnating.

Nevertheless, there is still hope; in the form of digital transformation and the Fourth Industrial Revolution.

Reindustrialising Malaysia

Malaysia sees the permanent reorientation of the global supply chain as a golden opportunity to attract new investment and reverse our premature deindustrialisation.

The entrepreneurial state has an important role here. Hence, the government will need to draw an industrial policy to focus Malaysia’s reindustrialising efforts, which requires necessary selective state interventions to prioritise investment in strategic sectors, and structure incentives around specific economic and social goals.

Budget 2020 and Industry 4.0

It is in the context of IR4.0 that the Finance Minister tabled Malaysia’s 2020 Budget. Keeping in mind a key question: why is the digitalisation of the economy important?

Previously, industrialisation required an ample supply of skilled workers, good physical infrastructure, as well as a set of consistent rules of law; now, there is a new dimension that needs to be considered today. It is about data and its uses.

However, the changing nature of industry requires that Malaysia must take Industry 4.0 technology into its embrace if its reindustrialisation exercise is to be successful.

Realising this, Malaysia has put in place its National Industry 4.0 policy (launched in 2018), identifying 5 sectors to prioritize in terms of Industry 4.0 technology implementation (i.e., E&E, machinery & equipment, chemical, medical devices and aerospace).

Generally, Malaysia is upgrading its digital backbone by investing RM21.6 billion into it’s National Fiberisation and Connectivity Plan (NFCP) from 2019 to 2023. This will widen the coverage and raise the speed of broadband internet in the country while providing Malaysians with high-quality internet services at affordable prices.

Moreover, the government is urging the private sector to lead growth. This is where the entrepreneurial state comes in with a comprehensive 4P partnership between the public sector, private sector, professionals and people to maximise the benefits of the NFCP.

When the NFCP is completed by 2023, Malaysia’s digital backbone is expected to be fully ready to support 5G implementation widely. This will give Malaysia the first-mover advantage in the region to reindustrialise faster.

However, the government is laying even more groundwork. It is already testing 5G technology in Malaysia. And the 2020 Budget has measures aiding Malaysian companies to digitalise and enable them to become more productive by adopting new technology.

Direct incentives are being provided; they are worth more than RM21 billion over 5 years for SMEs, large local companies and even multinational corporations to raise the productivity of the Malaysian economy through investment in new technology.

In 2018 as well, the Government provided large funds, either in terms of loan guarantees or grants to encourage digitalisation and the adoption of IR4.0 technology like artificial intelligence, automation, big data and robotics among Malaysian businesses.

Moreover, the regulatory framework to enable the establishment of virtual banking by is being developed and will hopefully be ready by 2020. This will further modernise Malaysia’s banking system, reduce cost and enable inclusive growth.

Disruption and Shared Prosperity

The introduction of new technology as significant as Industry 4.0 will create severe disruption to any economy. The World Bank projects 75 million jobs worldwide would be lost due to automation. Many of these jobs would not be replaced.

Malaysia is experiencing a transition into the Industry 4.0 era and aims to manage the transition well. Hence, the government has unveiled the shared prosperity agenda to ensure the fruits of economic growth can be shared meaningfully across all segments of our society.

The 2020 Budget also has a massive new job programme called Malaysians@Work. The target is to spend RM6.5 billion over 5 years to create 350,000 new jobs across 5 years for youth, unemployed graduates and women, while reskilling or upskilling workers towards technical and vocational education and training (TVET).

The Digital Gap

Shared prosperity must keep in mind progress made in digital payments, as well as digital currencies, and the digital divide it creates. Barriers to access must be lowered to make the digitalisation process inclusive.

To close the gap, Malaysia is adopting innovative methods to hasten the digitalisation of payments in the country as the first step towards a cashless society.

Malaysia will be providing RM450 million worth of digital stimulus to all Malaysians aged 18 years and above earning below a certain income threshold in January and February 2020. This programme works through a one-time electronic cash transfer to qualified Malaysians via their e-wallet.

While there is still much to be done, the Finance Minister believes Malaysia is making good progress in digitalising its economy and enabling the adoption of Industry 4.0 technology, while closing the digital gap.

PARTNER

Qlik’s vision is a data-literate world, where everyone can use data and analytics to improve decision-making and solve their most challenging problems. A private company, Qlik offers real-time data integration and analytics solutions, powered by Qlik Cloud, to close the gaps between data, insights and action. By transforming data into Active Intelligence, businesses can drive better decisions, improve revenue and profitability, and optimize customer relationships. Qlik serves more than 38,000 active customers in over 100 countries.

PARTNER

CTC Global Singapore, a premier end-to-end IT solutions provider, is a fully owned subsidiary of ITOCHU Techno-Solutions Corporation (CTC) and ITOCHU Corporation.

Since 1972, CTC has established itself as one of the country’s top IT solutions providers. With 50 years of experience, headed by an experienced management team and staffed by over 200 qualified IT professionals, we support organizations with integrated IT solutions expertise in Autonomous IT, Cyber Security, Digital Transformation, Enterprise Cloud Infrastructure, Workplace Modernization and Professional Services.

Well-known for our strengths in system integration and consultation, CTC Global proves to be the preferred IT outsourcing destination for organizations all over Singapore today.

PARTNER

Planview has one mission: to build the future of connected work. Our solutions enable organizations to connect the business from ideas to impact, empowering companies to accelerate the achievement of what matters most. Planview’s full spectrum of Portfolio Management and Work Management solutions creates an organizational focus on the strategic outcomes that matter and empowers teams to deliver their best work, no matter how they work. The comprehensive Planview platform and enterprise success model enables customers to deliver innovative, competitive products, services, and customer experiences. Headquartered in Austin, Texas, with locations around the world, Planview has more than 1,300 employees supporting 4,500 customers and 2.6 million users worldwide. For more information, visit www.planview.com.

SUPPORTING ORGANISATION

SIRIM is a premier industrial research and technology organisation in Malaysia, wholly-owned by the Minister​ of Finance Incorporated. With over forty years of experience and expertise, SIRIM is mandated as the machinery for research and technology development, and the national champion of quality. SIRIM has always played a major role in the development of the country’s private sector. By tapping into our expertise and knowledge base, we focus on developing new technologies and improvements in the manufacturing, technology and services sectors. We nurture Small Medium Enterprises (SME) growth with solutions for technology penetration and upgrading, making it an ideal technology partner for SMEs.

PARTNER

HashiCorp provides infrastructure automation software for multi-cloud environments, enabling enterprises to unlock a common cloud operating model to provision, secure, connect, and run any application on any infrastructure. HashiCorp tools allow organizations to deliver applications faster by helping enterprises transition from manual processes and ITIL practices to self-service automation and DevOps practices. 

PARTNER

IBM is a leading global hybrid cloud and AI, and business services provider. We help clients in more than 175 countries capitalize on insights from their data, streamline business processes, reduce costs and gain the competitive edge in their industries. Nearly 3,000 government and corporate entities in critical infrastructure areas such as financial services, telecommunications and healthcare rely on IBM’s hybrid cloud platform and Red Hat OpenShift to affect their digital transformations quickly, efficiently and securely. IBM’s breakthrough innovations in AI, quantum computing, industry-specific cloud solutions and business services deliver open and flexible options to our clients. All of this is backed by IBM’s legendary commitment to trust, transparency, responsibility, inclusivity and service.

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