Technology uptake will help Malaysian organizations remain competitive.
International Data Corporation (IDC) commends the government of Malaysia for the inclusive Budget 2023, which was announced earlier today. Specifically, IDC views the government’s allocation for connectivity improvement and technology adoption among businesses as encouraging and signifies Malaysia’s commitment to becoming a digital-first nation.
James Sivalingam, Senior Program Manager of IDC Malaysia, says, “Malaysia is at a pivotal point in its digital journey, where businesses and public sector agencies in the country are transitioning from the digital transformation era to become digital-first organizations. The planned upgrade to the nation’s communication infrastructure and the initiatives to empower businesses to adopt digital technologies and automation highlight Malaysia’s intent to accelerate the digitalization initiatives further to become a digital-first economy.”
“If implemented correctly, Malaysia will take a significant step towards growing into a major economic force in the region in the digital era,” adds James.
In addition, IDC also notes that the Budget 2023 is aligned with Malaysia’s Digital Economy Blueprint (MyDigital), which embodies Malaysia’s aspirations to transform Malaysia into a digitally driven, high-income nation. While tabling Malaysia’s budget for the year 2023, Malaysia’s Finance Minister, Tengku Dato’ Sri Zafrul Tengku Abdul Aziz, announced a slew of technology spending initiatives and allotments.
Among them were plans to upgrade the nation’s connectivity and infrastructure. Part of the budgeted plans includes increasing the bandwidth capacity for higher education institutions with the allocation of RM35 million under Malaysia Research and Education Network (MYREN), RM700 million to expand network coverage at 47 industrial areas and 3700 schools and investing 1.3 billion for the continuation of 5G rollout in the country under the JENDELA program. This is a step in the right direction as upgrading the country’s communication network, which serves as a foundational infrastructure, will connect people and businesses, enable digitalization, and open significant economic opportunities for Malaysians.
Small and medium enterprises are vital cogs of Malaysia’s expanding digital economy. Therefore, IDC is pleased to note the allocation of RM 10 billion in loans through Bank Negara Malaysia to help spur automation and digitalization initiatives for small- and medium-sized enterprises (SMEs). IDC also acknowledges the steps being taken by the government toward developing Malaysia’s digital and start-up ecosystems. This can be seen in the RM1 billion investment by Khazanah Nasional Berhad under “Dana Impak,” where RM230 million will be invested in developing local technology start-ups.
The digitalization of government functions and services continues with the phased introduction of e-Invoice by LHDN, expansion of the Digital AgTech program by MDEC (Malaysia Digital Economy Corporation), and the digitalization of the entire duty stamping payment process utilizing the Stamp Assessment and Payment System. Further, RM20 million is allocated to digitalize the Urban Transformation Centre (UTC) as a digital hub. IDC views these steps as promising incremental improvements towards Malaysia’s digital ecosystem across the government and private sector and to close the digital divide among Malaysians.
Additionally, the government has committed upwards of RM73 million to upgrade Malaysia’s cybersecurity posture, specifically in threat monitoring, detection, and reporting, and to develop the nation’s cyber forensic capabilities. IDC welcomes this initiative, as cybersecurity is a critical imperative in any digital journey. Continuous investments and capacity building in cybersecurity are necessary to ensure the transformation is secure, resilient, and robust. Furthermore, by developing its native security capability, Malaysia is also addressing digital sovereignty concerns, allowing it to maintain greater control of its digital infrastructure, assets, and data.
Malaysia is poised for a challenging 2023, facing global economic uncertainties, inflationary pressures, and a weakening Ringgit. However, strong fiscal policies and support and an expansionary budget policy, like what was announced, will help cushion global and regional economic shocks while stimulating growth. Moreover, technology spending, specifically IT Services and Software segments, has been traditionally resilient against economic downturns in the region. IDC expects this trend to continue in 2023, where the effect on ICT (Information and Communication Technology) spending is marginal.
