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Malaysia’s digital economy on track

Deputy prime minister outlines Malaysia’s digital efforts, noting that the digital economy will account for one-fifth of the country’s GDP by 2020

Malaysia’s digital economy is set to contribute 20% of the country’s GDP by 2020, up from 18.2% in 2016, according to the country’s deputy prime minister, Ahmad Zahid Hamidi.

Speaking at a recent Huawei event in Kuala Lumpur, Zahid said embracing digital technologies is the key to Malaysia’s goal of becoming one of the world’s top 20 developed nations by 2050.

The Southeast Asian nation of nearly 32 million people has been a keen adopter of technology, from using chatbots to process loan applications to piloting smart city projects in Cyberjaya, Malaysia’s Silicon Valley, south of Kuala Lumpur.

“In our 2018 budget, which was tabled two weeks ago, technology innovation and economic development have been given much emphasis to take the nation to greater heights,” said Zahid.

“A total of about RM245m (US$61m) under the Domestic Investment Strategic Fund has been allocated to upgrade smart manufacturing services, aimed at supporting investments and business activities.”

Also, Malaysia has set up a digital free trade zone (DFTZ) that has attracted the interest of almost 2,000 small and medium-sized enterprises (SMEs), said Zahid. The DFTZ, located near the Kuala Lumpur International Airport, was developed through a partnership between the Malaysian Digital Economy Corporation and China’s Alibaba Group.

“Malaysians have embraced the internet economy and e-commerce in a big way,” said Malaysian prime minister Najib Razak in March 2017.

“We are now leading the e-commerce market in the region, generating revenue of $2.3bn in 2015. With the launch of the world’s first digital free trade zone, Malaysia will serve as a regional e-fulfilment centre, and also become the regional hub for SMEs, marketplaces and mono brands,” he added.

Although the DFTZ is a significant step towards enabling SMEs to contribute about 40% of Malaysia’s GDP in future, Zahid said most Malaysian SMEs are still in the early stages of digital transformation. “I hope this new initiative will give a significant boost to help SMEs go full fledge on digitalisation,” he said.

But a digital economy is more than just providing a platform for Malaysian entrepreneurs to conduct business, said Zahid – it is also about improving the lives of people in a safe environment.

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“Public safety is being impacted by digital transformation,” he said. “New technologies such as high-definition CCTV systems, as well as command centres and advanced police communication systems, should be used widely.”

Taking a leaf from China’s Longgang district in Shenzhen, which has installed 41,000 CCTV cameras to enhance law enforcement efforts and reduce the presence of police officers, Zahid called for Malaysia to modernise and improve the efficiency of its police force.

In September 2017, Mimos, the country’s national research and development centre for information and communications technology, signed a deal with Huawei to develop public safety and smart city projects, including the use of advanced video analytics and facial recognition technology.

“I hope this venture will give Malaysia an intelligent system that can trace and analyse moving objects through video feeds, and detect abnormal behaviour so that the authorities can take appropriate measures,” said Zahid.

With broadband infrastructure central to Malaysia’s digital economy, Zahid said the government is planning to raise broadband speeds to up to 20Mbps in rural areas and 100Mbps in urban areas by 2020. It has also set aside RM1 billion (US$240.5m) in its 2018 budget to improve broadband connectivity in the east Malaysian states of Sabah and Sarawak.

To foster a culture of innovation that is needed for Malaysia to realise its vision of becoming a developed country under its Transformasi Nasional 2050 (TN50) framework, Zahid said that value innovation centres (VICs) will be set up in government ministries and agencies.

“These VICs will allow breakthroughs in innovation at a rapid rate,” he said. “They will be headed by chief innovation officers without creating new posts. Ministries and agencies should immediately start working on them as innovation is at the core of TN50.”

Zahid added that there is no shortcut to innovation, which requires hard work and perseverance, not just by the government, but everyone in Malaysia.



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