Policymaking: Policies for the digital era: Catalysts for continued economic growth

This article first appeared in Digital Edge, The Edge Malaysia Weekly, on May 24, 2021 - May 30, 2021.
Policymaking: Policies for the digital era: Catalysts for continued economic growth
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In line with the Malaysia Digital Economy Blueprint and MyDIGITAL that were launched on Feb 19, Prime Minister Tan Sri Muhyiddin Yassin recently announced the Bersama Malaysia initiative by Microsoft. This includes a data centre region investment, commitment to skill one million Malaysians by the end of 2023, collaboration across public and private sectors, and a partnership with the Social & Economic Research Initiative (SERI) to form the MyDIGITAL Alliance Leadership Council — a cross-sector collaborative platform bringing together stakeholders across the public sector, private sector, civil society and academia to develop policies fit for the digital era.

According to International Data Corp’s research, Microsoft’s investment in Malaysia will help generate up to US$4.6 billion in new revenues for the country’s ecosystem of local partners and cloud-consuming customers over the next four years. Additionally, the research estimates that Microsoft, its partners and cloud-using customers will together contribute more than 19,000 new direct and indirect jobs.

These are undoubtedly positive developments that serve to remind us that Malaysia remains an attractive investment destination for multinational corporations. It is imperative that we seize the momentum. It would be appropriate to pause and ask ourselves, what are the policy enablers required to maximise the potential of this investment?

Clarity in relation to law enforcement access to data is essential to bolster Malaysia’s position as a regional data centre hub and increase the confidence of other nations storing data in Malaysia.

Regulators around the world are developing new legal frameworks to replace conventional search and seizure rules, which do not apply to cloud computing. Removing a server from a hyperscale cloud data centre would not enable access to the information as data stored on servers is encrypted both at rest and in transit. This increases the urgency for common approaches to trusted government access to data held or processed by cloud service providers (CSPs).

As the global data economy grows, a principled rules-based approach to government law enforcement access would enhance legal certainty and increase investment opportunities, allowing countries to become data centre hubs or innovation test beds. With increased clarity, countries would be more willing to store their data in Malaysia, with the knowledge that law enforcement would not be able to access data arbitrarily without due process.

Better laws and policies on data

Data is the lifeblood of the digital economy, fuelling our ability to develop data-driven insights and policies. Today’s trade routes are digital and the digital economy depends on the trusted and uninterrupted flow of data between countries. Virtually no economic activity today can happen in national silos. Instead, it depends on close interaction with users, partners and customers in different countries. The secure storage, processing and transfer of personal data underlie all of these exchanges, including remote work and virtual collaboration, distance learning, telemedicine, cybersecurity and the fight against cybercrime and child abuse online.

Without secure cross-border data flows that are essential to domestic and multinational business operations, conducting business becomes costly and unfeasible for organisations of all sizes across all sectors. Without a predictable environment for cross-border data flows, the pace of digital transformation will be slowed, impacting people and society at a time when economic recovery is the top agenda for governments around the world.

International efforts on Covid-19 research and responses provide vivid examples of how data flows have enabled new discoveries, information sharing and collaboration that have helped mitigate the global crisis by enabling better understanding of the virus, tracking the spread of the pandemic and evolution of the different variants, and development and distribution of vaccines. In each of these areas, the ability of a nation, organisation or enterprise to respond to the pandemic depends on its ability to safely send and receive data across international borders.

Enabling cross-border data flows will also open Malaysia up to a market of 669 million people, compared with its population of 32 million. Participation in a digital single market would encourage entities to be global from their inception, and digital by default. Malaysians would be able to provide digital goods and services to Asean and the world, no longer being limited by physical geographical borders. 

Malaysia has the opportunity to demonstrate its leadership and become a regional data centre hub, especially if it is able to introduce legislation that will assure businesses, enterprises and governments that data hosted in Malaysia is safe and all access requests have to be made to the data owners and not the CSPs, as CSPs are merely the data processors and not owners. The follow-on effect is also the opportunity to encourage the thriving start-up community to select Malaysia as their headquarters.

Exemption to Malaysia’s cabotage policy

We should allow foreign vessels to install and repair submarine cables while developing local capacity.

In early April, Datuk Seri Dr Wee Ka Siong stated that the Google and Facebook submarine cables were intended to bypass Malaysia as we do not have the necessary data centre infrastructure. Unfortunately, this statement is inconsistent with the prime minister’s announcement on Feb 19 that conditional approval had been provided to four technology companies — Amazon Web Services, Google, Microsoft and Telekom Malaysia — seeking to develop hyperscale data centres.

The April 19 Bersama Malaysia announcement supports the contention that Malaysia has a growing data centre industry, with revenues expected to hit US$800 million (about RM3.3 billion) by 2025.

As the economic output of many countries, including Malaysia, rely on traffic from these undersea cables, there is a need to develop future-proof policies and sustain enabling environments to advance the nation’s and the region’s economic competitiveness. Blocking the access of foreign vessels with specialised repair capabilities will weaken the resilience of our digital infrastructure and contribute to a less conducive environment for technology investment.

Reinstating the cabotage exemption and allowing foreign vessels to lay cables and provide maintenance services would:

•    Encourage more international submarine cable landings in Malaysia;

•    Allow for shorter repair times, resulting in improved connectivity;

•     Attract more global data centres to reside in Malaysia; and 

•     Bolster the capabilities of domestic data centre companies. 

The Malaysia Digital Economy Blueprint specifically sets the goal of Malaysia having the highest number of submarine cable landings in Asean by 2025. This makes it all the more important that the Cabinet makes the right decision pertaining to Malaysia’s cabotage policy.

Our participation in the global digital economy is dependent on the health and resilience of our digital talent and digital infrastructure. Protectionist or monopolistic measures will not serve us well. Given the multi-stakeholder nature of the digital economy, a collaborative approach would be more appropriate, especially in relation to cable repairs as we lack local specialised talent and equipment to address cable damage quickly and effectively.

Digital divide

The growth of a resilient, sustainable and inclusive digital economy relies on resilient digital infrastructure, connectivity and devices. 

Connectivity: While there are various efforts to increase internet access, these must be accelerated. The Malaysia Digital Economy Blueprint stipulates that Malaysia will have 100% internet access by 2025. However, with education, economic activity and social interactions being pushed online, stable and accessible internet connectivity is no longer a luxury — it is critical infrastructure.

Taking education as an example, bridging the digital divide would allow students to fully engage in their online lessons and access their online learning materials. It is encouraging to note that Jendela fiberisation efforts are in progress. Remote areas may benefit from other technologies such as TV white spaces (technology that allows WiFi to be transmitted via unused television spectrum). TV white spaces is a viable option that is used in neighbouring countries, where connectivity is seemingly impossible due to geographical barriers.

Hardware: The absence of devices and poor or unavailable internet connection prevent productive and fruitful lessons or, even worse, bar the overall learning process. Research conducted by the Khazanah Research Institute last year showed that 37% of students in Malaysia did not have appropriate devices for remote learning at home.

Teachers and students require clarity on the My Device programme, which guarantees students access to digital devices to facilitate their education. 

While the government has expressed its intention to provide devices for students to access their respective online learning platforms, efforts need to be accelerated. Without the means to participate in online lessons, students’ education will be halted. The government has the option of providing refurbished devices, which may be more cost-efficient as opposed to brand new devices. However, this may require replacement or repairs sooner than a new device.

We must remember that work is no longer where you go; it is what you do. Similarly, for education, learning from home or learning from anywhere is the new normal, with increased Covid-19 cases and online school being reinstated post-Hari Raya. With Malaysians now working and learning from anywhere, stable, affordable and accessible internet connectivity must be prioritised to ensure continuity for educators, students and parents.

Skills — bridging the opportunity divide

The global pandemic has normalised and democratised remote working and learning, with technology enabling one billion people with disabilities to be mainstreamed into the economy. While premises once required wheelchair ramps and physical renovations to enable employment of people with disabilities, today’s digital workspaces are enabled by accessible technology, allowing people of all abilities to participate in the digital economy, via education, employment and entrepreneurship. 

Technology presents a unique opportunity to level the playing field, but it also brings the risk of deepening existing inequalities and widening divides. The digital divide is increasingly becoming an opportunity divide as connectivity slowly improves and the population comes online through mobile penetration or broadband.

Ensuring that Malaysia’s digital infrastructure provides consistent, reliable and ultra-fast broadband service is key to unlocking the potential of the digital economy. But it is important to note that access to data, connectivity and devices in isolation do not create economic opportunity. Skills must be at the centre of efforts to bridge the opportunity divide across all segments of the population.

Public sector and private sector organisations have been working on skills development, particularly digital skills, for a number of years. Initiatives have included #MyDigitalMaker hubs by MDEC (Malaysia Digital Economy Corporation), the incorporation of coding and computer science into school curricula, TalentCorp’s efforts to bring home talents working abroad, and training opportunities via HRDF (Human Resources Development Fund) and Socso (Social Security Organisation).

Policymakers and policymaking must also evolve in tandem with technology advancement. Policy innovation — innovation in the policymaking process, not government policies related to innovation — allows governments to respond to new challenges, overcome biases in policymaking and leverage generational advantages in navigating digital transformation, that is, wisdom and experience from digital immigrants coupled with the agility, speed, start-up culture and desire to fail forward in digital natives.

We must also create learning opportunities for civil servants who are in service and pre-service. For example, as governments seek to harvest the insights within their data estates, digital literacy and data literacy become critical skills within the civil service, for both technical and non-technical personnel.

Without appropriate technology and skills, the following challenges may arise:

•    Silo-ed data impeding our ability to understand and predict outcomes.

•    Lack of actionable insights hindering efforts to identify issues and apply predictive and/or preventive practical solutions.

•    Absence of streamlined centralised data preventing the optimisation of resources.

While it is certainly encouraging to note that the Malaysia Digital Economy Blueprint aims for 100% of civil servants to possess digital literacy by 2025, the pace of technological development requires rapid-response policymaking and skills development. By 2025, technology would have evolved further, requiring tectonic shifts in policymaking.

As a non-partisan think tank founded with the aim of advancing evidence-based policies to reduce inequality, SERI believes that empowerment begins with inclusion, and inclusion means leaving no one behind.

Malaysia’s efforts to develop an inclusive digital economy must be anchored on digital skills development, with opportunities made available to all across the nation — people with disabilities, women-headed households, educators, those in precarious working conditions, B40 (bottom 40%) and other marginalised communities.

The commitment by the government to enable and prioritise the digital economy is a step in the right direction and will lead to a realisation of the stated goals within the Malaysia Digital Economy Blueprint as long as the right policies are enacted and implemented on the ground. While technology continues to advance, our policies must be anchored on timeless values such as privacy, transparency, inclusion, empathy and trust. One hopes that Microsoft’s investment in Malaysia is merely the first of many from the technology industry as we strive to build an inclusive digital-savvy and capable society.


Dr Helmy Haja Mydin is the CEO of Social & Economic Research Initiative (SERI), a think tank dedicated to the promotion of evidence-based policies to address issues of inequality, particularly at the intersection of technology and society