This article first appeared in The Edge Malaysia Weekly on February 22, 2021 - February 28, 2021

BY the end of this decade, Malaysia will become a high-value-added economy and a net exporter of home-grown technologies and digital solutions, according to the road map set out in the Malaysia Digital Economy Blueprint.

“The role of digital technology is evident, especially since a year ago, following the outbreak of the Covid-19 pandemic, which has led to all countries facing difficult challenges to continue business as usual,” said Prime Minister Tan Sri Muhyiddin Yassin at the launch of the blueprint on Feb 19.

This is why mastery of digital technology is essential to elevating Malaysia’s economy, he said, emphasising its significance in driving new engines of economic growth.

The digital economy, which has been growing by leaps and bounds in recent months, is expected to make up 22.6% Malaysia’s gross domestic product (GDP) and create 500,000 jobs by 2025.

To achieve this, RM21 billion will be invested through the National Digital Network (Jendela) over the next five years; RM1.65 billion will be invested by telecommunications companies to strengthen connectivity to the international submarine cable network until 2023; RM15 billion will be invested to roll out 5G nationwide over a period of 10 years; and between RM12 billion and RM15 billion will be invested by cloud service provider (CSP) companies over the next five years.

Digital technology has been pivotal in overcoming the multitude of productivity restrictions during the coronavirus pandemic, said Muhyiddin.

The MyDIGITAL initiative sets out various measures and targets that will be implemented in three phases until 2030. The initiative, which includes the Malaysia Digital Economy Blueprint, complements national development policies such as the 12th Malaysia Plan (12MP) and the Vision for Shared Prosperity 2030 (WKB 2030), said the prime minister.

The digital economy is defined as economic activities that use digitised information and knowledge as key factors of production and connections among people, businesses, devices, data and processes.

“The digital wave continues to affect the global community, reaching a scale that has never been achieved before and has completely changed the lifestyles of communities all over the world.

“In the last five years alone, there have been endless changes in the way we interact with each other, the way we learn, the way business is run, and even the way we monitor our health — everything is very different and has changed because of technology,” Muhyiddin said.

Advanced technologies such as artificial intelligence (AI), the Internet of Things (IoT) or big data analytics and blockchain have changed the patterns of the world’s economy and the way of life of modern society, he added.

Apart from their sizeable contribution to GDP, the initiatives outlined in the blueprint are expected to propel 875,000 micro, small and medium enterprises to switch to e-commerce, attract two unicorns and catalyse the growth of 5,000 start-ups in the next five years.

“These initiatives will be the starting point to attract new investments worth RM70 billion in the digital sector, from within and outside the country. The government is also targeting for the level of productivity of the economic sector to increase by 30% more than what has been achieved today, by 2030.

“For the public sector, all agencies will provide cashless transaction facilities as the main option by 2022,” Muhyiddin said.

According to the Malaysia Digital Economy Corporation (MDEC), pure-play technology companies and digital services firms made RM5.99 billion worth of investments in the country last year.

New investments by pure-play technology companies stood at RM3.98 billion, while new investments by digital services companies amounted to RM2.01 billion. In total, these investments have created about 9,000 new jobs, said the agency.

So far, Malaysia has attracted some RM345 billion in digital investments, creating almost 185,000 jobs.

To accelerate innovation and create an effective digital ecosystem, however, four important types of digital infrastructure need to be built. The development efforts will be undertaken via a series of public-private partnerships, with the private sector contributing funds and expertise, said Muhyiddin.

“RM21 billion will be invested over the next five years through the Jendela project to strengthen the existing connectivity.

“This fixed-line fibre-optic network will cover almost 100% of populated areas in stages — from 7.5 million premises by end-2022 to nine million premises by end-2025. Based on this wider fibre-optic network coverage, this country will be better prepared to switch to fifth-generation cellular networking technology (5G) in the near future,” he said.

Jendela, which is part of the 12th Malaysia Plan (2021 to 2025), is aimed at improving the country’s digital infrastructure transition towards 5G technology and the timely delivery of ubiquitous high-quality broadband services at reasonable rates.

Moreover, telecommunications companies will be investing RM1.65 billion to improve connectivity to the international submarine cable network until 2023 to unlock more space for faster and more stable international data transfer, thus lowering internet costs, he said.

The RM15 billion investment — which will be carried out by a special-purpose vehicle under the government — for the nationwide rollout of 5G over 10 years is expected to generate 105,000 job opportunities.

This entity will then be given the appropriate spectrum to own, implement and manage the 5G infrastructure, the PM added.

He gave the assurance that all licensed telecommunications companies would have equal access to market their 5G services to customers.

“This infrastructure cost-sharing enables telecommunications companies to generate higher returns and, in turn, provide better and cheaper 5G services to consumers. This will boost the use of 5G and thus enhance economic capability in triggering more product and service innovations.

“So, by the end of this year, the people will start to enjoy 5G technology in stages. With this, Malaysia will emerge as one of the first countries in this region to build a 5G ecosystem using internet and cloud services in real time to enable instant sharing of information.

“5G technology not only promises better and faster internet access but, more importantly, enables various important applications to be in the hands of end-users, including health monitoring applications for chronic patients, smart emergency assistance, and special applications for senior citizens who are living alone,” said Muhyiddin.

As data centres will be at the heart of enabling 5G in all applications for the foreseeable future, hyperscale hybrid data centres will also be built to increase data storage, reduce operating costs and improve analytical efficiency.

Amazon, Google, Microsoft — which collectively account for more than half of the world’s largest data centres — and Telekom Malaysia have been selected to take the lead in building and managing the much-in-demand infrastructure for cloud services.

The government is also proposing the appointment of three local IT companies — Enfrasys Solution Sdn Bhd, Prestariang Systems Sdn Bhd and Cloud Connect Sdn Bhd — as managed service providers to work with CSPs to manage their services to public agencies.

“This is in line with our intentions to strengthen the capabilities of local companies,” said Muhyiddin.

As part of measures to strengthen the public sector’s cloud computing services, the PM said, the government through its “Cloud First” strategy aims to migrate 80% of public data to hybrid cloud systems by end-2022.

“In addition, for more effective and smooth data collection and management, this strategy helps reduce government costs in IT management in the long run. All these cloud services will allow big data, AI, IoT and other applications to be used to enhance and strengthen government services,” he said.

Muhyiddin emphasised that a robust digital infrastructure is the backbone for a sustainable digital ecosystem, which serves as the key engine of growth towards a sustainable economy.

The government will continue to strengthen the new ecosystem by creating a regulatory environment that is supportive of the digital economy while protecting the privacy of citizens; administering public data resources so that they can be jointly utilised by public and private organisations; and facilitating the evolution of labour market in potentially disruptive industries through automation and digital technology.

“We will ensure that digital companies involved with the government will work hard to help Malaysians improve on their digital skills. These companies, among others, will also collaborate with local universities to establish the Faculty of Artificial Intelligence, and to work with the government to carry out employees’ skills improvement programmes.

“Cyber and data security are the cornerstones in realising the vision for a digital technology nation. Therefore, public data will be handled with care based on security standards set by the government through the implementing agency, the National Cyber Security Agency,” he said.

The MyDIGITAL initiative through the Malaysia Digital Economy Blueprint is to be implemented throughout the nation and all stakeholders need to adapt as soon as possible to face the challenges, said Muhyiddin.

According to Minister in the Prime Minister’s Department (Economy) Datuk Seri Mustapa Mohamed, the digital economy’s contribution to the GDP increased from 13% in 2010 to 19.1% in 2019.

In his opening remarks, Mustapa said this correlated with the significant increase in the use of the internet by individuals from 57% in 2013 to 84.2% in 2019.

Mustapa said the low quality and coverage of broadband services, incomplete digital infrastructure and insufficient number of digitally skilled workers are challenges that need to be overcome to raise the country’s digital proposition.

The blueprint outlines 22 strategies, comprising 48 national initiatives and 28 sectoral initiatives. It will be implemented over 10 years — from 2021 to 2030 — and divided into three phases. The first phase, from 2021 to 2022, involves reinforcing the foundations and accelerating digitalisation.

The second phase, from 2023 to 2025, will focus on driving inclusive digital transformation. In the final phase, from 2026 to 2030, Malaysia is envisioned to become a regional market for digital products and digital solutions providers.

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