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Rise in investment commitments in digital economy signals investor confidence – Economist

Rise in investment commitments in digital economy signals investor confidence – Economist

17 Aug 2023

The surge of investment commitments in the digital economy sector is a clear signal of investor confidence and strong digital economic prospects in the near term, an economist said.

Sunway University economics professor Dr Yeah Kim Leng said a positive growth in the sector is expected to invigorate the information and communications services and e-commerce sectors which moderated from around eight per cent growth annually before the onset of the COVID-19 pandemic to slightly below six per cent between 2020 and 2022.

“The sector’s growth is projected to pick up to six and eight per cent year-on-year (y-o-y) in the second half of 2023 on account of the tripling of digital economy investment amid sustained consumption growth,” he told Bernama.

Last week, Communications and Digital Minister Fahmi Fadzil revealed that Malaysia has secured another RM5.2 billion worth of investment commitments in the digital economy sector from China (RM3 billion) and Singapore (RM2.2 billion).

He added that the ministry had brought in a total of RM28.4 billion investments in the digital economy sector in the first half of 2023, a 279 per cent jump from RM7.5 billion in the same period last year.

Citing a Department of Statistics Malaysia (DoSM) survey, Yeah said factors supporting the growth of the digital economy sector include the rising usage of computer, information technology and web presence by businesses across all sectors.

The quarterly survey also revealed a 10.4 per cent y-o-y rise in e-commerce income to RM291.7 billion in the first quarter of 2023, primarily driven by the manufacturing and services sectors.

Therefore, with a projected growth of six to eight per cent annually over the next few years, Yeah said the digital economy sector is on track to expand to a quarter of Malaysia’s Gross Domestic Product by 2025.

“The e-government policy and digitalisation initiatives mounted by various ministries, including the central bank’s drive to accelerate digital payment and banking services, are expected to boost the digital economy’s growth trajectory.

“In addition, the 5G rollout together with more rapid digital adoption by businesses and industries to meet growing customer and business demands will spur entrepreneurship, innovation and productivity increases that will feed the self-propelling growth of the digital economy,” he added.

Source: Bernama