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2020 Budget: A boost for Malaysia's tech industry

14 October 2019

KUALA LUMPUR: The 2020 Budget demonstrates that the local technology industry is continuing to get much attention from the government, which is intent on further boosting the capabilities of local SMEs and start-ups, strengthening digital content, embracing digitisation, enhancing e-commerce, and adopting 5G technology.

Local technology players, industry associations and tech agencies in general applaud the various allocations set aside towards making Malaysia a stronger player and contender in the technology arena, both locally and abroad.

The association representing the information and communications technology (ICT) industry in Malaysia (Pikom) says the Budget puts various short-, medium- and long-term goals in realistic perspective, and paves the way for the unfolding of the Shared Prosperity Vision 2030 (WKB2030).

Its chairman, Ganesh Kumar Bangah, said the association is pleased to see that there will be special incentives for start-ups to penetrate the world market.

“At the same time, special investment packages to attract global unicorns for investment will greatly help our local players to become unicorns themselves, someday. As the world moves to a more digital application environment, particularly so with 5G applications across all aspects of life, a dedicated Tech Ministry to oversee the incentive policy, growth of SMEs and providing the necessary platforms for upscaling is still called for,” he said.

Ganesh added that the focus on human capital development for the 4th Industrial Revolution (IR4.0) is well received.

“Funding for upskilling via HRDF and encouraging STEM education is most welcome. Pikom also applauds the various entrepreneurship programmes introduced, including for micro digital enterprises and coach and grow programmes that will be the catalyst for further growth in the start-up scene,” he said.

The proposal for e-wallet incentive is a boon and will have a transformative effect in creating a cashless society.

Elevating digital transformation

Budget 2020 also illustrates that the government is actively encouraging more local businesses to move rapidly into the technology sphere.

Malaysia Digital Economy Corporation (MDEC) CEO Surina Shukri said all the allocations will empower the digital economy initiatives championed by MDEC, and will directly support the recently-launched WKB2030.

“The digital transformation agenda for Malaysia continues to be a major catalytic driver for the nation’s economy. We are encouraged to note that Budget 2020 includes proposals, which will further accelerate Malaysia’s rapidly-maturing digital economy,” she said.

Surina said a new programme, called 100 Go Digital, has been launched to enable traditional Malaysian businesses to embrace digitalisation. This will enable local businesses to fully leverage on digital transformation to address their common pain points.

She said that under the budget allocation, MDEC will also continue to manage and improve its Digital Transformation Acceleration Programme (DTAP).

“We are also pleased to note that the allocation of RM70 million to build 14 one-stop Digital Enhancement Centres (DEC). This initiative will strengthen the nation’s position as the region’s tech and digital hub, as it will facilitate access to financing and capacity building for businesses, specifically small- and medium-sized enterprises (SMEs),” she added.

Digital content boost

The Government has also allocated RM20 million towards creating a conducive, inclusive, and competitive Digital Content Ecosystem.

“The Malaysian digital content ecosystem represents an industry that has tremendous export potential, and is greatly reliant on our talent and ingenuity, and resonates very strongly with young Malaysians.

“With over RM7.6 billion in revenue, a fast-growing RM1.3 billion export revenue and over 10,000 jobs, this industry is poised for the next stage of growth,” said Surina.

She said the allocation represents another wonderful opportunity for all Malaysians and talented content creators from around the world to continue to build on that success.

“This move reinforces the confidence that we, as a nation, have for the creative content industry. By increasing opportunities to participate in this industry, Malaysia can, and will, step up its competitive efforts in this space and push the nation as the destination for digital content production.

“This will also send a vital signal to the region and the global digital content industry that Malaysia is both serious and committed to developing world class animation, games, visual effects, and digital content platforms,” she added.

Besides that, the announcement of the Digital Social Responsibility (DSR) programme is also welcomed.

“This is a novel concept we introduced to enable companies that have made significant strides in the digital industry to give back to Malaysia to spur digital adoption or digital entrepreneurship among Malaysians,” said Surina.

E-commerce on the rise

Online shopping platform Shopee applauds the RM10 million and RM70 million allocations to MDEC to train micro-digital entrepreneurs and technology experts; and setting up Digital Enhancement Centres, respectively.

“This is in line with our vision to continuously upskill, educate and prepare local businesses to be e-commerce ready. The move is timely, knowing that only 32 per cent of Malaysian SMEs have adopted digitalisation to date,” said Shopee’s regional managing director, Ion Ho.

“As a close partner of MDEC, we will complement the corporation’s initiatives by doubling our efforts, including allocating our resources and manpower to create a strong foundation and conducive environment for businesses to trade online through our free Shopee Uni sellers’ workshop,” said Ho.

Additionally, the government’s vigorous rollout of the National Fiberisation and Connectivity Plan (NFCP), which is key for 5G, will indirectly benefit online shoppers.

“With greater Internet connectivity, this would allow us to serve Malaysians better, especially those residing in rural and remote areas who currently do not have access to a wide range of necessities,” added Ho.

Digital first economy

Microsoft Malaysia said the budget emphasises a shared responsibility to ensure that the fruits of development are distributed at each stage of the value chain and to the rakyat at large.

“Malaysia is poised to be a digital-first economy with a robust digital and social infrastructure that works towards bridging the opportunity divide in our journey to become a high-income nation.

“The core measure undertaken in the budget will help further fuel the digital economy, drive growth for SMEs and enterprises, enhance workforce skills development, as well as allowing education access for all,” said its managing director, K Raman.

Among the key thrust areas in the 2020 Budget is to fortify the digital economy with efforts to improve the physical and digital infrastructure that powers up the IR4.0 revolution.

“We welcome the measures for high speed and quality digital connectivity nationwide, and efforts towards more pioneer digital projects that would allow Malaysian businesses to ride the global 5G wave. By accelerating deployment of new digital infrastructure for public buildings, pilot projects on digital applications and encouraging digital payment and e-wallet adoption, the government is reinforcing its commitment to building a strong momentum for the digital economy.

"With digital transformation set to contribute US$10 billion to Malaysia's GDP by 2021, the government's move to enhance our nation's digital infrastructure is undoubtedly a step forward towards a stronger, more resilient economy. These efforts will help cement Malaysia's position as a tech powerhouse in the region, drawing in more investments from foreign companies, whilst also creating more job opportunities for Malaysians,” he added.

Meanwhile, Grab Malaysia’s country head, Sean Goh, said the company welcomes the government’s direction to encourage a cashless community.

“Based on a study by Nielsen, only eight per cent of Malaysians use e-wallets. A progressive, cashless economy would help micro-entrepreneurs and SMEs grow without the cost, burden and safety concerns that come with managing cash,” he said.

Digitising the manufacturing sector

Digitising the manufacturing sector is a key driver to Malaysia’s sustainable economic growth in the longer term.

Cisco Malaysia’s managing director Albert Chai said Budget 2020 exemplifies the government’s continued resolve to build the necessary foundation for Malaysians to capture the full potential of the IR4.0.

“We commend the supportive measures, such as the smart automation matching grant of up to RM2 million for local manufacturers and services companies to embrace digitalisation. This, coupled with the tax incentives provided to the electrical and electronics (E&E) industry to facilitate investment in next generation technologies, will definitely spur the pace of technological adoption, especially among manufacturers,” he said.

A Cisco and AT Kearney joint study revealed that the country’s manufacturing sector could experience an incremental growth of US$30 billion over the next decade from IR4.0. This growth will be largely driven by productivity gains, increasing between US$20 billion to US$25 billion, and driven by the creation of additional revenue streams through new products and quality improvements, as manufacturers adopt IR4.0 technologies.

iMoney Group’s CEO, Mitul Lakhani, commended the government for the allocation of RM20 million in grants and RM20 million from the Human Resource Development Grant to encourage working adults to sit for professional certification exams in IR4.0-related courses.

“This move is also bolstered by the expansion of the withdrawal scope for EPF, which includes members’ parents and spouses for accredited programmes in line with IR4.0. These initiatives will provide a larger local talent pool for digital SMEs such as iMoney to recruit from and continue to grow across the region,” said Lakhani, adding that this clearly outlines the government’s strategy on elevating the rakyat’s employability and financial well-being via initiatives focusing on continued investment in education, encouraging job creation, and providing incentives for training, development and upskilling of the current Malaysian workforce.

Meanwhile, NetApp’s country manager of Malaysia, Brunei and the Philippines, Azrin Abd Shukor, said that NetApp is pleased by the government’s ongoing commitment towards boosting Malaysia’s growth in a new economy and digital era.

“We believe that initiatives for SMEs, such as the provision of the 50 per cent matching grant of up to RM5,000 per company to adopt digitalisation measures for their business operations, will have a positive impact on Malaysia’s digital economy. The government’s incentivisation towards the greater implementation of these services, which are powered by data, is integral to digital transformation,” he said.

Azrin said the shift to data-centric business models requires solutions that will maximise the value that organisations can derive from data.

“NetApp’s cloud-connected flash solutions, an element of a Data Fabric strategy, provide the simplicity, operational efficiency and protection needed to support innovation, and we are committed to supporting Malaysian businesses in their transformation efforts,” he said.

Goh Chee Hoh, managing director of Trend Micro Malaysia, gave a thumbs’ up to new economic opportunities being realised from initiatives such as the National Fiberisation and Connectivity Plan (NFCP).

“The allocation of RM21.6 billion towards the NFCP and the 5G Ecosystem Development Grant worth RM50 million will significantly enhance Malaysia’s economic competitiveness by bridging the digital gap, as well as improving the adoption of IR4.0-related technologies that will further ramp up the productivity of Malaysian businesses.

“While digitisation will bring increased opportunities for growth, Malaysian businesses should continue to prioritise cybersecurity as a crucial component of this journey. It is only through a complete, multi-layered security approach that businesses can protect themselves in today’s increasingly sophisticated threat landscape. With that, we strongly urge businesses to let cybersecurity remain a core component of their digital transformation strategies, in order to reap the full benefits of digitisation,” he added.

For better connectivity

Budget 2020 reflects the government’s ambition of driving equitable growth and building a digitally-connected landscape for mutual prosperity.

“We applaud their commitment to accelerate Malaysia’s transition to 5G through the 5G Ecosystem Development Grant worth RM50 million,” said edotco Group’s CEO, Suresh Sidhu.

“Connectivity is key to ensuring a seamless transition to 5G and deploying shared infrastructure is crucial in that journey. As we move towards the era of Internet-of-Things (IoT) technologies, Artificial Intelligence (AI), development of smart cities and so forth, we will need the right solutions that can cope with the increased capacity demands,” he said.

Sidhu said he hopes that part of the budget allocation will be channelled towards helping disadvantaged communities to leapfrog to 5G so that all sectors of the nation progress at an equal pace.

“As a home-grown regional integrated telecommunications infrastructure services company in Asia, we have the capability and expertise in telecommunications infrastructure planning and deployment to deliver future-proof networks. Alongside players within the ecosystem, we are committed to transforming Malaysia into a digital economy powerhouse in Southeast Asia with an all-inclusive, vibrant 5G ecosystem,” he said.

Meanwhile, Red Hat, an open source solutions provider, is greatly encouraged by the promising use of technology in the digital banking sector and the digital transformation of Malaysian businesses, in line with efforts of having a mature digital landscape.

“We also applaud the Malaysian government in their commitment to providing support and grants to help businesses achieve automation and digitisation, further enabling access to innovations and disruptive technologies,” said its country manager, Eric Quah.

“It is increasingly clear that incremental innovation is just not enough anymore; we must innovate continuously through rapid development to meet ever-evolving business demands. In line with that, as local enterprises move towards digitising their businesses, investment in IT should not be perceived as an expense rather, an asset, to propel their operations and capture new gains. As such, enterprises should begin by exploring solutions that are inexpensive and which give them the ability to start small and scale,” he said.

Airbnb Southeast Asia’s head of public policy, Mich Goh, said it welcomes the allocation of RM1.1 billion for the Tourism, Arts and Culture Ministry (MOTAC) for the Visit Malaysia 2020 campaign, and the continued focus on promoting “Malaysia Truly Asia” as part of the WKB2030.

“With the influx of tourists expected in the coming years, a priority for Malaysian tourism must be ensuring tourism grows responsibly and sustainably. At Airbnb, we believe our community-based model promotes responsible travel and offers a sustainable alternative to mass travel,” she said.

Source: New Straits Times; https://www.nst.com.my/lifestyle/bots/2019/10/529831/2020-budget-boost-malaysias-tech-industry


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