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Unlocking the potential of digital economy

Unlocking the potential of digital economy

23 Aug 2021

Consistent, reliable, ultra-fast broadband infra vital

While digitalisation has become the new normal amid the Covid-19 pandemic, more concrete efforts are needed to steer Malaysia to become a regional leader in the digital economy.

Economists said the right measures should be put in place if the country wants to ensure the success of its digital initiatives, including the much touted Malaysia Digital Economy Blueprint. Otherwise, they said, the nation would lose out to its regional peers.

The blueprint sets the direction, strategies and initiatives to drive the growth of the digital economy, which would be implemented up to 2030.

The digital economy is targeted to contribute 22.6% to Malaysia’s gross domestic product (GDP) by 2025. In 2019, the information and communication technology sector contributed Rm289.2bil to the economy (19.1% of GDP), growing by 8% per year from Rm213bil in 2015 (18.1% of GDP).

Socio-economic Research Centre executive director Lee Heng Guie said that, among others, the digital infrastructure, in particular high-speed broadband, must be further enhanced for electronic communications and applications that are crucial for transmitting data.

“Although the Mandatory Standard on Access Pricing has reduced broadband prices and increased broadband speed, the coverage and speed of broadband, notably mobile broadband, is still markedly weaker than our regional peers,” he told Starbiz.

According to Speedtest Global Index (January 2021), Malaysia’s mobile download speed ranked 94th (out of 140) in the world and 8th among Asean nations.

The 4G mobile network coverage under Network Readiness Index 2020 also showed that Malaysia was ranked 61st (out of 134), lagging behind Singapore, Thailand, India and Vietnam.

Lee said: “Digital experience needs to be enhanced in terms of speed, reliability and coverage to narrow the urban-rural digital divides. The implementation of the Rm21bil National Digital Network Plan (Jendela) must be expedited.

“For example, all the industrial parks should be equipped with high-speed Internet infrastructure to enhance business operations.”

Digital talent, he said, should also be beefed up. The blueprint has placed significant emphasis on human capital development to build agile and competent digital skilled workforce talent.

He said if people did not have the requisite skills to use the relevant technologies, it would impact the government’s digitalisation initiatives.

Bank Islam Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said while the digital adoption has been forthcoming, the issue on connectivity and data speed appears mixed.

He said there are areas where connectivity has been slow and this could hamper the growth of the digital economy.

In this regard, he said the development of infrastructure is a pre-requisite for the successful implementation and execution of the digital economy, in particular the rollout of the 5G network.

“At the same time, issues relating to affordability of smart devices and data plan could also be one of the key considerations in order to ensure digitising the economy does take an inclusive approach, especially those who are in the low-income bracket.

“As such, the associated risks to the nation is the digital divide which can accentuate the extent of income and wealth inequality.

“In a way, it’s about rebalancing the growth strategy by taking into account the digitalisation, which is supposed to change the way we do things.

“So we need to rethink issues such as workfrom-home, e-learning and e-commerce in a wholesome way that will leverage on digitising the economy,” Afzanizam noted.

As data security and privacy are fundamentals to building consumer trust in digital services, Lee said there should be safeguards in place.

The necessary safeguards should be derived from a combination of internationally agreed approaches, national legislation and industry action, he added.

Based on Malaysia Computer Emergency Response Team (MYCERT), cyber crime cases had increased by 10.7% per annum from 7,962 cases in 2017 to 10,790 cases in 2020. In 2020, more than 80% of total cybercrime cases were due to fraud and intrusion.

Economists concurred that to boost the digital economy, relevant policies and conducive regulatory framework are vital to attract foreign direct investments (FDI).

In South-east Asia, Lee said the policies and measures have encouraged FDIS as billions, for example, have been invested in Gojek and Grab where ride-sharing and delivery firms are competing for market share.

On whether Malaysia is on track to be become a leader in the regional digital economy as spelt out in the blueprint, Associated Chinese Chambers of Commerce and Industry of Malaysia treasurer-general and chairman of SMES Committee, Koong Lin Loong, said local companies are rather slow in adopting digitalisation, including mastering high-tech research and development (R&D) capabilities and applications.

“This is evident as the World Bank data in 2018 showed that Malaysian enterprises were lagging behind the global average in terms of their pace of digitalisation.

“In a June 2021 report, the World Bank once again pointed out that only a third of the country’s enterprises have gone digital, while less than a quarter of them have a dedicated digital team,” he said.

To spur the growth of the digital economy, Koong said the government should ensure that digital infrastructure provides consistent, reliable and ultra-fast broadband service, adding that this is key to unlocking the potential of the digital economy.

Based on a joint survey by Huawei and the Malaysian government in 2018, he said the biggest challenge facing our SMES in going digital was the lack of financing and workers’ skills – with about 50% of them listed capital as their main setback, while 60% had no idea about any relevant financing methods.

Another major barrier was Malaysia’s Internet speed and price, where 44% of the SMES said it deterred them from using cloud services.

Source: The Star