Break the cycle of underperformance in delivering digital infrastructure

Content keywords: Digital infrastructure; 5G technology deployment; slow rollout

MALAYSIA'S bid to lead in the global digital economy is plagued by inefficiencies, delays, and lack of foresight.

Prime Minister Datuk Seri Anwar Ibrahim’s public frustration with the stalled MyDigital ID initiative and 5G network rollout underscores systemic issues.

The MyDigital ID project is embarrassingly a year behind schedule while unresolved negotiations have paralysed the 5G rollout under Digital Nasional Berhad (DNB).

The PM's criticism of these setbacks as monumental failures highlights Malaysia’s inability to execute vital digital infrastructure projects. “How can we talk about AI and cutting-edge innovations when basic digital infrastructure is stuck?” he demanded during a key economic council meeting.

These delays are more than missed deadlines; they also threaten Malaysia’s credibility and competitiveness, particularly as regional rivals like Singapore and Vietnam surge ahead. Without urgent reforms and decisive leadership, Malaysia risks permanent relegation to the sidelines of the digital economy.

Digital infrastructure forms the backbone of a modern economy. It supports industries ranging from e-commerce and fintech to manufacturing and healthcare.

Malaysia’s ability to compete in the global digital economy hinges on the strength and efficiency of its digital networks and platforms. Yet, government policies aimed

at transforming the nation into a regional digital hub have been nothing more than lofty promises weighed down by sluggish implementation, fragmented planning, and

outdated regulatory frameworks.

This glaring disconnect between ambition and action has left Malaysia lagging behind its peers, fostering the impression that the country is content with mediocrity.

The nationwide deployment of 5G technology is central to Malaysia’s digital strategy, promising faster data speeds, lower latency, and massive connectivity, which are essential for innovations like autonomous vehicles, smart cities, and advanced manufacturing.

As of October 2024, Malaysia's 5G network has achieved 82.1% coverage in populated areas, surpassing the initial target of 80% by the end of 2024. This progress reflects a significant advancement from earlier in the year. For instance, in May 2023, 5G coverage stood at approximately 59.5%.

The accelerated deployment has been facilitated by the establishment of over 7,500 5G sites nationwide. Despite this progress, challenges remain in ensuring equitable access across all regions, particularly in rural and underserved areas, to fully realise the benefits of 5G technology.

DNB, tasked with spearheading the rollout, has been widely criticised for its monopolistic structure, which has stifled competition and innovation. Regulatory bottlenecks and a centralised approach have sidelined key industry players, eroding trust among stakeholders.

The government’s belated attempts to involve telcos more actively in the process reflect a reactive, rather than proactive, strategy that has already cost the nation valuable time and credibility.

Critics have rightly pointed out that Malaysia’s sluggish 5G rollout could render it irrelevant in the regional digital race, where competitors like Singapore and Vietnam

are surging ahead.

The PM's insistence on accelerating 5G deployment underscores the urgency of attracting global tech investments. But the delays have not only postponed economic benefits but also raised serious questions about Malaysia’s capacity to manage large-scale infrastructure projects with the efficiency and transparency demanded by modern economies.

Malaysia’s ambition to position itself as a regional digital hub through data centre development is similarly fraught with challenges. Data centres, which provide secure,

scalable storage and processing capabilities, are pivotal to the digital economy.

While Malaysia boasts strategic advantages such as location, competitive energy costs, and a skilled workforce, the reality paints a starkly different picture. Singapore

has outpaced Malaysia with its efficient regulatory frameworks, robust infrastructure, and forward-thinking government policies. Meanwhile, Malaysia’s red tape, inconsistent land use policies, and inadequate energy infrastructure have created significant barriers for investors.

Left unaddressed, these foundational issues risk relegating Malaysia to a secondary role in the region, unable to compete with her more decisive and visionary neighbours.

The Malaysia Digital Economy Corporation (MDEC) has introduced incentives such as tax breaks and streamlined approval processes, but these measures have failed

to produce transformative results. Investors, both local and global, have grown weary of the slow pace of progress and the government’s inability to follow through on its promises.

The government’s Digital Economy Blueprint, MyDIGITAL, outlines a roadmap for digital transformation by 2030. Its initiatives – enhancing broadband infrastructure, fostering AI and big data innovation, and improving digital literacy – are commendable on paper but have been hampered by a lack of measurable outcomes and accountability mechanisms. The absence of transparent reporting has rendered much of the blueprint’s impact superficial at best, and disingenuous at worst.

Malaysia’s entrenched systemic challenges must be addressed head-on to break the cycle of underperformance. Key issues include:

1. Regulatory and bureaucratic barriers: Convoluted approval processes, opaque decision-making, and lack of regulatory clarity discourage investors and delay project implementation. Comprehensive reforms are no longer optional but critical for survival.

2. Infrastructure gaps: Broadband connectivity remains glaringly uneven, particularly in rural areas. This persistent digital divide hampers Malaysia’s ability to leverage its full economic potential, leaving entire communities marginalised.

3. Talent development: A severe shortage of skilled digital professionals poses a long-term threat to Malaysia’s competitiveness. Immediate investments in comprehensive upskilling, reskilling, and education programmes are essential to bridge this growing gap.

4. Strategic alignment: Poor coordination between federal and state governments wastes resources and time. A unified, strategic approach is critical to prevent inefficiencies and duplication of efforts.

5. Environmental sustainability: As data centres expand, Malaysia must prioritise renewable energy adoption to mitigate the environmental impact and attract environmentally conscious investors. Neglecting this aspect could isolate the country from global sustainability-driven markets.

Anwar’s pointed criticism of Malaysia’s digital infrastructure delays should be a wake-up call not just for policymakers but for all stakeholders. The nation’s potential to lead South-East Asia in digital innovation remains unrealised, and the window for action is rapidly closing.

Ambition alone is not enough; the leadership must demonstrate boldness, urgency, and a commitment to actionable reforms.

The successful deployment of 5G and establishment of a robust data centre ecosystem could redefine Malaysia’s position in the global digital economy. However, without addressing entrenched inefficiencies, fostering genuine public-private collaboration, and enforcing accountability at every level, Malaysia risks being relegated to a perpetual state of “what could have been”.

The time for decisive action is now, and anything less will consign the nation to the sidelines of progress.

DR SHAHRUL AZMAN ABD RAZAK

Researcher and Islamic finance consultant

Putrajaya