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Driving Penang’s digital transformation

Driving Penang’s digital transformation

08 Apr 2024

In 2018, the Penang government unveiled its Penang2030 vision for a family-focused, green and smart state. One of the foundational projects for achieving this is Digital Penang, a state government-linked agency whose aim is to create a connected, creative and competitive society. Central to this is its role as a catalyst for accelerating the state’s digital transformation plan, says Digital Penang CEO Ng Kwang Ming.

The transformation plan focuses on driving digital adoption among the community, more data-driven governance, a diverse talent pool for entrepreneurship and investment, and a resilient digital infrastructure to sustain a liveable environment.

The goal by 2030, says Ng, is for “Penang to be digitally engaged, the people use e-wallets, they interact with the state government via digital platforms, the industries are automated and have access to talent. We will have created a channel for skills from the people we’ve trained and those who have gone through the start-up process. These people who are skilled in public speaking and communication and can engage and share ideas will be the next generation of leaders”.

In line with its objective of accelerating efforts to capture opportunities in the digital economy and promote a digitally engaged society, Digital Penang’s initiatives broadly cover the community, industry, entrepreneurs and start-ups.

The start of the agency’s operations in April 2020 coincided with the onset of the Covid-19 pandemic and the beginning of the nationwide Movement Control Order. One of its first programmes was #DahDigital, which was geared towards educating the public on the use of digital tools, specifically e-wallets. The digital literacy programme continues to this day, with a variety of modules for the community, including senior citizens, on mobile security, e-hailing, social media and e-government.

To date, Digital Penang has organised 470 digital classes to train 10,000 participants on mobile technology and internet safety, reaching 42,000 members of the public through outreach programmes to raise awareness of the digital transformation in Penang.

“The pandemic created an environment where if you didn’t do it (get the e-wallet app), you’d lose out because a lot of the financial assistance from the federal government came via e-wallets. So that started the ball rolling. We taught senior citizens, for example, to install the e-wallet on their phones and get familiar with using it. We then raised awareness among retailers and went to the hawker centres, hypermarkets and other retailers to build acceptance for the e-wallet,” says Ng.

Today, cashless transactions are the norm. “If you go to any pasar malam in Penang, you don’t need to bring cash,” quips Ng. Along with Selangor, Penang is leading the way in cashless transactions, hitting a 90% penetration rate of digital payments as at October 2023, according to Payments Network Malaysia Sdn Bhd.

Catalysing digital transformation in industry

Besides the community, a focal point of the digital transformation plan is industry. “In Penang, there is manufacturing, which mainly covers the electrical and electronics (E&E) industry, and tourism and hospitality. In manufacturing, we’re trying to see how we can help the E&E companies and the supporting small and medium enterprises (SMEs) transform,” Ng says.

For instance, Digital Penang works with the Northern Corridor Implementation Authority in assisting SMEs to obtain grants for automation and education in the use of digital tools. “We also try to match start-ups grown in Penang with potential industry partners in manufacturing. We get the ball rolling and if there’s a natural need for industry then they will come and play,” he adds.

The agency is also catalysing digital transformation in the hospitality sector. “We’ve started a community group for tourism technology. We bring speakers, organise talks with the tourism operators and other players to help them understand the upcoming technology that they should be ready for.”

Last December, Digital Penang inked a memorandum of understanding (MoU) with the Malaysia Budget & Business Hotel Association (MyBHA) Penang to help accelerate digitalisation in the sector. With Penang positioning itself as a digital nomad hub in the region, members of the association, comprising mainly three-star hotels, have a key role to play. “A number of the members of the association are still operating with the old ledger system, so we want to get them on board to the digital environment where they can also sell and market their business to clients overseas,” Ng explains.

He adds that one of the priorities of the Penang transformation plan is improving the digital presence of micro entrepreneurs. “We currently have programmes with Lazada to encourage micro entrepreneurs to get on the bandwagon and start a business in the digital space. We see this as an extension of our work in teaching the community to digitise.”

Building and nurturing the start-up ecosystem

Its deep roots in the manufacturing sector aside, Penang in recent years has had its eye on growing the creative industries — art, culture and technology — which makes the incentivising of start-ups crucial. The state government has a target of cultivating 500 start-ups by 2030, and to date, 150 have been set up. These start-ups have gone through Digital Penang’s doors and were helped by the agency in myriad ways from funding to market access and training. The start-ups are in various verticals such as logistics and last mile, mobility and electric vehicle, e-commerce, smart manufacturing and industrial solutions, fintech, edtech and creative content.

“We’re creating an ecosystem for start-ups, one that can sustain and flourish in Penang. We want to see successful start-ups using Penang as their headquarters and hub for growth so that the state can enjoy the economic benefits and prosper from it.

“So, a large part of 2023 was spent looking at the fundamentals of building that start-up ecosystem, which is essentially funding or access to funding, venture capital or angel investors,” Ng says, adding that the MoU signed last year with the Malaysian Business Angel Network (MBAN) to establish a Penang chapter is a vital cog in creating a thriving start-up ecosystem. The collaboration covers identifying promising start-ups, providing mentorship and access to funding, and creating opportunities for networking. “So, start-ups see that there is that environment being created,” he adds.

At the same time, programmes are also developed to raise awareness among investors. Penang, Ng points out, is not short of high-net-worth individuals. “But investing in start-ups is a different concept compared to investing in traditional stocks where you hold equity. When you invest in a start-up, your equity dwindles as different rounds of investment are sought and secured, so these are among the things that we do with MBAN to educate investors.”

He says it helps that some of the high-net-worth individuals are themselves from the tech sector. “So, they understand and value the evolution of technology and the need to support the evolution. They see the value of investing at the early stage of a start-up to mentor and groom the next generation of business leaders.”

Market access is another key area of Digital Penang’s development of the start-up ecosystem. Through its Market Access Programme, 10 Penang start-ups — ADA Biotech, Certiify, Fulkrum, Re:Crave, Haroct, PeerHive, SpaceIn, Spots Logistics, Telebort and VeecoTech — participated in the Tech in Asia Conference in Jakarta, Indonesia, last year.

Digital Penang also inked an MoU with KUMPUL.ID, the premier digital entrepreneurship ecosystem builder in Indonesia. The collaboration paves the way for cross-border collaboration, fundraising and support for Penang start-ups that venture into Indonesia and vice versa.

This year, the Market Access Programme is funding five Penang start-ups to explore and establish business connections in Thailand. It is currently calling for applicants from the e-commerce, tourism tech, software as a service or SaaS, fintech and healthtech segments to participate in the Techsauce Global Summit 2024, to be held from Aug 7 to 9 in Bangkok. At the summit, start-ups can explore opportunities in new market penetration, technology licensing, venture partnerships, market collaboration and market exploration.

The agency also runs programmes and competitions to develop new ideas from universities and the academia. These ideas are then judged independently, and the winners go through accelerator programmes where they are taught how to build a business, work with mentors as well as have access to pitching sessions to venture capital funds and other potential investors. “There are many potential start-ups, and many are unsure about where to go with their ideas, so we’ve been having a few public workshops and interactive sessions, such as ‘ask me anything’ sessions with founders,” says Ng.

Other programmes such as IdeaPesta Hackathon, Penang Digital Creative Week and Digital Penang Hardtech Inculerator also contribute to the cultivation of a differentiated start-up ecosystem within the state. In recognition of its efforts, Digital Penang received the “Outstanding Ecosystem among Medium-Sized Population Cities in Southeast Asia 2023” award from StartupBlink, a leading start-up ecosystem map and research centre based in Switzerland.

Talent pipeline

For Ng, a career technologist with experience at multinational corporations such as IBM and Motorola as well as at Mimos Bhd, the country’s national applied research and development centre, the talent pipeline is crucial to the sustainability of Penang’s digital transformation plan.

Together with the state government, Digital Penang, Sunway Education Group and Khazanah Nasional Bhd last year announced plans to bring in globally renowned computer science school, 42, to Penang. Termed 42 Penang, it will be part of the network of campuses nationwide under 42 Malaysia, and provide an accessible and innovative learning experience in computer science based on the 42 learning model from France. With its peer-to-peer learning approach, 42 offers a unique and inclusive platform for students to acquire real-world skills through project-based learning, with zero fees.

Ng says 42 Penang fits into the agency’s lifelong learning ethos. “Targeted at school leavers, the school also accepts those who want to switch careers, so long as you meet the requirements and have the interest to learn coding. When they complete the programme, they can go on to become software engineers or establish a start-up themselves from the projects they developed at the school.”

In addition, the agency is also looking at a collaboration with the Malaysian Software Testing Board to train people as software testers. This, he says, is another way to attract talent to the IT world. By learning to test products, one learns the architecture of the product, how the coding is done and so, even without any STEM (science, technology, engineering and mathematics) qualifications, you get a leg in the IT world, Ng adds.

“It’s another way of getting supply, and for those without a technical background to join the technology industry. My priority is that no one is left behind in this digital transformation process. Penang has many structured, bottom-up programmes that are already doing very well, such as the Penang Science Cluster, but ours look at those who are already working and want to reskill. They see the excitement of jobs being created in the tech sector and they want to join the bandwagon, so I am creating the avenues to enable that,” he says.

In the near term, Ng and Digital Penang’s priorities are to get more companies in Penang on the digital platform. “For this year itself, we’re helped by the needs of the federal government such as e-invoicing. We see this as fires being started so we work with industry to provide the fire extinguishers,” he says, conceding that there are challenges.

“When you undertake industry automation, there are productivity improvements, so there is a return on investment (ROI) factor, but there is also digitisation work which has no upfront ROI. E-invoicing is one such example. But if you don’t comply, you cannot do business, so we try to explain and at the same time get partners to be ready to provide solutions for industry,” Ng says, adding that this approach is informed by his experience at Mimos.

“At Mimos, we did foresighting for things that were five to 10 years ahead, and although we knew no solutions existed for those trends then, the planning for those solutions happened concurrently so that by the time those future trends became a reality, the tech was there. These are the things we need to build in the ecosystem.” 

Source: The Edge Malaysia