MDEC continues to spur digital economy


  • Yasmin: We want to prepare the nation for a digital future
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This article first appeared in Corporate, The Edge Malaysia Weekly, on August 8 - 14, 2016.

 

THE Multimedia Super Corridor (MSC) initiative, which was viewed as too ambitious by certain quarters when first mooted, has expanded beyond Cyberjaya to the rest of the country. Today, there are 3,881 MSC-status companies and 44 cybercities and cybercentres across the nation. 

Since Malaysia Digital Economy Corp Sdn Bhd (MDEC), formerly known as the Multimedia Development Corp, was established over 20 years ago, investment into the digital sector has amounted to RM283 billion and about 160,000 jobs have been created.

In 2015, MDEC registered RM19.8 billion worth of approved and foreign direct investments, an increase of 56% from the previous year. As for new investments, MDEC saw the highest increase of RM4.6 billion since its establishment in 1996.

Export sales from MSC companies stood at RM16.2 billion in 2015, the highest in 10 years. In 2014, it was RM13.7 billion. Gross domestic product contribution from the digital sector grew 11% year on year to RM15.3 billion.

However, more needs to be done.

“Despite the 20-year headway, there is still a sense of urgency for us to catch up. The world is changing fast. If we are not agile and do not have the pace or a sense of urgency, we will be left behind,” MDEC CEO Datuk Yasmin Mahmood tells The Edge. 

Over the years, she has seen tremendous changes in the digital industry. “Of course, the internet is the almighty enabler. With the internet, innovation has become so pervasive so quickly.”

According to her, investment in focus areas such as cloud and data centre, big data analytics (BDA), e-commerce and internet of things (IoT) has grown five times between 2014 and 2015. 

“We want to prepare the nation for a digital future and make sure that we are able to unlock the opportunities of the digital innovation to drive the digital economy as a core economic pillar of the country,” she says.

The digital economy as a percentage of GDP amounted to 17% in 2015. Thus, MDEC’s target of 18% by 2020 looks set to be revised upward and could perhaps meet its aspirational goal of 20%.

MDEC is entrusted with overseeing the development of the MSC Malaysia initiative, a platform to nurture the growth of local tech companies while attracting foreign direct investment (FDI) and domestic direct investment (DDI) from global multinational companies.

“We see companies that have been doing well over the years. They came to Malaysia with a small footprint, maybe 10 or 15 years ago, with a simple business,” she says.

A good example is Scope International Sdn Bhd, a subsidiary of Standard Chartered Bank. Over the last decade, Scope has grown more than 10 times and now has a staff strength of 4,700. Its collective intelligence and command centre in Bukit Jalil, Kuala Lumpur, serves as the “nerve centre” of its worldwide banking technology and business operations in Asia, Africa and the Middle East, providing software and systems development, IT support services, banking operations and customer service capabilities.

Scope’s progress has somehow reflected the growth and maturity of Malaysia’s ecosystem of technology and digital companies, says Yasmin.

“Moving forward, making Malaysia a destination for great technology companies from across the world to conduct their business continues to be the main focus for us,” she says. 

Recently, Belgium-based Materialise NV set up a research and development centre for 3D printing in Malaysia. Currently, there are 146 active MSC-status multinationals in the country. 

“On the local front, we have our home-grown intellectual properties such as Upin & Ipin and BoBoiBoy. The movies have performed well at the box office,” notes Yasmin.

Last year, MDEC saw seven local companies cross the RM100 million revenue mark.

MDEC will continue to increase efforts to make MSC Malaysia companies more competitive globally and create micro multinational corporations. “Malaysian MSC companies will have to go global or regional if they want to grow further. MDEC wants to help them and be the ‘wind beneath their wings’,” she says.

In June, MDEC brought local tech firms to Jakarta, Indonesia, under its “Immersion Indonesia” programme. Thirty-one firms, five of them start-ups, took part in the programme, which is part of MDEC’s Global Acceleration Network initiative. 

Meanwhile, the increasing importance of new areas, such as BDA and IoT, will change the way of doing business. BDA is the process of examining large data sets to uncover hidden patterns, unknown correlations, market trends, customer preferences and useful business information. IoT is a network of buildings, vehicles and everyday items with network connectivity, allowing them to send and receive data.

“There are very few sectors that are going to be shielded. Traditional businesses will not be spared. The level of awareness and sense of urgency are some things we need to communicate,” she notes, adding that the government and companies cannot afford not to be data-driven.

“Unlocking the value of data is going to be the next frontier of a company’s competitiveness and we are going to make sure that our traditional bricks-and-mortar companies are embracing this,” she adds.

According to McKinsey Global Institute research, the IoT business could contribute as much as US$6.2 trillion to the global economy by 2025.

Yasmin says the financial technology (fintech) industry is another area of focus. “The fintech world is definitely a threat, but also an opportunity for us.” 

Malaysia’s advantage in fintech comes from the central bank’s support of it. Bank Negara has set up a financial technology enabler group, headed by a senior central banker, to strengthen support for disruptive innovations in the industry.

Meanwhile, to ensure Malaysia will have sufficient talent in the tech sector, MDEC has been working closely with the ministry of education, government agencies and private sector to nurture young talent in schools.

According to Yasmin, the [email protected] programme is part of the overall strategy.  “School children have to be nurtured to be digital innovators and not just digital consumers to fully capitalise on the digital economy and fully unlock the potential of digital innovation,” she says.

Computational thinking and computer science, including coding, will be added to the curricula, starting from the primary school, she says.