Malaysia and the digital economy


IN FEBRUARY 2019, then prime minister-in-waiting Datuk Seri Anwar Ibrahim launched an initiative called the Digital Native Agenda (DNA23). This was to be a key component of his administration – a vision of how the digital economy will be utilised to drive impact on Malaysia in a manner that takes into account the digital divide.

"If we do not take up immediate measures to propel this emergence and awareness in this digital native agenda, I believe that we will not be able to be or to remain a competitive country.

"Our state of our economy, and our society, is certainly in dire need of a major reform," said Anwar.

However, his initiative was paused due to a change or two in government.

The newly-minted Prime Minister has declared that his key short-term priorities are uniting the nation in the face of a rather fractious general election as well as pushing for equitable economic growth in the face of significant economic headwinds. It is likely that difficult decisions will need to be made (e.g., the need for a goods and service tax or GST, subsidy rationalisation) but there is also an opportunity to focus on potential growth areas including that of the digital economy.

Deloitte, the consulting firm, defined the digital economy as "economic activity that results from billions of everyday online connections among people, businesses, devices, data, and processes."

This is only achieved by appropriate connectivity in terms of speed and people, which leads to previously unavailable opportunities in all sectors.

It is telling that one of the key considerations that Anwar had when he was preparing for the premiership was the manner in which the digital economy can be utilised to improve the well-being of the rakyat. However, Malaysia has been talking about the digital economy for a few years now and it is important to take a critical look at where we are at and how far we lag behind regional and international competitors – and why.

Some of the factors that the new government will need to look into are:

1. Connectivity

One of the hallmarks of the Pakatan Harapan government of 2018 was the reduction in broadband costs whilst simultaneously increasing connectivity speeds. The philosophy of increased affordable connectivity should continue.

Key questions to include: Should Digital Nasional Berhad, the special purpose vehicle in charge of 5G connectivity in the country continue in its current form? What more needs to be done to highlight the role of 5G from industry vertical applications to smart city local council implementations?

2. Digital skills

There is a huge number of upskilling and reskilling programmes in Malaysia, run by government, university as well as private sector players. These need to be consolidated and should be checked if they are fit for purpose. For example, six out of seven of TalentCorp's Critical Occupations List require technology skills and these should be mapped out with appropriate interventions put in place.

Whilst there are increasing opportunities in the digital space, we need to be cognisant of regional competitors – for example, in 2021, Singapore stated that they require 1.2 million workers trained in digital skills by 2025. Without the right wage and incentives, we will likely see a brain drain as individuals seek opportunities elsewhere.

3. Investment

Malaysia has a number of start-ups that require funding at all levels. Whilst these can be identified through government programmes, some are best left to local fund managers who have greater insight into the domestic scene.

Bottlenecks to the foreign investment should also be reduced – initiatives such as the Digital Investment Office (a project mooted by MyDigital that led to a joint MDEC and Malaysian Investment Development Authority entity) is one such example. Companies that were hitherto hesitant to invest in Malaysia due to policy uncertainties will be more forthcoming; this is a window of opportunity that must not be missed.

4. Agile governance

Decisions must be made in a timely fashion. For example, it should not take months to resolve the cabotage issue (the revocation of cabotage exemption that previously allowed foreign vessels to carry out undersea communications cable repair works in Malaysian waters). Delays in decision-making affects perception and will hamper efforts to entice further industry investment in Malaysia.

It would also be timely to modify policies made for the analogue age and look at the various overlapping agencies and ministries that are involved in the digital space. There is a need to break down barriers across silos, and consider the need to consolidate the various entities under a "digital czar" who reports directly to the Prime Minister.

It is worth reminding ourselves that digitalisation per se is not the monopoly of any one ministry or agency, but is a framework that should guide all sectors of government machinery. The biggest digital transformation should occur across the government itself, with opportunities to gather and analyst data that will help both policy decision-making as well as provide a more effective and efficient public service.

5. Digital ecosystem

As digital technology is increasingly being used as a geopolitical tool, we must be strategic and agnostic in our use of technology. There is an opportunity to invest in the digital ecosystem and infrastructure.

Apps like MySejahtera have changed the manner in which we utilise digital tech and there is opportunity for growth from fintech to insurtech. The increasing use will also lead to a greater need for cybersecurity and a regulatory environment that balances the need for oversight versus the stifling of development.

The new government should revisit the existing Digital Economy Blueprint. We do not need more time wasted on new proposals – there are sufficient policy proposals that require implementation. Listening to the rakyat and industry stakeholders alongside identifying niche areas for development will be a good starting point. Most importantly, there should be a concerted effort to educate the rakyat regarding why the digital economy is worth their while in the first place.

Malaysia's political infighting has robbed us of the progress that we deserve over the past two years. Instead of reaping the benefit of technology, we have remained stagnant whilst our neighbours have forged ahead. The harsh truth is that nobody outside of Malaysia really cares about our domestic politics – technology advancement and the global digital economy carries on irrespective of who is Prime Minister. It is high time that we rise with the digital tide.

Dr Helmy Haja Mydin is the CEO of Social & Economic Research Initiative (seri.my), a think-tank focused on the intersection of digital technology and society.

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