Malaysia is currently one of the leading countries in Southeast Asia with respect to its digital economy. The country’s digital economy contributed 23.2% to its national GDP in 2021, and is expected to rise to up to 25.5% by 2025.

In this article, we identify five (5) priority areas in Malaysia that relate to the development of the country’s digital economy. They are:

1. Strengthening the foundation of digital adoption through Rakyat, businesses, and government;
2. Driving inclusion of small and medium-sized enterprises (SMEs) in the digital economy;
3. Addressing the digital divide by nurturing digital talent and a future-ready workforce;
4. Ensuring digital trust through digital security and protection; and
5. Encouraging people-private-public partnerships to drive innovation in the sector.

This article also highlights opportunities where Digital Economy Companies (DECs) with operations in the country are best positioned to support and deliver shared outcomes.

Priority 1: Digital Adoption amongst Rakyat, Businesses, and Government

Malaysia has been continuously driving efforts to become a high-income nation through digitalisation. Two guiding papers, namely the National 4IR Policy and the Malaysia Digital Economy Blueprint (MDEB), serve as guides in maximising the potential of digitalisation for the nation. The MDEB in particular seeks to accelerate Malaysia’s growth as a technologically-advanced economy by detailing the digital economy’s contributions to the Malaysian economy, establishing the groundwork needed for statewide digital adoption, and bridging the digital divide. In parallel, the National Fourth Industrial Revolution (4IR) Policy seeks to drive the transformation of industries through the utilisation of advanced technologies to enhance productivity. The 4IR Policy is focused on three main areas: the rakyat, business, and government.

A wide range of initiatives have been introduced to extend the benefits of digitalisation to the broader Malaysian rakyat (citizens/society). Some examples include:

• The Digital AgTech which was launched by the Malaysia Digital Economy Corporation (MDEC) to empower the local agriculture sector with 4IR technologies and improve the livelihoods of farmers across the nation;
• The Saya Digital initiative which drives awareness of ready opportunities to leverage digital services and technology;
• The Global Online Workforce (GLOW) programme which provides digital freelancers with the exposure and guidance on how to identify right online platforms and receive appropriate training required to explore this new career pathway; and
• The Digital Up initiative which provides training incentives up to RM 1,000.00 per pax to eligible Malaysian workforce to reskill/upskill in Digital Technology related courses and programmes.
• The eTunai Rakyat and the ePenjana eWallet program which provides cash incentives for Malaysians to download popular eWallets such as Grab, Touch ‘n Go and Boost to drive adoption of digital payments

Private sector participation has also been recognised as beneficial to aid in the adoption of ICT applications and digitalisation. To support businesses, various initiatives have been set up such as:

• The Digital Free Trade Zone which allows access to cross-border infrastructure and removes complex trade regulations and processes to foster knowledge-sharing;
• The Port Klang Net is a platform that enables stakeholders across the logistics value chain to communicate in real-time;
• The 24/7 Pos Laju Prepaid Dropbox is a service which allows customers to drop off their prepaid parcels at self-service automated machines;
• 100 Go Digital is an initiative which enables traditional Malaysian businesses to improve efficiency and productivity, create new sources of growth, and increase revenue and savings; and
• The Smart Automation Grant (SAG) is the provision of grants for service firms to automate and digitalise their business to jumpstart the development and implementation of projects
• Malaysia Digital (also known as the Multimedia Super Corridor 2.0) is an initiative to attract companies, talents, and investment while encouraging Malaysian businesses and citizens to play a key role in the global digital economy.
• The MSC 2.0 initiative also includes Malaysia Digital Catalytic Programmes (Pemangkin): DE Rantau and Digital Trade.
  • Rantau is a programme intended to boost digital adoption, encourage professional mobility, and promote tourism all throughout the country, with the objective of establishing Malaysia as the preferred Digital Nomad Hub
  • Digital Trade, on the other hand, will promote interoperability and increased harmonisation of standards and regulatory methods

For small to medium scale businesses, however, further support from the government is still needed (See Priority 2).

Lastly, the Malaysian public service is also undergoing digital transformation to fully adopt the 4IR technologies through initiatives such as:

• Building of digital infrastructures such as the National Fiberisation and Connectivity Plan 2019-2023 (NFCP) which was later on renamed as the Jalinan Digital Negara (JENDELA) Plan.
• By 2025, Malaysia also plans to have 100 percent of civil servants possess digital literacy and 80% of government services available online.
• Other government initiatives such as: 1GovCloud, Malaysia Government Central Data Exchange (MyGDX) and Government Data Optimisation (GDOTS).

Where DECs may play a part

The success of Malaysia’s digitalisation will depend on the willingness of all key players – society, businesses, and the government – to evolve, collaborate, and systematically and effectively implement the above policy thrusts, strategies and initiatives. There is great opportunity for DECs to be part of this effort to enable Malaysia’s transformation as a globally competitive digital nation, anchored on inclusivity, sustainability and shared prosperity.

Priority 2: SME Digital Economy Inclusion

The MDEB emphasises the importance of SMEs in Malaysia’s digital transformation, starting with post-pandemic recovery. Initiatives include:

• SME Corporation Malaysia coordinates programmes on innovation and technology adoption for SMEs as well as working with specific groups. For example, there are programmes for women-owned businesses in e-commerce adoption. SME Corporation Malaysia has also partnered with companies such as Fusionex to create hybrid platforms for networking and engagement.
• Also with Fusionex, the Malaysia External Trade Development Corporation launched a digital trade platform for Malaysian SMEs to facilitate new market access. The platform acts as a centralised interactive virtual space for trade that connects Malaysian business community with international buyers, recognising that digitalisation is an important export agenda item for companies of all sizes.
• Malaysia Digital Economy Corporation (MDEC) also led the Belanjawan 2021 Go eCommerce Onboarding and Shop Malaysia Online initiative to support Malaysian businesses to onboard onto eCommerce and ePayment platforms. The campaign has generated over RM4.6 billion worth of GMV and onboarded over 32 eCommerce partners such as Shopee, Grab and Lazada.

Where DECs may play a part

There is significant opportunity for DECs to work with the government and SMEs to unlock productivity gains in the Malaysian economy, both domestically and in terms of trade. Smaller enterprises may benefit from mature technologies that boost efficiency and resilience.

Priority 3: Addressing the Digital Divide: Nurturing Digital Talent for a Future-Ready Workforce

While Malaysia’s digital economy is expected to grow rapidly, there is a digital gap observed across various dimensions, such as age, gender, socio-economic status, income and skill sets.

Programmes to ensure the development of digital infrastructure alongside digital education include:

• The eRezeki for urban B40 (bottom 40 percent income earners) and M40 (Middle 40 percent income earners) families, non-income groups, senior citizens and youth to earn additional income from digital platforms;
• “My Device” and “My Digital Teacher” digital tools to aid online education for both teachers and students;
• The “GigUp” programme to equip gig workers with digital skills;
• The “My Ikrar” programme to encourage volunteerism in conducting digital training; and
• The #MyDigitalWorkForce Movement, a public-private digital skilling partnership aiming to provide access to 3,800 courses, giving support to retrenched workers to adapt and find new jobs in the digital economy.

Where DECs may play a part

DECs can support national, state and local efforts in nurturing digital talent through formal education and upskilling.

Through partnership with schools and IHLs, DECs can offer upskilling partnerships, technical support, expertise and opportunity for students to gain the literacy, skills and experience to be both confident consumers and well-prepared entrants to the workforce.

Some DECs may also be well-placed to encourage upskilling amongst specific segments of the population that are already on their platforms, such as MSMEs and platform workers. These DECs may distribute bite-sized content, modules and skills certifications to expand access to upskilling and talent development learning opportunities.

Priority 4: Ensuring Digital Trust by Strengthening Digital Security and Protection

Advancing the digital economy offers enormous opportunities, but it is not without risk. Rapid adoption of digital technology has also enabled opportunities for irresponsible use and manipulation of technology, proliferation of cyberthreats and cybercrimes, and increasing concerns over privacy.

Malaysia has made significant progress in achieving global standards in cybersecurity. The Malaysia Cybersecurity Strategy 2020-2024 was developed to enhance national security and protect businesses. The strategy offers cybersecurity initiatives aimed at combating cybercrimes and provides guidance in regulatory functions in cyberspace. With this, the government also plans to introduce cybersecurity laws to tackle cybercrime.

The 4IR Policy and the MDEB contains the strategies, initiatives, and outcomes expected of Malaysia with respect to gaining digital trust.

• Thrust 3: “Future-proof regulations to be agile with technological changes” of the National 4IR Policy mentions that agile regulatory framework, approach, and governance related to the 4IR are critical to building a trusted society and a conducive environment for innovation.
• Thrust 6 of the MDEB aims to create a trusted, secure, and ethical digital environment.

Where DECs may play a part

DECs can help foster a trusted and digital environment through participation in public initiatives, embracing cyber ethics, respecting and protecting personal data, and raising cybersecurity awareness in their respective communities. The market for trust enhancing technologies is also projected to grow.

Priority 5: Encouraging Innovative People-Private-Public Partnerships

In order to achieve the goals of the MDEB, Malaysia must navigate and adapt to the fast-paced growth of the digital economy. This requires the cooperation of its people, the private sector, and government. MyDigital has cited the importance of public-private partnerships in achieving this goal.

The MyDigital Alliance Leadership Council, formed by Microsoft and the Social & Economic Research Initiative (SERI), is one such initiative. This multi-stakeholder platform advocates for the development of transformative cloud-first technologies and recommends digital-native policies to advance the nation’s digital economy.

Where DECs may play a part

DECs can actively participate in the programmes created by the government, or proactively seek to partner with the government to cooperatively cultivate an environment in which the digital economy may thrive while ensuring that national interests remain protected.

This article is part of a series which covers national-level priorities of SEA-6 economies for digital economy development. As part of the “Tech for Good” study, the Tech For Good Institute also conducted roundtable discussions with policymakers, regulators, industry, and the academia in SEA-6. Summary and key recommendations of Malaysia’s roundtable discussions can be found here.

Footnotes:
[1] Southeast Asia-6 markets refers to the six biggest economies in the region, namely Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam