A time-testing National Digital Strategy for Malaysia

The digital economy has been playing an increasingly significant role as a new driver for Malaysia’s economic growth, to drive transformation in our daily life, socio-economic as well as business dealings and operations.

In 2018, the digital economy contributed 18.5% to the Malaysian economy as it had grown by 7.9% per year to RM267.6 bil from RM213 bil in 2015. The e-commerce’s share to GDP stood at 8% in 2018 to RM115.5 bil, an increase of 9% per year from RM89.1 bil in 2015 (7.6% of GDP).

Malaysia’s new policy-thinking on the future digital transformation in a “post-Covid-19 era” requires public-private partnership and collaboration as well as innovation in ICT development and contribution to the digital transformation.

We outline the following technology trends, business scenarios and major obstacles for future digital investments and transformation.

(a) Four key technologies for future digital investments and business development: Big data, Internet of Things, artificial intelligence, cloud computing and 5G.

(b) Three most applied scenarios: Marketing, Services delivery development and communication/telecommuting.

(c) Five major obstacles for digital transformation: Ecosystem, regulation and cyber security, lack of funds, talents shortage and finding proper business models.

The government, people and businesses must work together with the parallel “policy push” in accelerating and deepening the evolution of ICT and digital technologies in the public delivery services, consumer, business and market dynamics.

Determined leadership and infrastructure are important prerequisites for Malaysia to become the leading mover in harnessing the opportunities of sustainable digital transformation. In a fast-paced digital environment, we must be quick to adapt to the demands of people and businesses and deliver the goods and services in a fast, cost-efficient and quality manner.

Digitally skilled and digitally secure people are needed to lead and are able to drive innovation and translate that knowledge into leading others and forming effective team collaboration in the digital age.

In our view, Malaysia’s National Digital Strategy Plan should rest on five pillars as follow:

1. Digital leadership: The government takes the lead role to drive the catalysts of digital transformation through a well-executed plan with measurement outcomes in terms of inclusiveness and reaching out.

Key focus areas: A strong and clearer mandate from high ministerial council, to be led by the prime minister with senior representatives from the government, private sector and chambers. Clearly-defined structures of governance are required to produce visionary digital plans, along with policies for their implementation and regulations to make them happen.

2. Digital infrastructure: The digital infrastructure (soft and hard), in particular high-speed broadband, must be further enhanced and reinforced for electronic communications and applications that are crucial for transmitting data. The government should indicate what they need from digital infrastructure. Let the ICT experts work closely with the experts in the sectors to ensure the best service outcomes.

Key focus areas: A well-developed broadband infrastructure entails improved access to “hard” infrastructure, and continued development of “soft” infrastructure. Investment in digital infrastructure needs to include digital financial infrastructure on four digital fronts: payments, currency, identity and data.

3. Digital skills: Digital skills have moved from “optional” to “critical” and need to be complemented with transversal “soft skills” such as the ability to communicate effectively in both online and offline mediums. Major digital transformations such as artificial intelligence, machine learning and big data analytics necessitate change skills requirements and, in turn, impact capacity building and skills development for the digital economy.

Key focus areas: Modernise the education system, focusing on science, technology, engineering and mathematics (STEM). Digital literacy should be seen as a core skill alongside English and Maths. Tackle inequalities and gender divide through the provision of programmes and capacity development initiatives for disadvantaged groups, and re-skilling adults at risk for job displacement. In terms of skills matching, digital curricula should be devised in partnership with the industry, to provide people with the skills they will need in their roles across the workforce. The public sector needs to bridge the digital skills gap to become a trend setter in a digital economy.

4. Digital security: Digital issues such as data privacy, data protection and cyber security are of utmost importance and absolutely essential if Malaysia is to become a smart nation. People, companies and organisations must have trust and confidence in the use of digital services and being able to use them easily.

Key focus areas: The policies and procedures cover a digital identity, high security protection requirements, privacy in the digital society, and safeguarding consumers in digital environments. Priority will be given to critical sectors of energy, water, transport, health, government, information communication, media, security and emergency services, and banking and finance. We should place a strong focus on growing cyber security talent and manpower.

5. Digital innovation: The government should create a conducive ecosystem and competitive conditions for the creation and spread of new or improved products and services.

Key focus areas: Strengthen innovation climate for data-driven and digitally driven innovation through grants and incentives tailored outcome-based R&D and innovation research in collaboration between academia and industry. Robust intellectual property rights spur innovative activity by increasing the appropriability of the returns to innovation, enabling innovators to capture enough of the benefits of their own innovative activity to justify taking considerable risks. Position Malaysia as one of the leading innovations and creativity hub in the region through creating a conducive ecosystem (remove regulatory barriers, facilitation and financial supports, tax break, and skills support). – June 3, 2020

Lee Heng Guie is the executive director of Socio-Economic Research Centre, an independent research organisation.

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