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Digital Malaysia Progress Report 2013

Digital Malaysia is a national programme based on three


strategic thrusts to advance the country towards a developed
digital economy by 2020. It will create an ecosystem that
promotes the pervasive use of ICT in all aspects of the
economy to connect communities globally and interact in real
time resulting in increased Gross National Income, enhanced
productivity and improved standards of living. This will result
in a developed digital economy that connects and empowers
government, businesses and citizens.

The Digital Malaysia Progress Report 2013 is the second annual publication on the national
initiative to external parties. Each one was published in the first half of the following year to
ensure all the events, information and data relevant to the year under review can be clarified and
verified before production.

Table of Contents

SECTION 1: FOREWORD
Prime Minister of Malaysia
Minister of Communication &
Multimedia
CEO, Multimedia Development
Corporation (MDeC)
Vice President,
Corporate Strategy Division,
MDeC

06

SECTION 2:
EXECUTIVE SUMMARY

08
10
12

SECTION 3: OVERVIEW

SECTION 4: REVIEW

Chapter 1:
National Initiative for Digital
Transformation 30
Chapter 2:
Roadmap for the Way Forward
42

Chapter 3:
Key Highlights
Chapter 4:
Nurturing an Enabling Environment
Chapter 5:
Generating Growth in Sub-sectors
Chapter 6:
Creating Opportunities and
Channelling Benefits to Communities

SECTION 5: VIEW AHEAD


Chapter 7:
Looking Ahead

16

112

SECTION 6:
APPENDICES

46
54
65
75

120

FOREWORD
By The Prime Minister of Malaysia

Malaysia is another step closer to 2020, the year when we envisage our
country as a fully-developed nation with a robust and sustainable economy
and a knowledgeable and skillful society. As we take stock of the progress
made on this journey, we can reflect that 2013 was a momentous year with
many milestones achieved and challenges faced.

In the past year, the nations Gross Domestic Product


(GDP) breached the trillion ringgit mark to reach an
estimated total of RM1,008 billion while per capita
Gross National Income (GNI) leapt beyond the ten
thousand dollar barrier at an estimated US$10,687. In
the meantime, nominal GNI closed to within touching
distance of a trillion ringgit at an estimated RM981
billion even as our population grew to almost 30 million
people at 29.7 million. (Source: Economic Planning
Unit)
These are encouraging figures given that we had
originally set out to achieve an average 6% annual growth
in per capita GNI from US$8,348 in 2010 to the 2020
target of US$15,000, the latter being the benchmark of
income earning power in other developed economies.
The progress and successes thus far are an affirmation
of the National Transformation Policy we had put in
place to meet our goals and aspirations by 2020. In
this regard, the Digital Transformation Programme
(DTP), otherwise known as Digital Malaysia, is a
critical component of this policy that has also given
rise to the Economic Transformation Programme (ETP),
Government Transformation Programme (GTP) and
several others.

On all accounts, Digital Malaysia is making headway


in growing our economy by generating wealth and
enhancing the earning capacity of the nations citizenry.
At the same time, it is also driving and powering
other industries by improving productivity across the
economic sector.
The digital age has enveloped us all. Economies around
the world are being reshaped by seismic shifts in digital
technology that offers global potential. Opportunity
knocks for early adopters and those who are prepared
for change by embracing the digital economy. On this
score, our hopes and aspirations on the road ahead is tied
to the rapid deployment of Digital Malaysia and the host
of global opportunities that come with it. Advancing the
Malaysian digital economy is a path we must take and
a challenge we must exuberantly embrace in moving
Malaysia rapidly forward towards achieving its national
vision and aspirations by 2020.

(DATO SRI MOHD NAJIB ABDUL RAZAK)

FOREWORD
By The Minister of Communication &
Multimedia

The onset of digital technology over the past 20 years has changed the global
landscape in which nations and economies compete against one another. One
could argue that the field is levelling out like never before as traditional factors
like capital, labour and land have given way to knowledge, innovation and
entrepreneurship.

For this reason, it is imperative that nations and


economies set out a vision and put forth a strategy
that can leverage on technology to capitalise on
opportunities arising from a fast-growing digital world
economy. Malaysia has been one of the first nations
in the developing world to recognise the need to put
in place a comprehensive framework to coalesce and
coordinate ideas and intentions so as to optimise our
migration towards a developed digital economy and
society.

Indeed, Digital Malaysia is the Governments vision


on how digital technology can accelerate national
development and in creating an ecosystem where
ideas can come to fruition and innovations to flourish
and benefit the nation at every level. Over the past
two years, this initiative has taken shape and form. It
is already making a difference to the communities we
aspire to nurture and develop. It is hoped that it will
continue to galvanise the nation towards a bright digital
tomorrow.

Today, Digital Malaysia is our gateway into a future where


government, industries, enterprises and communities
are digitally enabled and globally connected to interact
and do business with the rest of the world. In Digital
Malaysia, we also have a vehicle that inspires invention
and innovation, two attributes that are critical to
national and individual competitiveness.
(DATO SERI AHMAD SHABERY CHEEK)

FOREWORD
By The CEO, Multimedia Development
Corporation

In the past year, Digital Malaysia has matured from a conceptual framework to
become an organic entity that is already bearing fruit for its stakeholders and
many of its targeted beneficiaries. At the same time, Digital Malaysia continues to
evolve as a comprehensive blueprint to accelerate Malaysias digital transformation
encompassing all aspects of the nation, its economy and its people.

Although 2012 marked the official launch of Digital


Malaysia, it was in 2013 that results could be qualified
and quantified as to the impact of the various projects
we had put in place. I am pleased to say that our
achievements have exceeded targets and expectations
for the year, giving a clear indication of the practicality
and functionality of the projects and programmes.
For the record, the projects implemented for four
pilot communities Digital Entrepreneurs, B40 (the
40% of communities in the lowest bracket of household
income), Digitally-Savvy Youth and SMEs registered
108% in achievement in terms of the GNI generated and
also 108% in jobs created. Over and above these areas,
the projects also brought in private investment worth
more than RM300 million.

These results are significant in so far as they generate


momentum for the other activities in the years ahead
as we seek to integrate Digital Malaysia into the very
fabric of our socioeconomic landscape.
On this score, Multimedia Development Corporation
(MDeC), being the developer and coordinating agency
for Digital Malaysia, continues to adapt and align the
relevant Roadmap to dovetail with prevailing trends
and technologies, both local and global.
The years ahead promises to be exciting ones as we
attempt to widen the Digital Malaysia sphere of
influence to eventually encompass the entire economy
and society.

(DATUK BADLISHAM GHAZALI)

10

11

FOREWORD
By The Vice President, Corporate Strategy
Division, MDeC

As products of the creative minds of global innovators, digital technologies ironically


have only one constant they undergo rapid change. That is their nature. Consequently,
the Digital Malaysia framework is a living document, evolving as time goes by to
equip Malaysia and Malaysians with the ways and means to take advantage of shifting
opportunities created by an increasingly digital world and economy.

In 2013, MDeC, in collaboration with key players in


Government and the private sector, developed the
Digital Malaysia Roadmap, currently referred to as
the DM354 Roadmap and representing 3 Enabling
Environment Focus Areas, 5 Digital Sub-sectors and 4
Targeted Communities.
In essence, the Roadmap calls for our collective
intervention to strengthen the environment for a
digital economy to grow and thrive, involving 3 focus
areas of Access, Adoption and Use. A more conducive
environment would stimulate growth in the 5 digital
sub-sectors of ICT Services, e-Commerce, ICT
Manufacturing, ICT Trade and Content & Media, The
resultant growth brings benefits of the digital revolution
to all communities, particularly 4 targeted ones namely
the digital Entrepreneurs, the Bottom 40% of the income
pyramid (B40), digitally-savvy youth and SMEs.

12

As an early iteration of the way ahead, the DM354


Roadmap will inevitably change so that Digital Malaysia
can progressively deliver the promise of the digital age
to all Malaysians.

(DATO DAN E. KHOO)

13

14

SECTION 02

EXECUTIVE SUMMARY

15

# Executive Summary

When Malaysia launched its National Digital Economy Initiative, Digital Malaysia,
in 2012, it joined the ranks of leading digital nations that had formulated and
established comprehensive digital economy frameworks or strategies.
Malaysia, like its more developed counterparts in Asia,
Europe, North America and Australasia, recognised the
primacy of developing an innovative digital economy
for economic sustainability and societal integration.
Indeed, a digital economy with its transformative
capabilities and capacities is considered a critical
strategy to capitalise on the wealth of global
opportunities now emerging from the pervasive use of
digital technologies in every aspect of work and life.

For this reason, many other countries and economies


are now jumping on the bandwagon to embark on their
own digital economy frameworks, even as the world
continues to evolve and revolve around game-changing
digital innovations that are redefining so many of the
parameters we have grown accustomed to.
As it stands, we are well-placed to race ahead, with
Digital Malaysia as the spearhead towards a developed
digital economy with the potential to thrive in a new
world order.

Information and Communications Technologies (ICT) can


play a vital role in the pathway to an economic recovery. A
digital revolution can form the foundation of a sustainable
global economy.

Source: 2009 World Economic Forum Annual Meeting Report

16

Digital Canada
Initiated in 2010

eNorway 3.0
Initiated in 2009

Digital Denmark
Initiated in 2000

U-Korea
Previously known as
Cyber Korea 21
Initiated in 1999

Digital Britain
Initiated in 2008
Digital Europe
Initiated in 2009

Hong Kong Digital


21 Strategy
Initiated in 2008
Singapore iN2015
Initiated in 2005

Digital Malaysia
Initiated in 2012
Digital Australia
Initiated in 2008
New Zealands Digital Strategy
Initiated in 2008

Digital Malaysia is on the Right Track


Two years after its launch, Digital Malaysia is today an evolving initiative that is set to impact on every strata of
the national economy and society as well as government. This generational undertaking to develop a vibrant digital
economy is rapidly taking shape and already bearing fruit, with its benefits impacting on communities at both ends
of the income and knowledge spectrums.
Its objectives have already been set out and that is to generate outcomes critical to the nation in terms of the
capacity to increase wealth, enhance productivity and improve the standard of living for all Malaysians.
These goals, in essence, are to build an innovative digital economy that:
Contributes 17% to national GDP by 2020;
Ranks among the top 20 economies according to the World Economic Forums (WEF) Global IT Report (GITR);
and
Is in the top 10 of the IMD World Competitiveness Yearbook.

17

BASELINE STANDINGS TO ASPIRATIONAL GOALS

2010 2012 2020


Digital Economy
contribution to
GDP1
WEF Global IT
Report (GITR)
ranking
(rank amongst 144
economies)2
IMD World
Competitiveness
Yearbook
(ranking amongst
59 economies)3

13% 12% 17%


#28 #30
#16 #16

TOP

INCREASED
GNI

20

ENHANCED
PRODUCTIVITY

TOP

IMPROVED
STANDARD
OF LIVING

10

Source:
1. ICT Satellite Account 2012
2. Global IT Rankings 2013
3. International Institute of Management
Development 2013

2013 was truly a year of reckoning for Digital Malaysia following the establishment of a strategic roadmap to guide
its development and implementation going forward. We call it the DM354 Strategic Roadmap.

Establishing a DM354 Strategic Roadmap


The development of a Digital Economy requires a holistic approach to building a comprehensive ecosystem while
ensuring that all stakeholders can act in unison on the road to meeting the respective and national aspirations.
A strategic roadmap serves the purpose of piecing together the complex task of nurturing potential while at the
same time addressing gaps and providing intervention in critical areas to ensure growth and development.

18

The DM354 Strategic Roadmap outlines intervention for:


3 ICT Enabling Environment Focus Areas:
Access
Adoption
Use
5 Digital Economy Sub-sectors:
ICT Services
eCommerce
ICT Manufacturing
ICT Trade
Content & Media
4 Digital Malaysia Communities:
Digital Entrepreneur
B40 (The 40% of Malaysians in the lowest income group)
Digital-savvy Youth
SME

VIR O N M E N T F O
N
E
G
CU
LIN
SA
B
A
RE
EN
AS

DIGITAL ECONOMY
SUB-SECTORS
DE*

Growth of
Sub-sectors create
opportunities and
channel benefits to
Communities

CONTENT & MEDIA

ICT TRADE

ICT
MANUFACTURING

eCOMMERCE

ICT SERVICES

Create suitable
conditions for
ICT Sub-sectors
to grow

B40*

YOUTH

ADOPTION

ACCESS

SME

DIGITAL MALAYSIA
COMMUNITIES

* DE - Digital Entrepreneur, B40 - The 40% of


Malaysians in the lowest income group.

USE
19

In essence, the three Enabling Environment Focus Areas serve to create a suitable environment for the digital
economy to flourish. This will form the building blocks for the ICT sub-sectors to grow and thrive. Focused
intervention on these sub-sectors would then create opportunities and channel the benefits to the selected
communities.
The formulation of the DM354 Strategic Roadmap was based on a methodical process that harnessed data-driven
insights from the various components used to calculate the Digital Economy Satellite Account (DESA), as well as
the myriad indicators tapped to produce the WEF Global IT Report (GITR) rankings and IMD World Competitiveness
Yearbook. These components and indicators were filtered according to their impact and relevance to ICT.

Putting in place a Governing Structure


Digital Malaysia is a collaborative and consultative work in progress. It is an initiative with multiple moving parts
involving multiple parties and beneficiaries. As such, it is critical for a governing framework to streamline and
coordinate all strategies, approaches and processes. While the initiative is driven by MDeC, other agencies and
organisations from within and outside the Government also play key supporting roles under the stewardship of the
Minister of Communication & Multimedia.

DM/MSC MALAYSIA

DESA Steering
Committee

Implementation
Council

Economic
Council

DM Steering
Committee

(Chaired by YBM KKMM)

NKEA
Steering
Committees

MDeC

PEMANDU

Submits report to

Secretariat

ICT DATA

Secretariat

As part of efforts towards greater transparency, we adhere to a set of Agreed Upon-Procedures (AUPs) developed
by PricewaterhouseCoopers Malaysia (PwC) to ensure accuracy of reporting. This exercise serves to establish clear
accounting and best practices as we move forward.
Additionally, the national initiative is shared with the MSC Malaysia International Advisory Panel (IAP) to invite and
draw out further ideas and advice as well as to seek the collaboration of the IAPs global technologists.

20

3 Enabling Environment Focus Areas


The right environment is always a crucial component for any initiative or endeavour as it can support and stimulate
growth while mitigating threats and addressing concerns. The DM354 Strategic Roadmap highlights three enabling
environment focus areas that require strengthening and reinforcing:
Access
Adoption
Use

ICT ENABLING ENVIRONMENT FOCUS AREAS

ACCESS

ADOPTION

USE

INDICATORS

INDICATORS

INDICATORS

Intervention would be carried out in each of the focus areas on selected digital economy-related indicators culled
from the WEF Global IT Report (GITR) rankings and IMD World Competitiveness Yearbook. The aim, essentially, is to
move up Malaysias aggregated maturity levels in terms of the respective indicators relevant to these Focus Areas,
whose definitions are listed below:
Access
Key Communities have access to affordable, reliable and high capacity digital infrastructure, including
broadband, applications, content and devices.
Adoption
Key communities overcome various barriers to adoption of digital technology, such as skills, cost and
knowledge thresholds.
Use
More members of key communities use digital technology to improve productivity and enhance their
quality of life.

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5 Sub-Sectors
One of the key thrusts of the DM354 Strategic Roadmap is to increase revenue by generating new growth areas
within the five selected Digital Economy Sub-sectors. More focus will be placed on ICT Services and eCommerce as
they can offer higher and faster yield.

GROWTH IN DIGITAL ECONOMY NEEDS TO BE DRIVEN BY 5 KEY SUB-SECTORS


GDP CONTRIBUTION

GDP CONTRIBUTION

GDP CONTRIBUTION

GDP CONTRIBUTION

GDP CONTRIBUTION

ICT
SERVICES

eCOMMERCE

ICT
MANUFACTURING

ICT
TRADE

CONTENT
& MEDIA

16.7%

RM
142.4B
RM
36.9B

12.0%

14.8%

RM
27.2B

5.9%

RM
14.2B

RM
57.3B

RM
5.5% 49.7B

-0.6%

RM
17.7B

4.8%

4.8%

RM
16.1B

8.0%

16.2%

RM
6.3B

RM
RM
RM
18.7B 41.3B 105.5B

RM
RM
RM
12.7B 19.0B 30.1B

RM
RM
RM
33.8B 32.3B 32.0B

RM
8.0B

RM
RM
11.1B 16.1B

RM
2.5B

RM
4.3B

RM
7.9B

2005

2005

2005

2005

2012

2005

2012

2020

2012

2020

2012

2020

2012

2020

2020

The respective bar charts are not proportionate across the 5 sub sectors
Source: Base data referenced from ICTSA 2005 to 2012 by DoSM. Further analysis and breakdown by MDeC & IDC

Focus on ICT Services


With its 48.4% contribution towards overall digital
economy GDP in 2020, the ICT Services sub-sector has
the highest margins of the five sub-sectors within the
Digital Economy. In 2012, the total contribution of
this sub-sector was RM41.3 billion, with the historical
growth of ICT Services aggregated at 12%. The
objective is to increase the growth rate to 16.7% to
achieve the targeted RM142.4 billion contribution to
GDP by 2020. Five steps have been outlined to propel
the potential growth for ICT Services:
Focus on ICT Services exports
Malaysia should push forward in five growth areas
namely in mobility, cloud, social media, big data
and outsourcing
Promote business adoption of cloud-based
enterprise application solutions
Expand outsourcing activities such as data-centre
services to drive growth in telecommunications
and ICT services
Position Malaysia as a value added BDA hub to tap
BDA business and as delivery centre for mobility
solutions

ICT SERVICES REQUIRED GROWTH

GDP CONTRIBUTION

ICT
SERVICES

16.7%
12.0%

RM
142.4B
RM
36.9B

RM
RM
RM
18.7B 41.3B 105.5B

2005 2012 2020


Source: Base data referenced from ICTSA 2005 to 2012 by DoSM.
Further analysis and breakdown by MDeC & IDC

22

Focus on eCommerce
The eCommerce spending market size is projected
to witness substantial growth in the years between
2011 and 2016. Worldwide, this figure is anticipated
to move from RM31.5 trillion in 2011 to RM64.5 trillion
in 2016. For Malaysia, the figures are expected to
grow from RM62.1 billion to RM263 billion. Malaysias
eCommerce industry contributed RM19.0 billion to
the GDP in 2012 and this is anticipated to increase by
14.8% to reach RM57.3 billion in 2020. eCommerce has
been targeted as the new growth engine for private
enterprises. To capture the required portion of this
ever-expanding pie, Malaysia must put in place new
incentives for growth. To achieve this, the plan is to:
Balance imports with more eCommerce exports by
encouraging players (especially SMEs) to convert
from traditional to digital business models for cost
and productivity efficiencies
Increase the adoption of eCommerce among Local
Large Corporations (LLCs)
Promote the creation of digital goods for exports
Promote the purchase of Malaysian brands through
online portals

eCOMMERCE REQUIRED GROWTH

GDP CONTRIBUTION

eCOMMERCE

14.8%

RM
57.3B
RM
27.2B

5.9%

RM
RM
RM
12.7B 19.0B 30.1B

2005

2012

2020

Source: Base data referenced from ICTSA 2005 to 2012 by DoSM.


Further analysis and breakdown by MDeC & IDC

4 Communities
One of the key goals of Digital Malaysia is to benefit all Malaysians by creating opportunities as well as channelling
the benefits of a growing digital economy to the people. For now, projects rolled out under the national initiative
target specific groups of people or Communities, specifically those that either have the highest potential to
capitalise on digital opportunities, or whose vulnerable positions can be mitigated through digital mediation.
At this initial stage, Digital Malaysia is focused on four Communities - Digital Entrepreneurs, the B40 or bottom 40%
of the income group, the Digital-savvy Youth, and the Small and Medium-sized Enterprises (SMEs).

COMMUNITIES

OBJECTIVES OF
INTERVENTION

PROJECTS*

DIGITAL
ENTREPRENEUR

Tap demand for digital


products and services

Grow the Embedded


Systems Industry

Develop a trusted Mobile


Digital Wallet System

B40

Improve income and quality


of life of the B40 community

Microsourcing to
Generate Income
for the B40

Facilitating Societal
Upliftment

YOUTH

Create knowledge
workers of the future

Develop On-demand, Customised Online Education

SME

Enhance SME productivity

Asian
eFulfillment
Hub

Enabling ePayment
Services for SMEs and
Micro Enterprises

Shared Cloud
Enterprise
Services

* The projects listed in the table are new DM projects over and above many other national ICT initiatives being implemented under
the 10th Malaysia Plan (RMK-10), Economic Transformation Programme (ETP) and Government Transformation Programme (GTP).

23

A total of 8 projects were launched in 2012 to catalyse change and drive progress within the four selected
Communities. These projects are beginning to bear fruit, with achievements exceeding the targets set for 2013.
This is encouraging progress for the on-going implementation of Digital Malaysia.
Collectively, the projects generated a Gross National Income (GNI) of RM402.9 million against the set target of
RM334.7 million while creating more than 4,000 new jobs compared with the target of 3,674. The projects also
attracted private investment worth RM340 million.

ACHIEVEMENTS HAVE
EXCEEDED TARGETS FOR 2013

108%

108%

90%

GNI

JOBS
CREATED

PRIVATE**
INVESTMENT

TARGET

TARGET

3,674

TARGET

RM345.11M

ACHIEVED

ACHIEVED

ACHIEVED

RM334.68M
RM360M

4,010

RM309.09M

Moving Forward
The task of developing a vibrant and innovative digital economy and society is a challenging one. It is a complex
undertaking, given that the digital world is a constantly evolving entity and that a host of different parties are
involved and engaged. On this score, moving forward will require concerted efforts from all concerned to bring
about this generational change.

24

GROWING NATIONAL DIGITAL ECONOMY


THROUGH CONCERTED EFFORT
KKMM
NATIONAL B
ROADBAND
INITIATIVE
M
K
N
EPU
MAP .MY
OGY ROAD
L
O
N
H
C
E
T
NATIONAL
ITY
CUR
E
S
R
E
MAMP
CYB
U
8
8 6
MYICMS

EXISTING
INITIATIVES

MAXIMISE & LEVERAGE

BENEFITTING
STAKEHOLDERS:
GOVERNMENT/
BUSINESSES/
CITIZENS
STRATEGIC
THRUSTS

Supply to Demand:
Consumption to
production:
Low knowledge-add to
high knowledge-add:

reallocate resources to more


demand-focused programmes
and activities
change the way people behave
to produce as they consume

GAME CHANGERS
& BEHAVIOURAL
CHANGERS

enhance competitiveness by
focusing on knowledge-added
activities

DM354 STRATEGIC ROADMAP


Tap Demand
Citizen Income/
Entrepreneurship
IT-savvy Youth
SME Productivity

DM
INITIATIVES

DM
PROJECTS

BLOCK 1, 2 & 3
PROJECTS

*
**

Block 2 Initiatives*
Block 1 Initiatives**
Digital Access, Adoption & Use
Digital Economy Sub-Sectors

PRIVATE SECTOR
DIGITAL PRODUCTS
& SERVICES

PRIORITY AREAS & FOCUS


BASED ON HIGH IMPACT &
SPEED OF DELIVERY

CURRENT, ANNOUNCED,
EXISTING & NEW PROJECTS
BY MINISTRIES, AGENCIES &
PRIVATE SECTOR

ICT initiatives in ETP and GTP


Existing 10th Malaysia Plan (RMK-10) initiatives

25

Digital Malaysia is a long-term national initiative that will be rolled out in various phases. Although it will continue
to grow and develop beyond 2020, the plan is to focus on three main clusters of activities from now until the end
of the decade.
The promise of Digital Malaysia to increase wealth, enhance productivity and raise the standard of living among
Malaysians remains bright. If everything clicks in place and all the pieces come together, the national digital
economy initiative will produce a developed economy and society that is innovative, enterprising and ultimately,
global.

ROLL OUT OF DIGITAL MALAYSIA IN PHASES

DIGITAL
ECONOMY
Use of ICT in
Vertical
Sectors

ICT
Sector

PHASE 1

PHASE 2

PHASE 3

2012-2020

2021-2030

2031-2040

Behavioural Change via 3 DM Strategic Thrusts


Operationalise Phase 1 through DM 354 Strategic Roadmap

26

27

28

SECTION 03

OVERVIEW

29

# CHAPTER 1
National Initiative for Digital
Transformation

Digital Malaysia, the national initiative to advance the country towards a


vibrant digital economy by 2020, is on track to meet its targets and achieve its
goals following two years of preparation and implementation.
At the end of 2013, the framework to develop a nation
where government, businesses and communities are
enabled and empowered by digital technologies
has well and truly taken shape. Alongside this
progress, specific steps in the form of projects and
programmes have gained ground with their benefits
already impacting the different and diverse levels of
our socio-economic base.

On all accounts, we are incrementally and steadily


changing the digital landscape to capitalise on global
opportunities (as estimated in the graphics below) and
at the same time mitigate threats from within and
without.
This has driven our efforts to catch up and keep pace
with the rest of the digital world, a key imperative in
the nations drive to become a high-income economy
and globally-connected society by the end of this
decade.

GLOBAL DIGITAL ECONOMY


Projected ICT
spending by 20201

US$5.4T

Projected eCommerce
revenue by 20202

US$44.2T
Source:
1. WITSA 2010
2. ITIF 2010

30

Generating outcomes critical to the nation


At the core of Digital Malaysia is the intent to stimulate and catalyse a digital transformation that can contribute
to sustained growth and continuous improvements necessary for the nation to join the ranks of the developed
world.
Digital Malaysia contributes to the national drive to achieve the desired outcomes of increased wealth, enhanced
productivity and improved standard of living.

Increasing Wealth

The ICT industrys contribution to the national economy has grown steadily over the past two decades, spurred
on by the development of the Multimedia Super Corridor (MSC Malaysia) and rapid assimilation of digital
technologies into everything we do at work, home and play. Digital Malaysia is poised to raise the contribution
of the digital economy to national GDP, in the process increasing wealth among Malaysians.

Digital Malaysia shared a link

What Contributes to a DIGITAL ECONOMY?


ICT Services
eCommerce
ICT Manufacturing
ICT Trade
Content & Media
Like Comment Share about an hour ago

31

Enhancing Productivity

The wide and increasing use of digital technologies has long been determined as a key factor in generating
greater efficiency and higher productivity in every economic sector. However, SMEs have been slow to leverage
on ICT in their operations. Digital Malaysia seeks to extend the Gross Value Added (GVA) per employee by
accelerating technology adoption among SMEs.

Digital Malaysia shared a link


DEFINITION OF GVA

HOW TO
CALCULATE
GROSS
VALUE
ADDED
(GVA)

The value of output less the value of


intermediate consumption; it is a
measure of the contributions to GDP
made by an individual producer,
industry or sector.

ICT GVA

The value of output of ICT products


at basic prices less the value of
intermediate consumption (at
purchasers prices) used in
producing these ICT products.

Source: DOSM

PROFIT

REVENUE

Like Comment Share about an hour ago

PROFIT
Total Employees

= PRODUCTIVITY
Source: OECD (Organisation for Economic Cooperation and Development)

Like Comment Share about an hour ago

32

Improving Standard of Living

Malaysians will attain a better quality of life when we can gain easier access to career or business opportunities
while having the ways and means to capitalise on our prospects through digital technologies. Digital Malaysia
hopes to raise the potential of the rakyat to perform higher value jobs and gain new sources of income.

CHANGING
MINDSETS &
SKILLSETS
SUPPLY
DEMAND

HIGH
KNOWLEDGE

CONSUMPTION

PRODUCTION

LOW
KNOWLEDGE

Alongside these desired outcomes, the digital transformation is also intended to reorient the prevailing economic
and societal forces from supply-driven to demand-driven, consumption to production, and low knowledge to
high knowledge activities.
The reorientation through these three game-changing strategic thrusts is to:
(supply to demand): reallocate resources to more demand-focused programmes and activities;
(consumption to production): change the way people behave to produce as they consume;
(low knowledge-add to high knowledge-add): enhance competitiveness by focusing on knowledge-added
activities.

33

Setting aspirational goals as true north


Aspirational goals allow us to work towards tangible results by identifying the difference between the current and
desired positions. In this way, strategies and approaches to bridge the gap can be put in place and tracked on an
regular basis.
These goals, as mapped out under Digital Malaysia, are to develop:
a digital economy that contributes 17% to national GDP in 2020
a digital economy ranked among the top 20 economies by the World Economic Forums (WEF) Global IT Report
(GITR)
a national economy in the top 10 economies of the IMD (International Institute of Management Development)
World Competitiveness Yearbook
An assessment of our current standings highlights the gap and quantifies the challenge we face before us:
our digital economy contributed 12% to GDP in 2012
the nation was ranked 30th in the WEF GITR in 2012
we were ranked 16th in the IMD World Competitiveness Yearbook in 2012

BASELINE STANDINGS TO ASPIRATIONAL GOALS

2010 2012 2020


Digital Economy
contribution to
GDP1
WEF Global IT
Report (GITR)
ranking
(rank amongst 144
economies)2
IMD World
Competitiveness
Yearbook
(ranking amongst
59 economies)3

13% 12% 17%


#28 #30
#16 #16

TOP

INCREASED
GNI

20

ENHANCED
PRODUCTIVITY

TOP

IMPROVED
STANDARD
OF LIVING

10

Source:
1. ICT Satellite Account 2012
2. Global IT Rankings 2013
3. International Institute of Management
Development 2013

34

In setting the respective targets, we benchmarked against other nations that could either offer a credible and
realistic yardstick, or an aspirational one. Of all these countries, South Korea was by far the most appropriate
model since the East Asian economy was on a par with Malaysia during the 1970s when both countries began
ramping up industrialisation. South Koreas digital economy contributed 17% to its GDP while it was ranked 11th
and 22nd respectively by the WEF and IMD World Competitiveness Yearbook in 2013.
It is interesting to note that several other developed nations have achieved a high Digital Economy contribution
to GDP. They include Sweden with 18.4% (2012), and the UK and Taiwan with 15.8% (2012). Meanwhile, the
corresponding figures for the US and Germany are 11.1% (2012) and 8.5% (2011) respectively.

Digital Malaysia shared a link


Source:
1. McKinsey Report: Internets Impact on Aspiring Countries & MDeC analysis
2. Digital Economy Fact Sheet, Germany Trade & Invest & MDeC analysis
3. The Truth of the Digital Economy, Google Think Insights, Grove

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35

Determining baselines to plot outcomes


One of the first tasks in determining the targets in the form of aspirational goals for Digital Malaysia was an accurate
appraisal of where the nation stands in the present against prevailing circumstances. This was the reason for the
establishment of data baselines under an exercise to create a Digital Economy Satellite Account (DESA) similar
to the existing Tourism Satellite Account. The DESA taskforce clarified and formalised the definition of a Digital
Economy and DESA is now a statistical framework used to organise and present information on ICT, eCommerce
products and services. (How DESA is used to determine baselines is elaborated in Chapter 5 Generating Growth
in Sub-sectors)
DESA is based on six primary indicators comprising:
Share of ICT industry to GDP
Domestic output of ICT products by industry
Supply and use of ICT products
Imports and exports of ICT products
Income components by ICT industry
Employment in ICT industry

Digital Malaysia shared a link

DESA

DIGITAL ECONOMY SATELLITE ACCOUNT

$
$$

SHARE of
ICT to GDP

DOMESTIC OUTPUT of
ICT PRODUCTS by INDUSTRY

SUPPLY and USE of


ICT PRODUCTS

IMPORTS & EXPORTS of


ICT PRODUCTS

INCOME COMPONENTS
by ICT INDUSTRY

EMPLOYMENT in
ICT INDUSTRY

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36

Imports and exports of ICT products

Share of ICT to GDP

The industrys contribution to GDP in 2012 amounted


to 12% from ICT products and services representing
a provisional Digital Economy.

The nation is a net exporter of ICT products and


services with exports in 2012 exceeding imports at
RM196.1 billion against RM160.2 billion.

RM160.2B IMPORTS
RM196.1B EXPORTS

NETEXPORTS

RM35.9B

Income components by ICT industry


12%

The average gross wages of ICT employees, which is


used as a benchmark for productivity, was at least
double the national average in other industries.

Domestic output of ICT products by industry

The output of ICT products and services from local


companies totalled RM327.3 billion in 2012. The
domestic output of ICT products produced a GVA of
RM108.9 billion, representing a 33% profit in 2012.

DOMESTICOUTPUT

RM327.3B
GVA

RM108.9B
(33% PROFIT)

Other industries

ICT employees

Employment in the ICT industries

The ICT industries provided employment to more


than 750,000 workers in 2012, constituting almost 6%
of the total workforce.

ICT EMPLOYMENT

762,400
Source for all graphics above: DOSM ICTSA 2012, MDeC analysis

Supply and use of ICT products

The total supply of ICT products comes from the


domestic output and imports. In 2012, domestic
output constituted 67.4% of the total supply, an
increase compared with 65.7% in 2011.

67.4%

In effect, the ICT industry has a positive multiplier effect


on the national economy, with a RM35.9 billion surplus
in ICT trade, a 2X average GVA per employee in terms
of business productivity, and has raised the standard
of living by more than 2X as evidenced by the average
gross wages of ICT employees versus workers in other
industries.

37

Stocktake to avoid redundancies in projects


A stocktake of current ICT projects was instrumental in preventing any overlap between existing efforts and new
ones introduced as part of Digital Malaysia.
The findings are as follows:
ICT projects make up 9% of total Government projects initiated and launched under the 10th Malaysia Plan
(RMK-10)
Within RMK-10, there are 426 ICT projects, of which 49 and 23 ICT projects are relevant to the SME and B40
communities respectively
Of the 426 ICT projects, major impact areas include 52% for infrastructure building, 18% for improving public
service and 12% for the general public. In terms of the SME and B40 areas, there is no duplication of efforts in
addressing these communities
There are avenues for further private sector involvement in Government ICT projects
Government has adopted good management tools which can be expanded across the project cycle
The industry rate of latest technology adoption is 16%; this study has shown that an average of 9% of government
ICT projects adopt the latest technology
Projects are still on-going

A STOCKTAKE OF ICT PROJECTS


101

4,722

Total RMK-10 projects


(Rolling Plans 1 & 2,
ETP & GTP)

426

9%

91

Total ICT-related
projects RMK-10
(RP1&2): 271
ETP & GTP: 155

are ICT
projects

52

43
32
18

MoE

PMD

MoSTI

MoF

18

NRE

13

MICC

10

MoHA

13
6
MHLG

MRRD MDTCC MoHE

Development Expenditure
271 ICT Projects

38

12

4
MITI

Others

ETP

GTP

SRI

GTP, ETP & SRI


155 ICT Projects

Governance & reporting


As a national initiative with the potential to transform the nation and its people, Digital Malaysia is a collaborative
and consultative work in progress. It is after all, an initiative with multiple moving parts involving multiple parties
and beneficiaries. While the initiative is driven by MDeC, other agencies and organisations from within and outside
the Government play key advisory, supervisory and implementation roles. (The governance structure is depicted
in the graphic shown in this section)

DM Steering Committee

A steering committee chaired by the Minister of Communication & Multimedia (KKMM) was formed following the
launch of Digital Malaysia with the mandate to steer and drive the strategic implementation of the initiative.
Committee members have the added responsibility to ensure the integration of DM into other national plans
and programmes while avoiding any overlap of projects. The Steering Committee held its first meeting on Feb
2, 2012. The Committee comprises members from:
KKMM
MInistry of Finance (MoF)
Economic Planning Unit (EPU)
Malaysian Communications & Multimedia Commission (MCMC)
PEMANDU
Department of Statistics Malaysia (DOSM)
MIMOS
MAMPU

DM/MSC MALAYSIA

DESA Steering
Committee

Implementation
Council

Economic
Council

DM Steering
Committee

(Chaired by YBM KKMM)

NKEA
Steering
Committees

MDeC

PEMANDU

Submits report to

Secretariat

ICT DATA

Secretariat

39

ICT Satellite Account (ICTSA) Steering Committee

Another steering committee to oversee the ICTSA was established earlier and now reports to the DM Steering
Committee. There are four workgroups in this committee, tasked with looking into Key Definitions, Process &
Methodology and Indicators from the supply as well as demand sides using 2010 as the baseline year. It held
its first meeting on December 1, 2011. Committee members include representatives from the ministries and
agencies listed above.

Digital Malaysia is an evolving initiative


More than any other business or industrial activity, the digital economy is transient by nature. New ideas and
innovations are only applicable and relevant within an increasingly short timeframe while market opportunities
come and go at an exponentially rapid pace.
It is obvious that this unique set of circumstances and conditions necessitates a fluid and dynamic rather than a
rigid and inflexible approach to the development of a digital economy and society. For this reason, Digital Malaysia
has to be an evolving initiative. After all, it is intended to be a generational undertaking to develop a vibrant
digital economy.
In the three years since inception, the shape and direction of Digital Malaysia has been amended and modified to
adjust for changes in prevailing trends as well as to factor in the continual input from the best minds in industry,
government and society.
Digital Malaysia as it stands today, focuses on four communities for initial intervention and will pivot on the newlyformulated DM354 Strategic Roadmap going forward. Specific programmes are already in the various stages of
implementation for the target communities even as new plans come into play to expand the scope and scale of
Digital Malaysia.

40

41

# CHAPTER 2
Roadmap for the Way Forward

Driving the nation towards digital transformation is a multi-layered and multifaceted challenge. It requires a holistic approach to build a comprehensive ecosystem that in the long run will create a conducive, yet resilient environment
and generate the necessary momentum for all stakehholders to act in unison
towards the aspirational goals set out under Digital Malaysia.

ACCESS
ADOPTION
USE

ICT SERVICES
eCOMMERCE
ICT MANUFACTURING
ICT TRADE
CONTENT & MEDIA

DIGITAL ENTREPRENEUR
B40
DIGITAL-SAVVY YOUTH
SME

Sub-Sectors

Communities

ICT Enabling
Environment
Focus Areas

DM354 STRATEGIC ROADMAP

For this reason, it is imperative to put in place a Roadmap that takes into consideration all the existing gaps and
future potential in the task of developing a digital economy. Intervention in certain areas is critical to stimulate
and steer progress along the right path.
The blueprint to achieve the challenging goals of Digital Malaysia by 2020 is a Roadmap termed the DM354 Strategic
Roadmap. It prescribes intervention for:
3 ICT Enabling Environment Focus Areas
5 Sub-sectors
4 Communities
By following the DM354 Strategic Roadmap, the nation is expected to achieve the Aspirational Goals of Digital
Malaysia by 2020, in the process establishing a vibrant and dynamic digital economy well placed to compete with
the developed world and well set to attain exponential growth in the years ahead.

42

In essence,the DM354 Strategic Roadmap reflects the following components of the aspirational goals. The three
Enabling Environment Focus Areas serve to create a suitable environment for the digital economy to flourish. These
are specific indicators that increases the nations competitiveness ranking with respect to access, adoption and use
of digital solutions. Improvement on these indicators would move the digital economy closer to its target rankings
in the IMD World Competitiveness Yearbook and GITR.
The Focus Areas would create an environment in which the economic, industrial and social components of the
nations digital economy can be grown. This will form the building blocks for the ICT sub-sectors to flourish. Their
respective growth rates have been extrapolated and projected in order to maintain the specific growth trajectory
needed to achieve the 17% GDP contribution target of 2020.
Focused intervention on these subsectors would then channel the benefits and create opportunities for the selected
communities. Currently, four initial communities have been selected as the beneficiaries of a healthy and vibrant
digital economy. Their selection was based on one or both of the following factors:
That they had the most potential for growth
That they were the most vulnerable to changes brought about by the digital age

Formulating strategy to bridge the gap


The formulation of the DM354 Strategic Roadmap was based on a methodical process that started out with plotting
the journey from the as-is baselines to the to-be targets represented by the aspirational goals.
Data-driven insights were derived from the various components used to calculate the Digital Economy Satellite
Account (DESA) and the myriad indicators tapped to produce the WEF Global IT Report rankings and IMD World
Competitiveness Yearbook.
These components and indicators were filtered according to their impact and relevance to ICT. Each was then
examined to identify gaps and weaknesses before we selected those that could produce the highest yield from
intervention efforts.

DIGITAL ECONOMY CONTRIBUTION TO GDP

2012
12%

2020
17%
From as-is to to-be...

43

WEF GLOBAL IT REPORT (GITR) RANKINGS

2011
1

28th

144

2020
1

TOP

20

144
From as-is to to-be...
Out of 144 economies surveyed.

Source: World Economic Forum (WEF) GITR 2011

IMD WORLD COMPETITIVENESS YEARBOOK

2011
1
2020
1

16th

59
TOP

10

59
From as-is to to-be...
Out of 59 economies surveyed.

Source: Institute of Management Development (IMD) 2011

Through this process, we outlined three broad and inter-related areas, as mentioned earlier:
ICT Enabling Environment Focus Areas
ICT Sub-sectors
Communities
Intervention would be required in THREE ICT Enabling Environment Focus Areas of:
Access
Adoption
Use
Likewise, attention has to be given to stimulating growth in FIVE Digital Economy Sub-sectors of:
ICT Services
eCommerce
ICT Manufacturing
ICT Trade
Content & Media
At the same time, it was also understood that priority should be given to those socio-economic segments or
communities that could benefit the most from digital intervention. Out of the communities categorised under
Government, Business and Citizens, FOUR were picked for initial intervention:
Digital Entrepreneurs
The B40 (the 40% of Malaysians who represent the lowest income group with below RM3,050 in monthly
household income)
Digital-savvy Youth
SMEs

44

SECTION 04

REVIEW

45

# CHAPTER 3
Key Highlights

Digital Malaysias aspirations to advance the country towards a developed digital


economy by 2020 is an all-inclusive vision encompassing every Malaysian from
all walks of life.
The embrace of digital technology in the various sectors, especially that of communication and business, is one of
the highways towards this vision; hence the dissemination of information plays a vital role in its efforts to achieve
its goals and targets.
By its very nature, digital technology represents change and requires not only new learning and understanding, but
also a willingness to embrace new methods.
The general use of digital technology in the areas of communication and social media is on the uptrend. However,
a sizeable portion of this usage is centred in the urban areas where mobile phones and devices play a vital role in
daily life.
Additionally, the percentage of businesses that employ digital technology has not yet reached the desired levels,
with much of the potential still largely untapped. Two of the main challenges here are lack of awareness and
confidence as well as the lack of funds.
As such, one of the important steps is to create awareness and bring this knowledge to the doorsteps of the people;
not only to those living in less urbanised areas, but also to those whose tentativeness towards digital technology
stem from a lack of understanding.
Digital Malaysia has put in much effort to increase the awareness of digital technology and its advantages and
benefits. It is also taking on an increasingly active role in social and community work and contributions, which
highlights its presence and contributes toward branding.
Various programmes have been planned and implemented to reach out to a wide spectrum of Malaysians, from the
young at school to the retiree living in the village. These programmes are not only directly technology-based, but
are also community development efforts that bring help in other ways.
Here, we highlight some of the significant outreach programmes for the year:

46

January 29
5th DM Steering Committee Meeting
(DMSC) in MDeC, Cyberjaya
Then MOSTI Minister YB Datuk Seri
Panglima Dr Maximus Johnity Ongkili
chaired the meeting to propose
KPIs for 2013 and approve the 2012
Achievement Report, ICT Satellite
Account Report, DM Communications
Plan and Brand Guidelines.

April 25
POKOK platform was launched in
PJ Hilton
POKOK (Pembangunan Oleh Komuniti
Untuk Komuniti or Development by
Communities for Communities) is a
digital platform to match the needs
of the B40 community with solutions
from the private sector and NGOs.

June 24
Talk on Digital Malaysia was jointly
held by MDeC and MyNEF at the
Sime Darby Convention Centre,
Kuala Lumpur
Throughout the year, MDeC also held
talks and presentations for various
companies, business associations
and institutions of higher learning.

47

August 19
Awareness Campaign: TV
commercials for the Digital
Entrepreneur community

August 19
DM Awareness Campaign was
launched
Do More Lah is the campaigns
rally cry. It is an easily-undertstood
colloquial phrase that can rally
Malaysians behind the Digital
Malaysia national initiative.

August 19
Awareness Campaign: Creative
Direction
The campaign features animated
3D characters called Domorelings.
They represent digital touch points
in a playful reminder to Malaysians
that they already have the tools
and knowledge to make digital work
harder for them.

48

August 19
Awareness Campaign: TV
commercials for the B40
community

August 19
Awareness Campaign: TV
commercials for the Digitally-savvy
Youth community

August 19
Awareness Campaign: TV
commercials for the SME
community

August 19
Awareness Campaign: Print
Advertisements

August 19
Awareness Campaign: MDeC office
building banner

49

September 4
ETP & DM Business Planning
Workshop at MDeC, Cyberjaya
This workshop was jointly organised
by MDeC and MyNEF.

December 20
DM Proposal Submission System
(DMPSS) is ready to be deployed
DMPSS is the automated system for
submission of DM proposals. The
system covers and tracks the entire
process of ideation until approval.

November 11
6th DM Steering Committee meeting
at Parliament, Kuala Lumpur
Chaired by the Minister of
Communication & Multimedia YB
Datuk Seri Ahmad Shabery Chik,
the meeting endorsed the 2012
KPI Achievements and 2013 KPI
targets. The Minister requested for
benchmarking against developed
economies.

50

#Achievements and Highlights in


key Communities and Initiatives
(C&I)

July 18
Joint embedded forum with
Intel at Sheraton Imperial, Kuala
Lumpur
This session was intended to create
and develop opportunities for
Malaysian companies to develop
technology based on the Intel
platform.

Digital Entrepreneur
Project: Develop a Trusted Mobile
Digital Wallet System
A National Mobile Proximity
Payment
Industry
Roadmap,
which was jointly developed by
MyClear and Smarttag Solutions,
was completed. The Roadmap was
presented to Bank Negara Malaysia
(BNM) in July. BNM has agreed to
the proposal.

Digital Entrepreneur
Project: Grow the Embedded
Systems Industry
During the year, 2 additional
technology partners were signed up
to grow the ecosystem. Additionally,
8 more projects were approved for
funding to capture market share.

51

#Achievements and Highlights in


key Communities and Initiatives
(C&I)

B40
Project:
Facilitating
Societal
Upliftment
The POKOK digital platform, aimed
at improving the lives of one million
underprivileged Malaysians by 2020,
was rolled out in two additional States
- Terengganu and Perlis - following
the successful implementation of the
pilot project in Pahang.

Digital-savvy Youth
Project: Develop on-demand,
customised online education
During the year, 7 content
providers came on board to grow
the ecosystem. In addition, more
than 5,200 youths tapped online
education resources via Celex while
another 300 took online courses.

B40
Project: Microsourcing to generate
income for the B40
Krowdin.com
was
brought
online, joining four other similar
platforms launched in 2012 to offer
crowdsourcing opportunities to the
underprivileged.

52

SME
Project: Asian eFulfilment Hub
During the year, 5 new customers
were secured, 25 logistics talents
were certified while more than RM43
million in goods and services were
transacted.

SME
Project:
Enabling
ePayment
Services for SMEs & Micro
Enterprises
For 2013, 8 third party acquirers were
recruited, 18 regional service hubs
were set up, 43,683 merchant outlets
were enabled while RM978 million
in transaction value was successfully
completed via e-payment facilities.

SME
Project: Shared Cloud Enterprise
Services
More than 1,720 small and medioumsized companies adopted an
cloud-based Enterprise Application
Solutions (EAS) in 2013.

53

# CHAPTER 4
Nurturing an Enabling
Environment

For any initiative to work and grow, and better yet to thrive and yield positive
results, the right environment is a crucial component. This has to be the first
step in the implementation of a programme or idea as it serves to set the stage
for all the players and pieces to come together.
The DM354 Strategic Roadmap highlights three focus areas that require strengthening and reinforcing as the
preliminary move to growing Malaysias digital environment; they are (i) Access, (ii) Adoption and (iii) Use. As
outlined earlier in Chapter 2, intervention would be carried out on selected indicators in each of the focus areas
on the basis that these indicators have the potential to generate the highest yield. These indicators were culled
from the WEF Global IT Report (GITR) rankings and IMD World Competitiveness Yearbook (WCY). It is important
to note, however, that these are preliminary indicators and they may be subject to further refinement as well as
additions. For instance, indicators used for benchmarking by the International Telecommunication Union (ITU) may
be added as and when deemed necessary.

Maturity Levels

Digital Malaysia shared a link

5
4
3
2
1

Classifications
Top 10 Ranked Economies
Top 1120 Ranked Economies
Top 2130 Ranked Economies
Top 3150 Ranked Economies
Economies Ranked 51 & above

Like Comment Share about an hour ago

54

The graphic below offers a guide as to how the WEF and WCY ranked economies according to a maturity model.
Their respective classifications were based on:
The countrys ranking reflects the maturity of its development
This assumes that the top country is the most mature and Malaysia needs to achieve the top 10/20 positions in
terms of maturity
In 2013, GITR ranked 144 economies and WCY ranked 59 economies
The maturity levels are based on bands created to establish a stair-step approach to breaking down global indices

ICT ENABLING ENVIRONMENT FOCUS AREAS

ACCESS

ADOPTION

USE

INDICATORS

INDICATORS

INDICATORS

Access
Before any activity to directly encourage and promote growth is initiated, access to ICT components and services
is necessary. This is something which requires close attention given the fact that Malaysias 29 million population
is spread out over both the urban and rural areas.
A significant portion of todays ICT users are centered within the urban area; hence the target would be to deliver
ICT access to the wider portion of the less urban population, while also improving overall services in terms of
quality, accessibility and availability. The assessing parameters within these 7 indicators are measured and defined
within five maturity levels.
In terms of access, the 7 key indicators which have been selected are:
1. Fixed broadband tariff - Malaysia needs to bring broadband tariffs to a more competitive rate compared with
economies which are currently ranked above us. Internet and broadband infrastructure and coverage in rural
areas also fall within this indicator which comes under the responsibility of MCMC. This is a crucial step forward
as wider internet access will increase the base of ICT users.
2. Mobile telephone tariff The tariff of mobile telephone access needs to be brought to a more competitive
level on par with other economies.
3. Households with internet access Emphasis was placed to increase the number of households with internet
access, especially in the rural areas. The task of the MCMC here was twofold the provision of internet access
to such areas as well as the education of the rakyat here.
4. Accessibility of digital content User generated content needs to be made available on multiple platforms for
example via the internet, mobile telephone and satellite services. This would lead to the sharing of information
and applications which more people can benefit from.
5. Internet access in schools The MoE, in collaboration with the MCMC, successfully implemented the 1BestariNet
programme which was designed to ensure all national schools are equipped with internet access. Much learning
is done in the school environment and those students who are exposed to ICT during school will adapt to it much
faster and easier.

55

11. Government procurement of advanced technology


(GITR = Rank 4)
10. Investment in telecommunications (WCY = Rank 5)
9. Mobile telephone costs (WCY = Rank 15)
8. Fixed telephone tariffs (WCY = Rank 16)

7. Laws relating to ICT (GITR = 23)

6.
5.
4.
3.
2.

Availability of latest technology (GITR = Rank 35)


Internet access in schools (GITR = Rank 38)
Accessibility of digital content (GITR = Rank 40)
Households with internet access (GITR = Rank 42)
Mobile telephone tariffs (GITR = Rank 43)

1. Fixed broadband tariffs*


(GITR = Rank 76, WCY = Rank 23)

*According to MDeC modelling

11
7

Access-related Indicators
Generate Highest Yield

6. Availability of latest technology Malaysia must keep up with the introduction of new ICT technology to
position itself as a hub for Asian demand of ICT services. Under the purview of MITI, MoF, Ministry of Domestic
Trade and SIRIM, perceived barriers to entry must be lowered, if not extinguished altogether to encourage the
penetration of the latest technology and services
7. Laws relating to ICT A review of the laws pertaining to ICT, specifically to remove roadblocks, must be made
to enable the more efficient and wider use of ICT. Applications would encompass cloud services, data privacy
and IP protection.

56

Access:

Assessment to improve the 7 indicators


to facilitate maturity progression
No

Indicators and Assessments

Potential Stakeholders

Fixed Broadband Tariffs (GITR=Rank76; IMD=Rank23)


Ensure that broadband tariffs are competitive with rival
economies ranked above Malaysia
Improve internet and broadband infrastructure and coverage
in rural areas

MCMC

Internet access in schools (GITR=Rank38)


Successfully implement 1 BestariNet to ensure the objective
to provide internet access to all national schools is met

MoE, MCMC

Households with internet access, % (GITR=Rank42)


MCMC
Incentivise uptake of Internet usage amongst rural population

Mobile Telephone Tariffs (GITR=Rank43)


Ensure that mobile tariffs are competitive with rival economies
ranked above Malaysia

MCMC

Accessibility of digital content (GITR=Rank40)


Encourage user-generated content to be made available on
multiple platforms i.e. internet, mobile, satellite, etc.

KKMM,MCMC,
MDeC

Availability of latest technology (GITR=Rank35)


Position Malaysia as a hub for Asian demand
Better enforce IP protection laws
Lower perceived barriers to entry e.g. tax, localisation
requirements, standards

MITI, MoF, Ministry


of Domestic Trade,
SIRIM

Laws relating to ICT (GITR=Rank23)


Review legislation to remove roadblocks for effective use of
ICT (e.g. Big Data Analytics, cloud services, data privacy, IP
protection, open data)

NITC, KKMM
MDeC, Attorney
Generals Office

* According to MDeC modelling


** The list above is not exhaustive

57

Adoption
Following closely on the heels of access is the adoption of ICT services. With the availability of efficient ICT
services in terms of connectivity and accessibility, the onus would then also lie on the people themselves to
actually embrace such services and take advantage of what is available.
The stakeholders also have a responsibility to ensure that ICT services are available at attractive rates to encourage
more subscriptions which would lead to higher ICT penetration.
Education and information dissemination also play a role as the people must be aware of what is available, and
what the advantages and benefits are, while new skills and competencies must trickle down to the end-users for
optimum adoption.
The maturity level of ICT adoption takes into account five of the highest yielding indicators, out of a total of 8.

Maturity Level

8. Importance of ICTs to government vision of the future


(GITR=Rank 6)
7. Development & application of technology
Maturity Level
(WCY=Rank 6)

Maturity Level

Indicators with highest yield

5. Information Technology Skills (WCY=Rank 24)

Maturity Level
4. Mobile phone subscriptions per 100 population
(GITR=Rank 35)
3. Percentage of households with computer
(GITR=Rank 41)
2. Fixed broadband Internet subscriptions per
100 pop (GITR=Rank 67)
1. Mobile broadband Internet subscriptions per
100 pop (GITR= 6)

Maturity Level

*According to MDeC modelling

58

Access-related Indicators

Generate Highest Yield

1. Mobile broadband internet subscriptions per 100 population The MCMC and MoF have been charged with
providing competitive broadband packages for the individual and enterprises. These would include enhanced
allowances such as tax exemptions and other incentives.
2. Fixed internet subscriptions per 100 population It is vital to promote the use of the internet in rural
communities. This can be done through the implementation of various programmes such as e-learning, social
media and income generation.
3. Mobile phone subscriptions per 100 population This indicator can be improved by providing competitive
rates for mobile services which would prompt more people to adopt such facilities.

Adoption:

Assessment to improve the 5 indicators


to facilitate maturity progression
Potential Stakeholders

No

Indicators and Assessments

Mobile broadband Internet subscriptions per 100


population (GITR=Rank69)
Provide competitive broadband packages for both
individuals and enterprises
Enhance internet adoption tax incentives

MCMC, MoF

Fixed Internet subscriptions per 100 population


(GITR=Rank67)
Promote the advantages of Internet usage amongst rural
communities with relevant adoption programmes like online
learning, information-sharing, income-generation channels
(crowd-sourcing) and social media

MoE, MCMC, MDeC,


KPWKM, KKLW

Mobile phone subscriptions per 100 population


(GITR=Rank35)
Provide competitive mobile packages for both individuals
and enterprises

MCMC

Percentage of households with computer (GITR=Rank41)


Provide higher incentives (or tax relief) for households that
embrace technology
Introduce computer voucher for students similar to the
1Malaysia Book Voucher programme

KKMM, MCMC,
MDeC, MoF

Information Technology Skills (IMD=Rank24)


Increase no. of ICT hours in school curriculum
Enhance IT skills amongst graduates, professionals and civil
servants

MoE, MDeC,
MIMOS, MoHR,
INTAN

* According to MDeC modelling


** The list above is not exhaustive

59

4. Percentage of households with computers - Higher incentives are needed to encourage households to invest
in computers. These can include better tax rebates or vouchers which have been proven successful in the
1Malaysia Book programme.
5. Information technology skills Access to ICT facilities and services must go hand in hand with new learning
and training wherever necessary. Schools play an important role here and ICT hours can be increased within
school time. ICT skills must also be improved and enhanced among graduates, professionals and those in the
civil service.

Use
Among the more rural population, there is still some hesitancy towards the use of ICT services. This is the same for
those in business who have yet to embrace the benefits and advantages of digital commerce.
This could be due to a lack of awareness, uncertainty and in some cases, insufficient knowledge. Financial
considerations could also be an issue for some quarters.

Maturity Level

17.Employment Growth (WCY=Rank 6)


16.ICT Impact on new organization models
(GITR-Rank 9)

Maturity Level

Indicators with highest yield

15.% of High Tech Exports (WCY=Rank 11)


14.Venture Capital Availability )GITR=Rank 11)
13.Impact of ICTs on new services and products (GITR=Rank 13)
12.Large Corp Use (WCY=Rank 15)
11.Productivity of Workforce (WCY=Rank 15)
10.SME Use (WCY=Rank 17)
9. Productivity Companies (WCY=Rank 17)
8. Employment (WCY=Rank 17)
7. Government Online Services Index
(GITR=Rank 20)
Maturity Level
6. Productivity Real Growth (WCY=Rank 21)
5. Business-to-consumer Internet use (GITR=Rank 26)
4. Use of virtual social networks (GITR=Rank 30)

Maturity Level

3. E-Participation Index (GITR=Rank 31)


2. Business-to-business Internet use (GITR=Rank 33)
1. Percentage of individuals using the Internet
(GITR=Rank 41)
Maturity Level

*According to MDeC modelling

17
6

60

Access-related Indicators
Generate Highest Yield

Use:

Assessment to improve the 6 indicators


to facilitate maturity progression
No

Indicators and Assessments

Potential Stakeholders

E-Participation Index (GITR=Rank31)


Promote wider use of digital technology amongst all strata of
society with particular focus on vulnerable groups such as B40,
elderly, OKUs, housewives, rural population, etc.

MCMC, MDeC,
KPWKM, KKLW (Luar
Bandar)

Percentage of individuals using the Internet (GITR=Rank41)


Ensure availability of relevant content that will promote
technology utilisation for positive use
Enhance digital navigation skills amongst the vulnerable groups

MCMC, MDeC, MoE

Business-to-business Internet use (GITR=Rank33)


Develop programmes to accelerate adoption and usage of Internet
& business applications amongst micro-enterprises and SMEs

MDeC, SME Corp,


MyNIC

Productivity Real Growth (IMD=21)


Identify sectors that have low comparative productivity and develop
programmes to catalyse adoption of digital technologies to
increase productivity within targeted sectors

MDeC, MPC, SME


Corp

Use of virtual social networks (GITR=30)


Create awareness campaigns (include safe and responsible usage),
training, as well as programmes to encourage productive use of
social networks

MDeC, MCMC,
CSM

Business-to-consumer Internet use (GITR=26)


Implement eCommerce interventions that will increase
utilisation of online services
Remove barriers to participation amongst consumers

SME Corp, MDeC,


CSM

* According to MDeC modelling


** The list above is not exhaustive

61

For the advancement of Malaysias digital economy, a larger number of the population encompassing all ages and
walks of life must adopt the use of ICT services, both as individuals and businesses.
There are 17 overall indicators to assess the use of ICT and of these, six have been sidelined for further action:
1. E-participation index Malaysia must promote a wider use of digital technology among all strata of the
population. Nevertheless, special attention must be paid to the B40, elderly, OKUs (handicapped), housewives
and the rural population as a whole. These groups contribute a significant portion towards the index.
2. Percentage of individuals using the internet There must be relevant content which is readily available and
accessible to individuals to encourage the positive use of the internet. Digital navigation skills among certain
vulnerable groups, as mentioned above, must be enhanced via community programmes and incentives.
3. Business-to-business internet use The stakeholders need to develop programmes to accelerate the adoption
and use of ICT services and business applications especially among small businesses and SMEs. This would lead
to enhanced business activities such as communications and marketing.
4. Productivity real growth Low growth and productivity sectors can benefit from the adoption and use of
ICT services. These areas need to be identified and suitable programmes and incentives should be created to
catalyse the adoption of ICT which would then lead to better business activities and higher growth rates.
5. Use of virtual social networks Social networks and real-time virtual communication are the buzzwords of
communication today. The dissemination of information via these channels is immediate and can be infinitely
useful in various applications and situations. The people must be made aware of the benefits and also be taught
the safe usage of such media.
6. Business-to-consumer internet use Ecommerce is one of the fastest growing sectors of ICT services.
Interventions are necessary to encourage the transfer of business to the virtual world. Barriers must be removed
for both the benefit of the business owner as well as the consumer. These encompass e-payment security and
transparency. Supporting facilities such as delivery of products from seller to end-user is also a consideration.

Moving forward
To create the environment for the digital economy to flourish, all the ingredients and the stakeholders must
come together to create a complete and holistic environment. The more conditions which are met, the better
the growth and development. The benefits of a growing and expanding digital economy are manifold and the
advantages will be reaped by everyone.
In addition, to increase its competency on the global stage, Malaysias digital environment must be conducive
not only for the citizens but also for the rest of the world. Globalisation is a reality and ICT has penetrated both
businesses and personal communication. So to be on the cutting edge of new developments, and to spur Malaysias
journey towards Vision 2020, the digital environment here is a vital component for the growth of the digital
economy and the ICT competency of the people.

62

63

64

# CHAPTER 5
Generating Growth in
Sub-sectors

One of the key thrusts of the DM354 Strategic Roadmap is to increase revenue
by generating new growth areas within the existing ICT Sub-sectors.
Such economic impact is seen especially in 5 ICT sub-sectors:
ICT Services
eCommerce
ICT Manufacturing
ICT Trade
Content & Media
All these areas not only apply to local businesses but they also represent a
global phenomena as the digital world is not restricted by physical boundaries
or limitations. This being so, the benefits and advantages are tremendous and
are still growing. Economic impact is delivered via the 5 ICT Sub-sectors.

An overview of Malaysias ICT Industry

ICT
SUB-SECTORS
1. ICT SERVICES
2. eCOMMERCE
3. ICT MANUFACTURING
4. ICT TRADE
5. CONTENT & MEDIA

In 2005, the digital economy made up 14.9% of Malaysias GDP of RM543 billion.
Supported by a compound annual growth rate of 5.7%, this increased by RM38.3
billion in 2012. However, this represented a downtrend as it only contributed
RM119.2 billion towards the overall RM941.2 billion in GDP. The 2012 figure also
takes into account two additional components of the Digital Economy, namely
eCommerce and Share Services and Outsourcing (SSO).
This drop was likely due to the decline in ICT manufacturing due to the global
recession. On top of this, Malaysias position in the IMD World Competitiveness
Yearbook dropped to 16th in 2010 from 10th the previous year.

ICT SHARE OF GDP


14.9%
Year 2005

12.7%
Year 2012

Source: Base data referenced from ICTSA 2005 to 2012 by DoSM. Further analysis and breakdown by MDeC & IDC

65

This same downtrend in GDP contribution was repeated from 2010 to 2012. In turn, this was likely caused by the
severe floods in Thailand in late 2011 which also caused a global shortage of hard disk drives throughout 2012.
Additionally, the World Bank estimated a loss of US$45.7 billion in economic damages and losses as a result of the
floods.
ICT Manufacturing, specifically, has also been recording a progressive decline in growth from 2005 to 2010 and 2012
respectively. The RM33.8 billion contribution to GDP in 2005 dropped by 0.6% to RM32.8 billion in 2012.
But there was a silver lining to this downtrend as ICT Services recorded higher margins of 46.6% in 2012 as opposed
to the 20.7% from ICT Manufacturing.
ICT Services also saw a leap of 12% in the seven years between 2005 and 2012. The actual figures went from
RM18.7 billion (2005) to RM41.3 billion (2012).

AGGRESSIVE GROWTH IN MALAYSIAS


DIGITAL ECONOMY
CAGR 11.9%
+RM174.8B

294B
CAGR 5.7%
+RM66.5B

12.7%
of GDP

14.9%
of GDP

2005
543.6B

2012
941.2B
8.2%

Note:
2020 National GDP target
incorporating ETP contribution

17% of GDP

119.2B

80.9B

Required
on top of
historical
growth
rate

185.7B
10.7% of GDP

CAGR 5.7%
+RM38.3B

108.3B*

2020 est.
2020 Goal
National
1.733T*
GDP (RM)
7.9%

2 additional components of the Digital Economy,


eCommerce & SSO, are reflected in the figures here

Source: Base data referenced from ICTSA 2005 to 2012 by DoSM


Further analysis and breakdown by MDeC & IDC
66

It is noted here that eCommerce is not fully factored into DESA as yet and the upside is that the potential growth
is sizeable.
This positive uptrend improved Malaysias position in the IMD Global Competitiveness Ranking by one spot to
number 15 in 2013.
As for the future, the national anticipated goal for the GDP in 2020 is RM1.733 trillion, of which 17% is projected to
come from the digital sector. Assuming the growth adheres to the trend of previous years, at a CAGR of 5.7%, this
would only amount to RM185.7 billion, translated to only 10.7% of the projected GDP. This very significantly falls
short of the projected figure of RM294 billion from the digital sector expected in 2020. As such, there is a need to
contribute to the historical CAGR and push it higher to achieve the target.
This upwards push needs to be driven by all the 5 key sub-sectors of the digital economy, and growth must be seen
to accelerate in each area.

GROWTH IN DIGITAL ECONOMY NEEDS TO BE DRIVEN BY 5 KEY SUB-SECTORS


GDP CONTRIBUTION

GDP CONTRIBUTION

GDP CONTRIBUTION

GDP CONTRIBUTION

GDP CONTRIBUTION

ICT
SERVICES

eCOMMERCE

ICT
MANUFACTURING

ICT
TRADE

CONTENT
& MEDIA

16.7%

RM
142.4B
RM
36.9B

12.0%

14.8%

RM
57.3B
RM
27.2B

5.9%

RM
14.2B
RM
5.5% 49.7B

-0.6%

RM
17.7B

4.8%

4.8%

RM
16.1B

8.0%

16.2%

RM
6.3B

RM
RM
RM
18.7B 41.3B 105.5B

RM
RM
RM
12.7B 19.0B 30.1B

RM
RM
RM
33.8B 32.3B 32.0B

RM
8.0B

RM
RM
11.1B 16.1B

RM
2.5B

RM
4.3B

RM
7.9B

2005

2005

2005

2005

2012

2005

2012

2020

2012

2020

2012

2020

2012

2020

2020

The respective bar charts are not proportionate across the 5 sub sectors
Source: Base data referenced from ICTSA 2005 to 2012 by DoSM. Further analysis and breakdown by MDeC & IDC

67

However, two out of the five key focus sub-sectors were identified as the higher yielding areas and more attention was
directed to these areas.

FOCUS IS ON 2 SUB-SECTORS
GDP CONTRIBUTION

GDP CONTRIBUTION

ICT
SERVICES

eCOMMERCE

16.7%

RM
142.4B
RM
36.9B

12.0%

14.8%
5.9%

RM
57.3B
RM
27.2B

RM
RM
RM
18.7B 41.3B 105.5B

RM
RM
RM
12.7B 19.0B 30.1B

2005 2012 2020

2005 2012 2020

Source: Base data referenced from ICTSA 2005 to 2012 by DoSM.


Further analysis and breakdown by MDeC & IDC

Focus on ICT Services


ICT Services refers to the activities in any telecommunications, IT systems/solution planning, implementation,
support, management and education and training provided by IT Service Providers to the customers. From the
customer engagement standpoint, they are either buying systems integration, IT outsourcing or IT education
services from the service providers. Source: IDC Market Research, 2013
The goal is to drive digital economy growth via a concentrated focus on ICT services.

Overview of ICT Services

With its 48.4%, contribution towards the overall digital economy GDP, the ICT Services sub-sector has the highest
margins of the 5 sub-sectors within the Digital Economy.
The sub-sector contributed RM41.3 billion to GDP in 2012, having registered a CAGR of 12% in the years from 2005.
Based on a historical growth path, ICT Services will grow to RM105.5 billion in 2020. To support the ICT industrys
aspirational macro targets, however, the sub-sector has to grow at a CAGR of 16.7% to achieve a GDP contribution
totalling RM142.4 billion by 2020.
For the export market, historical trends charted a 11.1% growth in ICT Services exports between 2005 to 2010, with
the figures moving from RM3.6 billion to RM6.1 billion.
As for manpower, the number of employees in ICT Services is expected to reach 461,265 (representing 42.5% total
employees among ICT Services sub-sectors) in 2020.

68

ICT SERVICES CONTRIBUTION TO


MALAYSIAS DIGITAL ECONOMY

48.4%
BY 2020

BIG DATA
ANALYTICS

SOCIAL
MEDIA

SOFTWARE
DEVELOPMENT

CLOUD

MOBILITY

Recommendations for ICT Services Growth


Five steps have been outlined to propel the potential
growth for ICT Services:
1. Focus on ICT Services exports
2. Malaysia should push forward in 5 growth areas
namely in mobility, cloud, social media, big data &
outsourcing
3. Promote business adoption of cloud-based enterprise
application solutions
4. Expand outsourcing activities, eg. data-center
services to drive growth in telecommunication & ICT
services
5. Position Malaysia as value added BDA hub to tap
BDA business and as delivery center for mobility
solutions.

ICT SERVICES REQUIRED GROWTH

GDP CONTRIBUTION
SSO

TELCO

ICT
SERVICES

OTHER IT SERVICES

16.7%

This ICT Services sub-sector is made-up of multiple


components. It is imperative that this growth is
sufficient to make up 48.4% of Malaysias Digital
Economy in 2020.
This initiative for growth is a two-pronged approach:
Multiple initiatives already exist to push the needle
in ICT Services components such as:
HSBB in Telco
MSC Malaysia Cloud Computing Initiative
ICON in Mobility
Knowledge Process Outsourcing in SSO
YouTube Partner Programme in Social Media
The nascent Big Data Analytics segment presents a
sizable opportunity that requires urgent attention.

RM
142.4B
RM
36.9B

12.0%
RM
RM
RM
18.7B 41.3B 105.5B

2005 2012 2020


Source: Base data referenced from ICTSA 2005 to 2012 by DoSM.
Further analysis and breakdown by MDeC & IDC

69

Malaysias BDA Journey


From the five recommendations outlined above, we will
highlight the new area of Big Data Analytics (BDA) which
represents a new frontier in ICT services. The others are
existing recommendations and these will be expanded
accordingly.
Recognising the potential in BDA, Malaysia has embarked
on a journey to tap into this market with the goal of a
projected RM0.72 billion in revenue in 2020.
A widespread adoption of BDA by industries will create
spillover multiplier benefits such as cost savings,
productivity gains and competitiveness enhancements.

96+

MSC MALAYSIA STATUS COMPANIES


INVOLVED IN VARIOUS ASPECTS OF BDA
DataMicron

Fusionex

XYBASE

Isentric

TES S International

G-Asia Pa

Pulse

N2N Connect Bhdcific

Ganti Teknologi Sdn Bhd

To maximise the benefits of this initiative, a comprehensive and holistic approach is needed to grow the Big Data
ecosystem. This can be divided into three focus areas:
1. Proliferate usage of BDA in all sectors
2. Catalyse adoption and usage of BDA in the public sector
3. Build the BDA industry in Malaysia
The government is considering a move to embark on BDA in 2014.

Holistic (BDA) Framework Should Address The Following Components

APPLICATIONS

SOCIAL

GOVERNMENT

ECONOMIC

VALUE-ADDED
ELEMENTS
DATA MIX

MINING

ANALYTICS

DATA IN SILOS

PRIVATE SECTOR
PUBLIC SECTOR
DATA SOURCES
ENABLERS

70

SYNTHESIS

PREDICTIVE

SHARED DATA

OPEN DATA

DATA OWNERS

SYSTEM USERS / PROVIDERS

Private Companies

System integrators, Solution Providers,


Business Intelligence, etc

DOSM, MACRES, Bernama,


MET, DOE, MOH, MKN, etc
TRADITIONAL
MEDIA

TALENT

SOCIAL
MEDIA

INFO / INFRA

Universities, Research Institutions


TRANSACTIONAL
DATA

FUNDING

REGULATORY

NATIONAL
STATISTICS

TECHNOLOGY

Focus on eCommerce
eCommerce refers to the process by which an order is placed or accepted via the Internet (B2B and B2C), therefore
representing a commitment for a transfer of funds in exchange for goods or services. Source: IDC Market Research,
2013

Overview of the eCommerce sector

Technology has facilitated globalisation and in business, it has enabled a wider cross geographical participation in
trade.
eCommerce envelops not only the established business, big and small, but also includes the individual trader, the
self-employed or simply anyone who uses the internet for income-generating activities of sales and services. Sites
such as ebay and various other similar platforms where individuals can engage in a willing-buyer willing-seller
transaction are also part of the growing eCommerce arena.
World merchandise exports have grown nine-fold since 1980 from US$2.03 trillion to US$18.26 trillion. Meanwhile,
the eCommerce spending market has hit the tipping point in global economies with the CAGR for 2011-2016 15% at
world level and 36% for Asia Pacific excluding Japan.
The eCommerce spending market size is projected to witness substantial growth in the years between 2011 and
2016. Worldwide, this figure is anticipated to move from RM31.5 trillion in 2011 to RM64.5 trillion in 2016. For
Malaysia, the figures are expected to grow from RM62.1 billion to RM263.0 billion.

eCOMMERCE SPENDING MARKET SIZE, 2011 & 2016


eCOMMERCE REMAINS ATTRACTIVE AS COUNTRIES DO NOT IMPOSE COMSUMPTION TAX

WORLDWIDE

ASIA / PACIFIC
EXCLUDING JAPAN

64.5
31.5
2011

18.3
3.9

RM TRILLION

RM TRILLION

MALAYSIA

RM TRILLION

RM TRILLION

2016

2011

62.1
RM BILLION

2016

2011

263
RM BILLION

2016

Source: IDC, eCommerce Spending 1H2012

71

At home, Malaysias eCommerce contributed RM19.0 billion to the GDP in 2012 and this is anticipated to increase
to RM57.3 billion in 2020, in tandem with the growth in surrounding countries. At least 48% of the RM103.5 billion
Malaysian purchases are from other countries.
Adhering to past years CAGR of 5.9% will only see the revenue from eCommerce in 2020 reaching RM30.1 billion,
falling short of the anticipated RM57.3 billion by some RM27.2 billion.
The projected target for the 2020 GDP contribution is indeed high and there is a large gap to fill if eCommerce is
to take its role as one of the two key sub-sectors of significant GDP contribution.
However, we face an uphill climb here as only 28% of Malaysian SMEs have adopted eCommerce into their business
activities.
The potential is nevertheless large with the anticipated worldwide eCommerce spending figures of RM64.5 trillion
in 2016. In the Asia Pacific itself, digital goods transactions are expected to surpass RM150 billion in 2015.
eCommerce has been targeted as the new growth engine for private enterprises. To capture the required portion
of this ever expanding pie, Malaysia must put new incentives for growth in place.

Recommendations for eCommerce growth


Malaysia needs to:
1. Balance imports with more eCommerce exports by
encouraging players (especially SMEs) to convert
from traditional to digital business models for cost
and productivity efficiencies
2. Increase the adoption of eCommerce among Local
Large Corporations (LLCs)
3. Promote the creation of digital goods for exports
4. Promote the purchase of Malaysian brands through
online portals
Intervention is definitely and most certainly required
if the 2020 targets are to be met. These have been
formulated as a 3-pronged approach:
Increase the adoption of eCommerce among SMEs
Efforts should be directed to educate and train
SMEs on the potential benefits and advantages of
eCommerce and to illustate the infinite market
potential. SMEs represent a large percentage of
the private sector, but the overall contribution to
the economy is relatively low. These SMEs should
capitalise on the eCommerce platform to increase
their exports, market share and exposure, both to
the local market and the international scene.
Increase LLCs export revenue via eCommerce
Incentives can be given to LLCs to increase their
exports and sales via eCommerce. This will also
strengthen the countrys share of global exports.
Create digital and virtual goods The digital era
has given rise to an innumerable range of digital
and virtual goods. This is a new area for eCommerce
and Malaysia must start to take an active role in the
creation of ICT virtual goods such as programmes
and applications for computers and mobile phones
which can be transacted globally in the virtual
marketplace. This significant step forward would
also increase its standing as an ICT-competent
nation and provider.

72

eCOMMERCE REQUIRED GROWTH

GDP CONTRIBUTION

eCOMMERCE

14.8%

RM
57.3B
RM
27.2B

5.9%

RM
RM
RM
12.7B 19.0B 30.1B

2005

2012

2020

Source: Base data referenced from ICTSA 2005 to 2012 by DoSM.


Further analysis and breakdown by MDeC & IDC

INTERVENTION REQUIRED TO MEET 2020 TARGETS

INCREASE
ADOPTION
OF
eCOMMERCE
AMONG
SMEs

INCREASE
LLCs
EXPORT
REVENUE
VIA
eCOMMERCE

ICT Manufacturing remains a


good source of jobs
Based on business-as-usual negative growth
experienced by ICT Manufacturing from 2005 to
2012 (-0.6%), this sub-sectors contribution to GDP
is projected to lead us to RM33.1 billion in 2020.
However, the negative growth has been due to
external forces, the global recession in 2008 and the
severe Thai floods in 2011, that has since dissipated.
As such projection for ICT manufacturing is to grow
by 2.3% from 2010 to 2020
Total gross wages for ICT Manufacturing dropped
by 19.4%, versus a smaller percentage decline in
employment at 4.5%
This suggests the possibility of ICT manufacturers
hiring lower-cost labour, a situation that needs to
be reversed

CREATE
DIGITAL
AND
VIRTUAL
GOODS

ICT MANUFACTURING REQUIRED GROWTH

GDP CONTRIBUTION

ICT
MANUFACTURING
RM
5.5% 49.7B
RM
17.7B

-0.6%

RECOMMENDATIONS

Encourage more Malaysian manufacturers to focus


on mobility platform
Increase output of downstream E&E activities,
shifting from component parts to finished goods and
solutions such as embedded systems, in line with
NKEA E&E 2.0
Attract investments in high-growth ICT Manufacturing
activities
Move ICT manufacturing labour up the value chain
through re-skilling and up-skilling.

RM
RM
RM
33.8B 32.3B 32.0B

2005

2012

2020

Source: Base data referenced from ICTSA 2005 to 2012 by DoSM.


Further analysis and breakdown by MDeC & IDC

73

Traditional ICT Trading faces


uphill challenges
ICT Trade contribution grew to RM13.2 billion from
2005 to 2010, registering positive growth of 11.4%
This sub sector is expected to face headwinds
from challenges posed by eCommerce and shifting
consumer preferences leading to a lower projected
CAGR of 2%
ICT trade experienced a 0.4% decline in number of
employees (from 2010 2012)

RECOMMENDATIONS

Focus on trading of new devices


Establish Malaysia as an ASEAN trading hub for digital
goods

Creative Multimedia Industry is still


an untapped market in Malaysia
The content and media sub-sector in Malaysia is
exhibiting reasonable growth between 2005 and 2010
but it is the smallest sub-sector in the Digital Economy
Exports of Malaysian-made Content & Media recorded
RM7.8 billion in 2010, while imports were RM5.4
billion
The Malaysian industry is mainly based on advertising,
animation, digital content, TV/film, games, music
and video
Various efforts by the government to grow this
industry has been implemented under the NKEA CCI
and the expected outcome is slowly gaining traction
While Malaysian content producers have created
IPs, they have not sufficiently monetised these via
licensing and merchandising

RECOMMENDATIONS

ICT TRADE REQUIRED GROWTH

GDP CONTRIBUTION

ICT
TRADE

Bring in more overseas animation projects to further


develop the creative digital content industry in
Malaysia
Promote local and Islamic content to domestic and
overseas cable-broadcast companies
Propagate business models adopted by global content
owners among Malaysian IP owners to further their
IP monetisation through licensing and merchandising

CONTENT & MEDIA REQUIRED GROWTH

4.8%

4.8%

RM
16.1B

RM
8.0B

RM
RM
11.1B 16.1B

2005

2012

2020

Source: Base data referenced from ICTSA 2005 to 2012 by DoSM.


Further analysis and breakdown by MDeC & IDC

GDP CONTRIBUTION

CONTENT
& MEDIA
RM
14.2B

8.0%

16.2%

RM
6.3B

RM
2.5B

RM
4.3B

RM
7.9B

2005

2012

2020

Source: Base data referenced from ICTSA 2005 to 2012 by DoSM.


Further analysis and breakdown by MDeC & IDC

Moving Forward
We will continue to develop the necessary strategies to achieve all our targets while at the same time
intensifying efforts to get buyin from various stakeholders for syndication and collaboration.

74

# CHAPTER 6
Creating Opportunities and
Channelling Benefits to Communities

Digital Malaysia is intended to benefit all Malaysians by creating opportunities


as well as channelling the benefits of a growing digital economy to the people.
At this stage, projects rolled out under the national initiative target specific groups of people or Communities. This
focused approach, as opposed to an open-ended one, ensures that intervention efforts can be optimally-delivered
to and have the maximum effect on the right segments of the nations economy and society. In other words,
these are the Communities that either have the highest potential to maximise on digital opportunities, or whose
vulnerable positions can be mitigated through digital mediation.
On a broad scale, the three main stakeholders of Digital Malaysia - namely Government, Business and Citizens can be further differentiated into easily-identifiable community clusters. At this initial stage, Digital Malaysia is
focused on four Communities - Digital Entrepreneurs, the B40 or bottom 40% of the income group, the Digital-savvy
Youth, and the Small and Medium-sized Enterprises (SMEs), as shown in the graphics below.

DIGITAL MALAYSIA FOCUSES ON 4 COMMUNITIES


COMMUNITIES
DIGITAL
ENTREPRENEUR

OBJECTIVES OF INTERVENTION
Tap demand for digital products and services

B40

Improve income and quality of life of the


B40 community

YOUTH

Create knowledge workers of the future

SME

Enhance SME productivity

75

Progress and Achievements


A total of 8 projects were launched in 2012 to catalyse change and drive progress within the four selected
Communities. The projects were tailored according to imperatives specific to each Community.
Two projects were introduced for Digital Entrepreneurs to tap demand for digital products and services:
Grow the Embedded Systems Industry
Develop a trusted Mobile Digital Wallet System
For the B40, the two projects listed below are intended to improve the household income and quality of life for
this community:
Facilitating Societal Upliftment
Microsourcing to generate Income for the B40
The sole project for the Digital-savvy Youth aims to create knowledge workers of the future:
Develop on-demand, customised online education
Three projects were kicked off to enhance productivity among SMEs:
Asian eFulfillment Hub
Enabling ePayment Services for SMEs and Micro Enterprises
Shared Cloud Enterprise Services
These projects have been introduced and implemented over and above on-going projects funded by the Government
and the private sector.

COMMUNITIES

76

PROJECTS

DIGITAL
ENTREPRENEUR

Grow the Embedded


Systems Industry

Develop a trusted
Mobile Digital Wallet
System

B40

Microsourcing to generate
Income for the B40

Facilitating Societal
Upliftment

YOUTH

Develop on-demand, customised online education

SME

Asian
eFulfillment
Hub

Enabling ePayment
Services for SMEs and
Micro Enterprises

Shared Cloud
Enterprise
Services

Includes other
projects funded
by the
Government or
private sector
such as:

These projects are beginning to bear fruit, with achievements exceeding the targets set for 2013. This is encouraging
progress for the on-going implementation of Digital Malaysia.
In terms of hard numbers, the 8 projects collectively generated a Gross National Income (GNI) of RM360 million
against the set target of RM334.7 million while creating more than 4,000 new jobs compared with the target of
3,674. Although this was not a key performance indicator (KPI) set by the DM Steering Committee, the projects
attracted private investment worth RM309 million, which was marginally lower than the target of RM345.1 million.
The respective performance of the various projects and their respective Communities are detailed in this chapter.

ACHIEVEMENTS HAVE
EXCEEDED TARGETS FOR 2013

108%

108%

90%

GNI

JOBS
CREATED

PRIVATE**
INVESTMENT

TARGET

TARGET

ACHIEVED

ACHIEVED

RM334.68M
RM360M

3,674
4,010

TARGET

RM345.11M
ACHIEVED

RM309.09M

COMMUNITY 1: THE DIGITAL ENTREPRENEUR


Broadly speaking, digital entrepreneurs are individuals and/or enterprises who leverage on new technologies and the
Internet as a tool to create commercial opportunities, disseminate information and collaborate with clients and partners.
(Source: www.betterworker.com)
Nowadays, inventors and entrepreneurs are taking less time to reach the masses. With digital technology, both innovators
and entrepreneurs are not only able to create faster and at lower cost, but they are also able to go beyond their
geographical
boundaries and operate their businesses 24/7.
To illustrate this, the humble telephone took 89 years to move from novelty to necessity level; the mobile phone
overtook its older cousin in just 14 years while Skype managed to surpass them all in a blink of two years. (Source :
Porthole Research, ITF Advisors)
In this telecommunication illustration, the telephone represents mainstream technology while Skype represents digital
technology both contributing to the convenience of communicating.
Disruptive innovations are without a doubt a force to reckon with while the mainstream technology keeps getting
stronger. As predicted by international research company, IDC, the global digital economy is expected to grow to RM156.5
trillion by 2020.

77

TIME FOR TECHNOLOGIES TO REACH 150 MILLION


USERS IS EXPONENTIALLY DECREASING
GOOGLE EARTH & SKYPE
2 YEARS
2004 - 2006........................................
THE INTERNET
4 YEARS
1994 - 1998........................................
FACEBOOK
5 YEARS
2004 - 2009........................................
IPOD
7 YEARS
2001 - 2008........................................
CELL PHONE
14 YEARS
1983 - 1997........................................
TELEVISION
38 YEARS
1998 - 1966........................................
TELEPHONE
89 YEARS
1876 - 1965........................................
Source: Porthole Research, ITF Advisors

AGGRESSIVE GROWTH IN MALAYSIAS


DIGITAL ECONOMY
CAGR 11.9%
+RM174.8B

294B
CAGR 5.7%
+RM66.5B

12.7%
of GDP

14.9%
of GDP

80.9B

2005
543.6B

2012
941.2B
8.2%

Note:
2020 National GDP target
incorporating ETP contribution

108.3B*
Required
on top of
historical
growth
rate

185.7B
17% of GDP

119.2B

10.7% of GDP

CAGR 5.7%
+RM38.3B

2020 est.
2020 Goal
National
1.733T*
GDP (RM)
7.9%

2 additional components of the Digital Economy,


eCommerce & SSO, are reflected in the figures here

Source: Base data referenced from ICTSA 2005 to 2012 by DoSM


Further analysis and breakdown by MDeC & IDC

78

Malaysias Digital Economy is reported to contribute 10.5% to the national GDP with RM80.7 billion from a total domestic
ICT industry output of RM346.5 billion in 2010 (Source: ICTSA 2012), while in 2012, MSC Malaysia contributed 2.3% of the
national GDP share at RM27 billion, showing an obviously strong and growing demand for digital products and services.
This presents a huge opportunity for digital entrepreneurs both in Malaysia and across the globe.
Of late, there has been a marked increase in locals trading, selling or simply interacting online. There is potential in
nurturing these basic digital users into full-fledged technopreneurs or digital entrepreneurs.
At Digital Malaysia, the digital entrepreneur is categorised into five broad maturity segments from a scale of level 1
to 5, Malaysias level 1 digital entrepreneur is termed as a digital trader, before the person or entity moves up to a
digital value-added service provider and digital innovator before moving onto the nett digital products and services
exporter and digital niche leader at levels 4 and 5.
The majority of the Malaysian digital entrepreneurs are now at the threshold of maturity level 3 which means
they are mainly digital value-added service providers with some reaching the digital innovator status. However, to
compete with their international counterparts, Malaysian digital entrepreneurs need to mature faster to capture
a more significant market share.

MALAYSIA
DIGITAL ENTREPRENEURS
MATURITY LEVEL
DIGITAL NICHE LEADER
TO-BE position 2020
NETT DIGITAL PRODUCTS &
SERVICES EXPORTER

Maturity Level

Maturity Level

Maturity Level

DIGITAL INNOVATOR

Where they
are now

Maturity Level
DIGITAL VALUE-ADDED SERVICE PROVIDER
AS-IS position
DIGITAL TRADER

Maturity Level

79

FAST FORWARD THE PROCESS THROUGH


TWO KEY INTERVENTIONS
INCREASE THE NUMBER OF DIGITAL ENTREPRENEURS

1
MORE
Increase rate of
successful start-ups
through:
a. More incubators

DIGITAL ENTREPRENEURS
ACCELERATION
Increase Exports
of Malaysian
digital products
and services

Develop niche
area leadership

b. Accelerators

2
FASTER
Move existing
entrepreneurs to
higher maturity
level via:
a. Focus on Niche
Areas
b. Global Footprint
Expansion

WORLD CLASS DIGITAL ENTREPRENEURS

To achieve this, two key intervention initiatives has been introduced:


Develop MORE digital entrepreneurs and ensure their higher success rate through aggressive incubator and
accelerator programmes
Ensure established digital entrepreneurs mature FASTER by focusing on Niche Areas and encouraging their
expansion onto the international arena

80

Digital Malaysia Incubator and Accelerator Programmes


INCUBATORS HAVE PLAYED A PRIMARY ROLE
IN NURTURING START-UPS ALL OVER THE COUNTRY

VIRTUAL INCUBATORS

INCUBATORS IN MALAYSIA

18

INCUBATORS

Incubators
setup

360

companies
incubated

517
Jobs
created

PROGRAMME

Primarily for new start-ups

MONEY

No equity stake taken

MENTOR

Local and regional networks

MARKET

Mainly domestic

MAD; PLUG & PLAY;


CYBERPORT; SKALI;
TECHNOLOGY PARK MALAYSIA
IIC; MRCB TECHNOLOGY; SIRIM
MSC; SOHO SUITE;
KULIM HI-TECH PARK; UTM;
K-PERAK; MUTIARA.COM;
USAINS; E; MITCH; CAPITAL

MORE INCUBATORS ARE NEEDED:


1. Promote Existing Physical Incubators
2. Create Virtual Incubators

VIRTUAL INCUBATOR

DEFINITION

Virtual Incubators deliver incubation


services through the prevalent usage of
electronic means to incubatees that are not
physically located in the incubator

RATIONALE:

1. Advisory, mentoring, market access,


rapid development can be done online
2. Physical space is secondary and only
required for co-working space
3. Entrepreneurs co-work on demand via
Small Office Virtual Office (SOVO), SOHO
and Hot desking arrangement

Physical
Support

Virtual
Support

PHYSICAL
INCUBATEES

OFFSITE
INCUBATEES

Incubator programmes are nothing new to Malaysia especially within the ICT and digital industries. Under the MSC
Malaysia programme alone, 18 incubators have been set up producing 360 companies and creating 517 jobs. Digital
entrepreneurs that are deemed as eligible are those who are still at the start-up position, whereby they will be
steered towards capturing the local and regional market first.
In view of the increasing trend of cash-strapped businesses opting for the less is more concept, the Digital
Malaysia Incubator programme also created and promoted the idea of virtual incubators, while still maintaining
the support and promotion of existing physical incubators. These incubators provide both physical and virtual
support, depending on the entrepreneurs preference, that includes advisory, mentoring, market access and rapid
development of digital entrepreneurs.

ACCELERATORS HAVE BEEN PROVEN TO FAST-TRACK


DIGITAL ENTREPRENEURS TO SUCCESS
An entrepreneur saved 1,000
hours over 3 months just by tapping
others around him for help
One of the most important
benefits of incubators and
accelerators is the community that
they foster among entrepreneurs
and their alumni, mentors, and
partners
The culture of people sharing
information and the collective
intelligence you can create around
that is incredibly powerful
Source: Intuit small business blog, August 2013

81

While incubators ensure the development and nurturing of new and up-coming digital entrepreneurs, accelerators
are quoted as incubators on steroids - aimed at fast-tracking matured digital entrepreneurs into the next realm.
The accelerator programme differs from the incubators programme in the sense that it is highly intensive, involving
monetary and equity stake incentives, has the support of a large global network as mentors and looks towards
the bigger global market. Renowned global players like the Founders Institute and Bootstrap Accelerator has been
enlisted in the Digital Malaysia Corporate Accelerator Programme, which is currently nurturing 15 local companies
hoping to be the Malaysian answer to AirBnB and Dropbox.

ACCELERATOR

ACCELERATORS ARE INCUBATORS ON STEROIDS


PROGRAMME

Start-ups and existing


entrepreneurs
Highly selective and Intense

MONEY

Seed, VC funding
6%-8% equity stake

MENTOR

Large global network

MARKET

Global

ACCELERATORS IN MALAYSIA
Accelerators from Silicon Valley
FOUNDER
INSTITUTE

BOOTSTRAP
ACCELERATOR

Global early-stage
start-up accelerator,
launching 30 Malaysian
companies in 2014
First Southeast Asia
focused tech accelerator,
1,000 startups with
USD$1m revenue by
2015

Corporate Accelerator
CORPORATE
ACCELERATOR
PROGRAMMES

First corporate
accelerator programmes
in Malaysia, accelerated
4 start-ups and achieved
RM5.0m in revenue

2020 TARGET: 15 ACCELERATORS

Digital Malaysia Niche Areas and Global Footprint Expansion


Programmes
In propelling the digital entrepreneurs to the next level, Digital Malaysia ensures that the entrepreneurs choose
the right business focus and pushes them to dive into the international market as quickly as possible.
After thorough research, Digital Malaysia has identified a few niche areas that its digital entrepreneurs can tap
into and they are the embedded systems industry; mobility, specifically in the areas of banking and healthcare; as
well as Big Data Analytics.
As it is a new area to be capitalised upon, Big Data Analytics has been given a 2020 target of USD400 million in
revenue, including three digital entrepreneurs who are able to capture significant regional big data market share.

82

Concurrently, Digital Malaysia has established a Global Footprint programme to encourage its entrepreneurs to
expand their business abroad. To spur them on this path, Digital Malaysia hopes to assist in the following avenues:
Provision of or connection to global mentors
Smart international partnership
Linkages to foreign venture capital
Connections to international network
Access to markets in multiple countries

Digital Malaysia shared a link


DEVELOPMENT
PROGRAMMES

Niche
Area 1

Niche
Area 2

Niche
Area 3

ACCESS

Assess Market
Potential

ALIGN

Align with other national


initiatives (e.g. CCI NKEA)

DEPLOY

Evaluate strengths of digital


entrepreneurs

SELECTED
NICHE AREAS

R&D funding
Innotech pitching
Gartner Magic Quadrant
Technical training and
certification
Solution certification
Soft skills development
Knowledge worker
development
Solution showcase
Buyer matching
Business development

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In addition, the programme also included placing active MDeC Senior International Representatives (SIRs) in key
growth markets such as Japan, India and the US, as well as organising specialised trade missions, coaching and
direct buyer matching initiatives in order to further promote Malaysias growing pool of digital entrepreneurs.
Setting up an MDeC office in the Silicon Valley is also in the pipeline in order to provide a soft landing zone to
capitalise on the North American market.

Achievements and Successes in 2013


Project: Grow the Embedded Systems Industry
Description of project
Embedded systems are intelligent solutions with tightly integrated hardware and software, designed to perform
a dedicated function. These systems are currently represented in over 80 industry segments including wireless
infrastructure, enterprise storage, in-vehicle infotainment and factory automation.
Digital Malaysias Grow the Embedded Systems Industry Project aims to develop the embedded systems
industry as a new source of growth to capture the growing global embedded systems market. This is achieved
by capitalising on Malaysias established electronics ecosystems and skilled local enterprises.

83

Avenues for participation is open to all Malaysian Embedded Systems Development Companies (SME) where
opportunities lie within areas that include technology access, training, funding for embedded systems product
development, go-to market assistance and prospects to work with technology leaders.
Success stories in 2013
This project, aimed at capturing marketshare by developing local capabilities and securing business, achieved
all its respective targets in the year under review, generating RM341.13 million in GNI and creating 3,250 jobs.

2013 KPI ACHIEVEMENT:

GROW EMBEDDED SYSTEMS INDUSTRY


No

Macro KPI

1.

GNI (RM)

2.

Total Jobs

3.

Private Investment (RM)

No

Project KPI

2013 Targets

Current Achievement

% Achievement

279.9 mil

341.13 mil

122%

3,092

3,250

105%

262.42 mil

297.48 mil

113%

2013 Targets

Current Achievement

% Achievement

1.

No. of new technology partner

100%

2.

No. of embedded projects approved


for funding

100%

Two approaches were adopted to meet the project objectives the first to develop projects to capture markets
and the second to grow the ecosystem in collaboration with industry partners. In the first case, 8 embedded
projects were approved in 2013, involving products and services from embedded automotive applications
to digital signage and digital security surveillance. Meanwhile, the project also received a boost with two
technology partners coming on board including National Instruments and Altera.

84

DIGITAL ENTREPRENEUR

GROW THE EMBEDDED SYSTEMS INDUSTRY

TECHNOLOGY
PARTNERS SIGNED UP
TO GROW ECOSYSTEM

The eventual target is to collaborate with


3 technology partners as well as other
ecosystem partners comprising facilitating
agencies and IHLs.

11

PROJECTS FUNDED TO CAPTURE


MARKET SHARE

NO

EMB EDDED FOCUS

Embedded automotive

PROJECT & COMPANY


Electric vehicle charging infrastructure solutions
Smart electric bus controller system

Vision inspection

Advanced X-ray inspection system for automotive,


telecommunication & medical industries

Wireless sensor
network

Embedded wireless sensor for ubiquitous monitoring


in retail

Digital Set Top Box

Interactive TV Set Top Box for hospitality & homes

Digital Signage

Digital signage kiosk for retail, indoor & outdoor &


others

Fleet Management

Intelligent visual analytic traffic incident detection


system for intelligent transportation system

Digital Security
Surveillance

Digital smart home and security system for homes &


community

Payment Point of Sales

Combo payment router for retailer

10

Embedded Radar
System

Remote Monitoring of Man-made Structures and


Earth Environments

11

Embedded Control
System

Embedded controller system for automated peritoneal


dialysis system

Project: Develop a Trusted Mobile Digital Wallet System


Description of project
The concept of a cashless society has been mooted for many years, but has largely remained as a mere
pipedream for some.
With the advent of Near Field Communications (NFC), consumers are now able to move towards micro payments
with the use of electronic chip-embedded cards. This technology allows simple encrypted data exchange between
an electronic card and a terminal, thereby making it an avenue for convenient payment and authentication
transactions.
Malaysias high mobile penetration rate of 128.7% and more affordable devices make cashless transaction
service a reality for the country. With the power of the smartphone, various possibilities of providing valueadded services have been created and will ultimately help to increase sales. Consumer experience and loyalty
will also improve greatly whereby consumers can simply tap a smartphone with the NFC function for ePayment,
coupon or voucher redemption, points collection, and access information or location-based services. It will also
reduce the proliferation of counterfeit products that poses potential health risks to the public.
This very idea forms the basis of Digital Malaysias Trusted Mobile Digital Wallet System. The project aims to
establish a trusted nationwide system that allows consumers to transact securely and confidently by embedding
virtual cards, vouchers and coupons in mobile digital wallet applications in their smartphones or other mobile
devices. Invariably, the existence of a trusted platform will bring about an ecosystem that will encourage
more service providers to participate and increase the adoption of NFC which will subsequently enable more
customers to gain access to these services.

85

Success stories in 2013


The project met its target of creating jobs, but fell marginally short of achieving its KPI for GNI by a mere
RM20,000 from its total of RM460,000.

2013 KPI ACHIEVEMENT:

DEVELOP A TRUSTED MOBILE DIGITAL WALLET SYSTEM


No

Macro KPI

1.

GNI (RM)

2.

Total Jobs

3.

Private Investment (RM)

No

Project KPI

2013 Targets

Current Achievement

% Achievement

0.477 mil

0.002 mil

0.42%

13

13

100%

3.2 mil

0.4551 mil

14.22%

2013 Targets

Current Achievement

% Achievement

1.

Industry Roadmap

100%

2.

Project Partners Signed

0%

3.

Mobile Wallet Service Subscribers

50,000

600

1.2%

In July, the project took a crucial step forward when Bank Negara Malaysia (BNM) approved a proposal for a
National Mobile Proximity Payment Industry Roadmap, which was jointly developed by MyClear and SMTRACK
Bhd. The month earlier, Celcom conducted trials for its AirCash Tap & Pay facility, in which 600 mobile wallet
pilot users carried out transactions amounting to almost RM9,000 at seven cafeterias, a news stand operator
and car park in Menara Celcom and the cafeteria operator in MRSM Kuantan.

86

DIGITAL ENTREPRENEUR

DEVELOP A TRUSTED MOBILE DIGITAL WALLET SYSTEM

ROADMAP
COMPLETED
NATIONAL MOBILE
PROXIMITY PAYMENT

Bank Negara Malaysia (BNM) approved the


proposal in July 2013, paving the way for an
Industry Roadmap that will facilitate
development of the Ecosystem.

600 $ $
MOBILE WALLET

SERVICES SUBSCRIBERS

The trial by this pioneer batch of


subscribers represented the
commercial roll-out of the
service.

Challenges and mitigation plans


Now that the National Mobile Proximity Payment Industry Roadmap has been approved, the challenge is to rope
in institutional partners to build the ecosystem while also increasing the number of mobile wallet users. On this
score, action plans have been put in place:

3 MEASURES TO SIGN UP 2 PROJECT PARTNERS


Ecosystem Development:
Syndication and collaboration with key ecosystem stakeholders and partners to create value and viable business
models and opportunities for the Mobile Digital Wallet project.
Potential Partners:
Establish ecosystem where solution providers can develop value-added services and applications leveraging on
the platform and mobile wallet system.
Launch of Pilot projects:
Participate in local pilot projects that would potentially increase the Mobile Digital Wallet subscribers base.

2 APPROACHES TO INCREASE ADOPTION RATE


Target: 900 subscribers
Increase Awareness Through Roadshows and Campaigns
Embark on local Digital Wallet pilot projects:

87

The way forward for the community


The number of Malaysian digital entrepreneurs is still very small in comparison to their international counterparts.
As such, a concerted approach is needed, not only from the Ministry of Communication and Multimedia and
its agencies, but also other agencies like the Malaysia External Trade Development Corporation (MATRADE) and
Ministry of Education (MoE).

MALAYSIAN DIGITAL ENTREPRENEURS ARE STILL SMALL


COMPARED TO GLOBAL COMPETITORS
AIR TRANSPORT IT
SOLUTIONS

1,570

Revenue 2012
(US$M)

ONLINE PAYMENT
SOLUTIONS

5,600

XYBase

PayPal

Source: Company websites, Annual reports, MSC Industry Reports 2012

88

Revenue 2012
(US$M)

2,870
154

2.3
SITA

Revenue 2012
(US$M)

BUSINESS
INTELLIGENCE
SOLUTIONS

MOL

11.3

SAS INSTITUTE

FUSIONEX

COMMUNITY 2: THE B40


The B40 specifically refers to the bottom 40% of the income group. The Department of Statistics Malaysia (DOSM)
defines the B40 as those earning a monthly income of RM3,050 and below per household. However, the reality
of the nation is that the current B40 earns a monthly average of only RM1,847 per household. About 11.7 million
people in Malaysia fall under this category, and they are characterised as shown in the graphics below:

THE B40 C0MMUNITY


KEY CHALLENGES:

B40:
B40 definition

Below
RM3,050 p.m.

income per household

B40 average

RM1,847 p.m.

income per household


Source: DOS Survey, 2012

B40 POPULATION SIZE:


11.7 MIL

Limited economic mobility as


majority have not graduated
from high school and work in
low-income jobs
Low awareness and low
participation in intervention /
social development
programmes

Digital Means can help to


address B40 challenges, and
create impact by:

INCREASING INCOME

Cost of living rising faster than


income, especially in urban
areas

IMPROVING WELL BEING

Limited to traditional means of


income generation, typically
lower value-added

(in 2020)

No means to raise capital to


become entrepreneurs and
lack of business experience
and know-how

1 Mil
B40 Citizens
Impacted

RM 7 Bil
Additional
Income

Limited economic mobility as the majority are still in school or work in low-income jobs
Low awareness and participation in intervention or social development programmes
Slow rise in incomes, not in tandem with the rising cost of living, especially in urban areas
Lack of means to raise the capital required for entrepreneurship as well as a lack of business experience and
know-how

Digital technology can help alleviate some of the challenges the B40 goes through and Digital Malaysia aims to
impact 1 million of the B40 citizens and generate an additional RM7 billion through increase in incomes and
improvement of quality of life.

89

IMPACTING B40 VIA DIGITAL MEANS


PRE-REQUISITE: Need to understand the broad range and
complexity of B40 issues, challenges and competencies / skills

SO THAT SOLUTIONS OF RELEVANCE TO THE DIFFERENT


B40 TARGET GROUPS CAN BE DEPLOYED:
FACILITATING GREATER PRIVATE
CONTRIBUTION IN SOCIAL PROGRAMMES
FOR:

Education
Health
Economic Security
ICT
Recreation

WELL BEING

CHANNELING INCOME OPPORTUNITIES


AND DEMAND TO THE B40 FOR:

Services
Products

$ $
$
$
INCOME

Achievements and Successes in 2013


2013 saw numerous positive developments in uplifting the community through two projects that took off in 2012,
Facilitating Social Upliftment (FSU) and Microsourcing to generate income for the B40. Despite challenges and
setbacks, all programmes initiated for the B40 community saw both quantitative and qualitative achievements,
specifically in two areas, namely:
Nurturing an entrepreneurship culture among the B40, and
Getting support and funding to carry out the initiatives effectively.

Project: Facilitating Social Upliftment


Description of project
Malaysia has countless societal programmes that are run both by the public and private sectors. Due to the
multi-faceted nature of these programmes, a structured methodology needs to be drawn out to consolidate
them into a cohesive structure that will bring about meaningful outcomes to uplift the social well-being of
every level of society.
ICT-enabled systems can achieve this end goal and can support both the planning and deployment of these
various projects and programmes, especially those initiated and implemented by the private sector and NGOs,
in order to bring a greater and more holistic good to the people.
Efforts will focus on socially uplifting the nations bottom 40% of the community or better known as the B40.

90

Project: Microsourcing to Generate Income for the B40


Description of project
Microsourcing or crowdsourcing is the distribution of well-defined discrete or micro tasks, to a potentially large
group of networked users (such as task or micro workers) through the internet. The flexible nature of these
tasks mean they can be completed anytime and anywhere, and require only basic internet-connected devices
such as application-capable phones, tablets, netbooks or notebooks and personal computers.
Although anyone can participate as a task worker, it especially offers opportunities to people outside the
traditional workforce and those at the bottom 40% of the community (B40) who want to increase their income.
In the Malaysian context, the B40 may include:
Homemakers, including those who used to work full-time
Retirees and senior citizens
Unemployed graduates
Recently laid-off workers
Part-time workers
Disabled citizens who are capable of knowledge work
Prison/institution inmates
The under-employed
Among the tasks that can be distributed to this group are:
Data entry
Data-gathering, including census taking and price watch
Promotional service
Translation
This project focuses on unearthing the 6.6 million latent workforce which currently exists in Malaysia by
offering them digital access that will help them generate some income.

Impacting B40 well-being and income


As a starting point, the FSU pilot project galvanised 511 villages, casting a net over 232,791 B40 individuals. The
programme then managed to actively engage a total of 98,397 B40 individuals creating an impressive 1,085 local
B40 champions.
The programme successfully raised the entrepreneurship culture among the B40 by matching their interest,
capabilities and availabilities to related programmes and type of opportunities.
The participants are trained in volunteerism ethics and community-building mindset and their individual growth
potentials are identified.
The programme also takes a holistic effort in profiling available infrastructure for community activities like
mosques, community halls, telecentres, libraries, health centres as well as playgrounds and shops and commercial
amenities.
The B40 entrepreneurship inculcation efforts are then taken to the next level with the establishment of
microsourcing platforms by the likes of yourparttime.com, MyKerja, EduSource and Ikrar Potensi.
These platforms recruited and trained 3,217 B40 participants in 2013 alone, resulting in 1,229 of them earning
additional income as part-time workers.

91

FSU PROJECT: GRASSROOTS PARTICIPATION,


SHARING REAL AND VERIFIED ISSUES & NEEDS

232,791

98,397

1,085

B40 INDIVIDUALS
PROFILED

B40 INDIVIDUALS
ENGAGED

LOCAL CHAMPIONS /
VOLUNTEERS
DEVELOPED

Income & Economic Sectors


Competency & Skills
Quality of Live Factors

Channel to match interests,


programmes and type of
opportunities

Trained in volunteerism
ethics and communitybuilding mindset

Education
Health
Economic Security
Recreation

Individual growth potential


identified

Supporting DO, Penghulu,


Ketua Kampung, JKKK
Facilitating programmes
deployment locally

QoL

Engaging B40 continuously &


recording community issues

Information of different levels can be made accessible and


enabled by ICT to Leaders, Ministries, Agencies, Academia, NGOs
and Private Sector Contributors (Action Parties)

511

KAMPUNG

INFRA & AMENITIES


LANDSCAPED
Stocktake of amenities and
facilities
Masjid / Surau
Schools / Pre-schools
Balairaya / Telecentre
Library
Pusat Kesihatan Desa
Field / Playground
Shops / Commercial etc.
Mini ERP for public
amenities operator (coming
soon)

Reduce the guessing game


Offering relevant solutions and opportunities

Simple tasks such as data collection, data entry, database management, mystery shopper, online marketing and
part-time teaching have since generated RM1.24 million in income as at December 2013.

B40 MICROSOURCING PROJECT:


TAPPING INTERNATIONAL DEMAND

2011 Data

HIGH DEMAND FROM NORTH


AMERICA AND EUROPE
North America

Europe

Asia Pacific

South America

2%
7%

6%

36%

35%

18%
55%

41%

Partnering with US-based Crowdsourcing.org,


(Crowdsourcing LLC) to tap and secure
international demand
Crowdsourcing LLC is also working with the
Mexican Government to bring crowdsourcing
opportunities to Mexicans
Tasks from foreign corporations (demand) to
be channelled to B40 via relevant / ready
local platforms
In addition to B40 profiling via FSU, MDeC is
approaching Jabatan Hal-ehwal, Veteran
ATM, MARA, MoA, KKLW to reach out,
engage, profile and upskill the B40 to take
on global opportunities

MOVING FOWARD:

Job Providers
Source: www.massolution.com

92

Workers

Operationalising partnership with


Crowdsourcing LLC a to tap international
demand / opportunities
Collaborating with JHEVATM, MARA, MoA and
KKLW to engage, profile and identify B40
task workers

Efforts to encourage individual entrepreneurship among the B40 is also made more robust by tapping global
demand.
More than 100,000 Malaysians are already on-board online job platforms like Freelancer.com and earning an
income performing jobs for the global market.
However, in this arena, the non-B40 is making up most of the numbers catering to the global market, possibly due
to the skills requirement factor.
Local organisations too need to be educated to offer services like those provided by Freelancer.com. Awareness
needs to be stepped up via conferences and on-the-ground outreach programmes.
On top of that, collaboration with international partners like US-based company, Crowdsourcing LLC, is underway
to tap into the higher valued international demand.
It is noteworthy that there has been cohesive support and funding to alleviate the plight of the B40 community.
Many organisations see the benefit of assisting the B40 as the latters upliftment will contribute to the increase in
the nations general well-being.
Public, private and non-governmental organisations have come together to lend a hand, contributing to an
approximate total of RM2 million as part of the Digital Malaysia 2013 B40 funding generation exercise.
Agencies and organisations like the National Cancer Society and the Health Department, the Jerantut District
Heath Centre, the Asia Foundation and Pahang State Library, Pahang Technology Resources and its Crowdsourcing
Platform partners, as well as the Zero2Hero Group and the Bera District Office have collectively contributed more
then RM2 million.

FSU PROJECT: BENEFITTING THE B40 COMMUNITY IN PAHANG


THROUGH TARGETTED PROGRAMMES
PIONEER NGOs AND PRIVATE SECTION ENGAGED (JUN-SEP 2013)

9 VERTICAL PROGRAMMES IN 5 KEY AREAS FACILITATED & PILOTED VIA FSU


HEALTH &
WELL BEING
1.

EDUCATION

3.

NATIONAL CANCER
SOCIETY +
HEALTH DEPARTMENT
National Cancer Society +
Health Department
B40 TARGET: 2,000
CSR SPENT: RM100K

COMMUNITY ENGLISH
CLASSES IN RURAL AREAS
Asian Foundation + Pahang
State Library
B40 PARTICIPATED: 100
ADDITIONAL TARGET: 1,900
CSR SPENT: RM1.15M

2.

4. CHILD SAFETY

DEVELOPMENT &
TRAINING OF OKU
PDK Jerantut
B40 TARGET: 50
CSR SPENT: RM150K

AWARENESS
MCRI + PDRM Pahang
B40 TARGET: 4,000
CSR SPENT: RM150K

ECONOMIC
SECURITY
5.

MICRO-SOURCING
Crowdsourcing Platforms
B40 IMPACTED: 652
ADDITIONAL TARGET: 1,900

6. DOWNSTREAM ROSELLE
PRODUCT
Rompin + Cameron Highland
Community
B40 TARGET: 20
7. DOMESTIC MAID

SERVICES
Persatuan Ibu Tunggal + Ikrar
Potensi
B40 TARGET: 50
CSR SPENT: 50K

ICT

RECREATION

ICT & MICRO-SOURCING


TRAINING
Crowdsourcing Platforms +
Pahang Technology Resources
B40 PARTICIPATED: 2,417
CSR SPENT: RM350K

9. COMMUNITY CYCLING
TRACK
Zero2Hero & Pejabat Daerah
Bera
CSR SPENT: RM50K

8.

RM2M

Private Contribution
to-date

$
$$

Pilot targeting 10,000 members of B40 (To-date 2,517 already benefitted)

93

The Digital Malaysia B40 Initiative has also managed to garner international support through the crowdfunding
platform, Pitchin.my. The platform successfully raised a total of almost RM50,000 for four projects, including an
exciting Sponsor a Child to Read project under the Teach for Malaysia programme.

SOCIAL CROWDFUNDING TO UPLIFT B40

FUND B40 BUSINESS AND SOCIAL ENTERPRISES VIA CROWDSOURCING


& MICRO-FINANCING
Making Crowdfunding as new source of funds to support the enterprise and community projects

Crowdfunding
Business and start-up
companies with crowd
investors

NEW SOURCE
OF FUNDS FOR
START-UP /
PROJECT

RM

CITIZEN
ENTERPRISE
MICRO
ENTERPRISE
pitchIN

... Every Enterprise can raise money from individuals

Partner: Pitchin.my Partnership started in June 2013


EXAMPLE OF COMMUNITY PROJECT:
US$3,970 successfully raised for Sponsor s Child to Read
project under Teach for Malaysia programme

To-date, US$15,787 raised via Pitchin.my


crowdsourcing platform for 4 projects

Approaching Amanah Ikhtiar Malaysia (AIM), Yayasan Pembangunan Ekonomi Islam Malaysia (YaPEIM), Yayasan Basmi
Kemiskinan (YBK), to collaborate and support B40 entrepreneurship and social enterprise via micro-financing

FSU - Success stories in 2013


Seven vertical programmes were initiated via a collaborative effort enabled by the POKOK platform to improve
the well-being of considerable segments of the B40 community. The platform has directly generated RM1.08
million worth of income to its B40 employees.

2013 KPI ACHIEVEMENT:

FACILITATING SOCIETAL UPLIFTMENT (FSU)


No
1.

GNI (RM)

2.

Total Jobs

3.

Private Investment (RM)

No

Project KPI

1.

System and tools for programmes


matching, planning, deployment,
tracking & community feedback
mechanism

2.
3.

4.

94

Macro KPI

# of B40 people contracted to


undertake freelance work
Trained volunteers (Professionalism
in volunteerism. Getting community to
be volunteers)
Private sector contribution to
Social Programmes (RM)

2013 Targets

Current Achievement

% Achievement

1.5 mil

1.08 mil

72%

50

28

56%

0.67 mil

0.55 mil

82%

2013 Targets

Current Achievement

% Achievement

Operational and Rollout System ready for rollout.


Perlis & Terengganu
in 2 States
UPEN started mobilising
support / state
machineries

50%

700

976

139%

1,500

1,085

72%

1.5 mil

2.0 mil

133%

A critical component of the FSU project is POKOK - (Pembangunan oleh Komuniti untuk Komuniti or in English
Development by Communities for Communities) a digital platform launched in 2012 to carry out the following
tasks:
Increasing private contribution in societal well-being programmes, via CSR programmes or other forms of
participation and engagement with the B40 community. Through this platform, the project will harness
and synergise greater efforts from the private sector, NGOs and the community themselves to create social
development impact.
Improving delivery and impact of vertical programmes through ICT-enabled tools and mechanisms. The
platform will be able to track programmes, performance and its funding utilisation, facilitate planning by
NGOs and the private sector, and assess programme impact from the community perspective.
Enhancing vertical programme outreach, embrace and value through increased involvement of local
communities. Part of the project components are to develop networks of ICT-enabled community champions,
local volunteers and long-term community-driven programmes.
Following a pilot project implemented in Pahang, POKOK was rolled out to two other states in 2013, Perlis and
Terengganu. (Other achievements such as the number of people profiled, volunteers trained and individuals
contracted for work have been mentioned in the preceding pages and are featured in the graphic shown below)

B40

FACILITATING SOCIETAL UPLIFTMENT

976

PROGRAMME
ROLLOUT
IN

2013 TARGET:

700

B40 INDIVIDUALS CONTRACTED FOR


FREELANCE WORK

1085

PERLIS: Green light given


TERENGGANU: Green light given
PAHANG: Pilot project bearing fruit

1,500

232791

B40 PEOPLE PROFILED FOR


ENGAGEMENT

STATE

Programme to plan, match, deploy and


track opportunities for B40

2013 TARGET:

VOLUNTEERS TRAINED AND


DEVELOPED TO BE LOCAL CHAMPIONS

A DIGITAL
PLATFORM TO
DEVELOP B40
COMMUNITIES BY
COMMUNITIES

RM2.0m

2013 TARGET:

FROM PRIVATE SECTOR 1.5m

Challenges and mitigation plans


During the year, several external factors had an adverse impact on the implementation of this project. These,
along with the action plans are detailed below:

3 ISSUES TO BEAR IN MIND


Implementation of Pilot Project in Pahang interrupted by GE13
Delay in the 2 States due to requirement for national rollout approach to be approved by higher authority
Delay in roll-out to the 2 States affected KPIs

1 REMEDIAL ACTION IN PLACE


The ICM has approved a plan to fast-track roll-out to Perlis and Terengganu before end-2013 by using existing
system developed by private champion, and for current implementation mechanism and governance to be
adopted.

95

Microsourcing - Success stories in 2013


This project contributed RM1.15 million to GNI and provided jobs for 36 individuals, the respective targets
being RM2.30 million and 24.

2013 KPI ACHIEVEMENT:

MICROSOURCING TO GENERATE INCOME FOR THE B40


No

Macro KPI

1.

GNI (RM)

2.

Total Jobs

3.

Private Investment (RM)

No

Project KPI

2013 Targets

Current Achievement

% Achievement

2.3 mil

0.67 mil

29%

24

36

150%

0.5 mil

0.67 mil

134%

2013 Targets

Current Achievement

% Achievement

2,590

3,217

124%

1.

No. of microsourcing workers


trained

2.

Microsourcing Platform (Operational)

1+1 WIP

100%

Trained volunteers (Professionalism in


volunteerism. Getting community to
be volunteers)

1,000

1,229

123%

3.

Contributing to this performance was the addition of Oricipta Sdn Bhd as an online platform to facilitate
crowdsourcing in 2013. Four similar platforms had come online the previous year, details of which are depicted
in the graphic in the next page along with the other relevant numbers. These microsourcing platforms have the
effect of sustaining a steady stream of opportunities for the B40 community.
Challenges and mitigation plans

96

B40

MICROSOURCING TO GENERATE INCOME FOR THE B40

1200

2013 TARGET:

3200

2013 TARGET:

1,000

B40 INDIVIDUALS EARNING INCOME FROM MICRO TASKS

2,590

INDIVIDUALS TRAINED, RECRUITED AND REGISTERED


ON MICROSOURCING PLATFORM

RM1.24m

MICROSOURCING
PLATFORM
2013 TARGET:
BROUGHT
1
ONLINE

Four similar platforms were


operationalised in 2012.

2013 TARGET:

RM1.2m

PAID OUT FOR WORK DONE WITH AN ADDITIONAL RM0.6M


WORTH OF TASKS ASSIGNED TO MICRO WORKERS

There is now a need to build on the success in 2013 since microsourcing opportunities for the community are
generally few and far in between. The action plans to address this issue are depicted below:

2 COURSES OF ACTION TO GENERATE DEMAND


For local demand:
1. One-on-one engagement to educate local enterprises on crowdsourcing / micro sourcing opportunities
2. MDeC is working with other agencies / ministries to identify microsourcing potential
For international demand:
1. Tap international demand of higher value, based on currency exchange rate. Securing collaboration with
US-based Crowdsourcing LLC to design, identify and channel international demand to Malaysia

The way forward for the community


The B40 remains a key Community for Digital Malaysia, given the need to reduce the digital divide while at the
same time tap the potential of a relatively disenfranchised group to contribute to the national economy. Going
forward, efforts to bring the B40 into the mainstream of the digital economy will pivot on two impact areas:
Income: to generate income opportunities via digital means catalysed ad channelled to the B40
Well-being: to provide better access to well-being programmes with greater private sector participation,
enabled by digital means
The plight of the B40 needs synchronised efforts and support from both public and private organisations alike. When
the initiative is done smartly and with the right intent, the effort can benefit both the B40 and the establishments
that help them.
To this effect, Digital Malaysia will align its B40 initiatives to the national programmes and/or projects contributing
to the upliftment of the B40 community, like the Lower Income Household (LIH) NKRA.

97

98

COMMUNITY 3: THE DIGITAL-SAVVY YOUTH


Malaysias Ministry of Human Resources has reported that in 2010, the countrys Generation Y (Gen-Y) or those born
between the 1980s and 2000s and younger, makes up 34% of the Malaysian workforce, giving a total of 3.97 million
people. By 2020, there will be an addition of 4.3 million new entrants to the workforce and this demographic is
expected to grow to 55% giving a total of 8.3 million new workers
In ensuring a strong growth for the nation, the human resources of the future must be rightfully skilled and armed
with the right attitude.
Given the nature of the technologically influenced future, Digital Malaysia finds it imperative to ensure that the
next generation of the Malaysian workforce is employed competitively, gainfully and most definitely digitally savvy.
In reaching that goal, the youth of today, identified by the United Nations as those between the ages of 15 and 24
years, has to be empowered with the right digital capabilities. This include:
Competencies in digital productivity, communications and collaborative tools
Skills for entrepreneurial endeavours via digital platforms
Cognitive and creative skillsets to curate innovative and market-relevant digital content
Knowledge and skills to practice responsible and ethical use of digital tools and content

DIGITAL-SAVVY YOUTH: KNOWLEDGE WORKERS OF THE FUTURE


Malaysias Workforce Demographic, 2010 vs 2020

In 2010, Gen Y & younger


made up 34% (3.97 Mil)
of the workforce.
34%

55%

Gen Y &
Younger
Others

2010

2010

2010 - Gen Y &


Younger (mil)

2020 - Gen Y &


Younger (mil)

2020 - New
Additions (mil)

3.97

8.27

4.29

By 2020, there will be an


addition of 4.3 mil new
entrants to the workforce.
This demographic is
expected to grow to 55% of the
total workforce (8.3 mil).

99

Digital Malaysia identified three areas to focus on in developing these youths and has set a target of 5 million
digital-savvy youth by 2020.

EMPOWERING YOUTH WITH DIGITAL CAPABILITIES TO


ADDRESS NEEDS OF THE NEXT GENERATION WORKFORCE

DIGITAL LITERACY
A. Basic
B. Advanced

>72,000

CHARACTER &
VALUES
A. Digital
Volunteerism

>60

NO. OF YOUTH ENGAGED / INVOLVED IN DIGITAL


MALAYSIA YOUTH INITIATIVES IN 2013

MILLION

Digital-Savvy Youth
by 2020

DIGITAL CREATIVITY
& INNOVATION
A. Content Curation
B. Entrepreneurship

>3,400

It should be noted that several initiatives to promote greater digital competency among Malaysian youths are
already on the scene. These have been put in place and funded by the Government as well as the private sector.
They include:
Digital Literacy
This focus area ensures that Malaysian youths are equipped with digital skills and are adept in using those skills
as a means to value add themselves and increase their productivity level. Youths are either exposed to the
basics of technology and electronic media such as instant messaging, Voice Over IP, e-mail and calendaring, as
well as video across multiple devices; or taken on more advanced courses depending on their level of knowledge
and exposure in digital technology.
Character and Values
Character and values are inculcated in youths so they can become a responsible workforce of the future. For
instance, digital volunteerism aims to promote social responsibility among the young and includes the use of
digital advocacy skills, know-how and ethics for socially responsible and productive purposes. Some of the
programmes which youths can participate in currently are TEDxKL, DiGi Challenge for Change, Do Something
Good, Social Innovation Camp, YouthsToday.com and Youth Trust Foundations programmes.
Digital Creativity and Innovation
This focus area takes youths to another level where creation and entrepreneurship are key. Entrepreneurship
are also given due emphasis where youths are taught to develop commercially viable ideas, financial planning
and marketing via digital tools. MCMC-AT&T Hackathon, ICON, IHL Business Competition, MDEC Entrepreneurship
Skill Development and Microsoft Appathon are currently implemented to meet this demand.

100

Achievements and Successes in 2013


Digital Malaysias Youth programmes saw an exciting and fruitful 2013. More than 72,000 youths participated
in Digital Literacy programme, more than 3,400 in the Digital Creativity and Innovation and in excess of 60 in
Character and Values.
Under the Digital Literacy programme, CELEX chalked up an impressive set of achievements:
7,000 users accessed quality and customised education online
14,400 magazines were downloaded since 2013
2,500 book titles and 70 magazine titles were featured
313 e-Learning courses were purchased
International interactive online content for primary and secondary schools were featured
At the same time, some 500 secondary school students attended training to curate information for sharing via
JOOTA and 250 actively built info decks as part of the Nurturing Content Curation programme. 600 youths also
managed to tap the wisdom and knowledge of elders on Malaysian topics and turned what they gained into video
content in the Linkages project.

Project: Develop On-Demand, Customised Online Education


Description of project
One of the core features of a developed nation is the availability of a skilled and innovative talent pool.
These talents must not only be technically the right fit for the job, but must also be armed with the necessary
cognitive, entrepreneurial and soft skills.
Currently in Malaysia, most learning programmes are one size fits all which can result in an uneven distribution
of knowledge and education. This may give rise to Malaysia having human resources that are regimented and
lacking in individualism leading them to be mere followers rather than influencers.
To address this challenge, Digital Malaysia is developing a centralised customised education and learning
exchange portal (CELEX) that will, among others, serve as online classrooms for both degree and non-degree
programmes education and career counselling service providers as well as meeting points for employers and
students. This portal will be open to students from all age groups as well as working professionals, who will be
able to access rich learning content and obtain certification from different institutions around the world.
This online experience is envisioned to provide a robust environment for learners of all ages to interact,
exchange ideas and create, at a cost effective and technically efficient manner, thus making their learning
experience fun, affordable and customised to their needs.

101

Success stories in 2013


This project surpassed expectations, recording RM4.28 million in GNI and creating 65 jobs. Meanwhile, efforts
to develop the CELEX portal also met with success with seven content providers coming on board.

2013 KPI ACHIEVEMENT:

DEVELOP ON-DEMAND, CUSTOMISED ONLINE EDUCATION


No

Macro KPI

1.

GNI (RM)

2.

Total Jobs

3.

Private Investment (RM)

No

Project KPI

1.

No. of Users

2.

No. of Content Providers

2013 Targets

Current Achievement

% Achievement

9.5 mil

4.28 mil

45%

64

65

101.6%

4.11 mil

3.55 mil

86.4%

2013 Targets

Current Achievement

% Achievement

1,411

6,231

442%

100%

DIGITAL-SAVVY YOUTH

DEVELOP ON-DEMAND, CUSTOMISED ONLINE EDUCATION

6200

2013 TARGET:

1,411

USERS OF CUSTOMISED ONLINE


EDUCATION VIA CELEX

2500
300 2

102

2013 TARGET:

Empowering Youth With Digital Capabilities


To Address Needs Of The Next Generation
Workforce

BOOK TITLES TO AGGREGATE ONLINE CONTENT

ONLINE COURSES

CONTENT
PROVIDERS
TO GROW
ECOSYSTEM

International Interactive
content for primary &
secondary schools

The way forward for the community


Moving forward, the Digital Malaysia Youth initiative has set a primary target of 150,000 youth in 2014. To reach
this goal, MDec will continue working closely with the public sector, namely the Ministry of Education and the
Ministry of Youth and Sports.
Content Creation and Digital Safety & Ethics will be some of the programmes planned for the coming year.

103

COMMUNITY 4: THE SME


SMEcorp reported the existence of 653,000 small and medium enterprises or SMEs in Malaysia in 2013. Of this total,
a majority of 90% are in the services sector and an astounding 97% are still considered small and micro.
It is also disheartening to note that while Malaysian SMEs makes up 97.3% of the nations business entity, it only
contributes 32% to the total GDP and only makes up 19% of the nations total exports.
As such, Digital Malaysia deems it vital for SME contribution to the nation to be improved with the help of digital
technology.
The adoption of ICT among Malaysian SMEs has been relatively slow due to limited finances, lack of technological
knowledge and the high cost of employing technical teams and implementing software applications.
To date, only 20% of SMEs use ICT applications actively in daily operations. There are various reasons contributing
to this low figure:
The high connectivity cost internet accessibility is low among SMEs because of the high cost of bandwidth
and domain registrations
Low technological knowledge only 100,000 of the 645,136 SMEs actually have their own websites
Limited resources with which to adopt technology

WHO ARE THE SMEs IN MALAYSIA?


TOTAL: 645,136 SMEs

90%

97%

In Services Sector

Small & Micro

90% Services

77% Micro

Mining & Quarrying - 3%


Construction - 3%
Agriculture - 1%
Manufacturing - 5.9%

3%
Medium

104

20%
Small

Percentage of SMEs
over total business
establishments

97.3%

98.5%
Based on the new SME Definition
(WEF 1st January 2014)

MALAYSIAN SME IMPACT ON THE NATIONAL


ECONOMY CAN BE IMPROVED FURTHER
NATIONAL GDP

SMEs play a vital role in national GDP and its growth


For example, in OECD countries SME provides 40 - 60% of GDP

EMPLOYMENT

Majority of employment in any country is in the SME sector


In OECD countries, SMEs count for up to 70% of employment

OUTSOURCING &
TECHNOLOGY

Cost advantage creates subcontrators in globalised world


SMEs focus on particular and specific technology development

NATIONAL SAVINGS &


INCOME DISTRIBUTION

SMEs play huge role in national savings of an economy


It also reduces the income disparity by creating opportunities

IMPACT ON
ECONOMY
EMPLOYMENT
GDP
ENTERPRISES

19%

USA

50.4%
50.7%
85.2%

TAIWAN

76.6%
40.0%
95.0%

SINGAPORE

AUSTRALIA

CHINA

45.0% 42.0% 82.0%


25.0% 46.0% 60.0%
99.0% 97.0% 99.0%

MALAYSIA

56.4%
32.0%
99.2%

Contribution to
national exports

Source: The Internets Impact on Aspiring Countries Report by Mckensey, Jan 2012

Digital Malaysia initiatives for SMEs centre on the need to address the challenges of these industries in adopting
technology and to create a positive impact by enhancing revenue and reducing costs.
Firstly, the vertical sectors for intervention were assessed and aligned with other national initiatives before
programmes were deployed. Four sub-sectors, namely F&B, wholesale and wholesale trade of motor vehicles
parts, textiles as well as apparels, were proposed as sectors to be focused on.
Subsequently, four projects were identified to drive exports and productivity growth for SMEs and they are:
1. Asian eFulfillments Hub
2. Shared Cloud Enterprise Services
3. Enabling ePayment services for SMEs and Micro enterprises
4. Accelerate international trade through eCommerce (eTrade)

Achievements and Successes in 2013


Project: Asian eFulfillment Hub
Description of project
Logistics and fulfillment make up key components of the eCommerce value chain, facilitating the movement
of goods and products of various shapes and sizes across borders, and providing the last mile delivery of
eCommerce transactions.
Capitalising on the nations excellent regional connectivity and to take advantage of the above needs of
eCommerce, Digital Malaysia aims to develop Malaysias eFulfillment capabilities and infrastructure. Through
this project, Digital Malaysia will build eFulfillment capabilities and infrastructure in Malaysia, targetting
global online retailers to use these facilities as their Asian eFulfillment centre. The hub will offer integrated
logistics solutions to global online retailers and also make available comprehensive fulfilment services such as
warehousing, packaging, kitting and delivery.

105

Success stories in 2013


This project generated RM6.91 million in GNI and creating 90 jobs compared with the respective targets of
RM11.0 million and 81 jobs.

2013 KPI ACHIEVEMENT:


ASIAN eFULFILLMENT HUB
Macro KPI

No
1.

GNI (RM)

2.

Total Jobs

3.

Private Investment (RM)

No

Project KPI

2013 Targets

2013 Achievement

% Achievement

11 mil

6.91 mil

63%

81

90

111%

60.5 mil

7.65 mil

13%

2013 Targets

2013 Achievement

% Achievement

1.

Certified Logistics Talent

20

16

80%

2.

Number of Customers

100%

3.

Transaction value (RM)

10 mil

43.19 mil

432%

During the year under review, the Asian eFulfillment Hub was expanded to four spokes, namely Tampoi, Subang 6,
Mentakab and Port Klang. The Hub trained 14 certified logistics talents and 14 new customers with a transaction
value of RM43.19 million for 2013. 2014 will see more efforts towards:
Increasing transaction value by attracting new customers
Adding new private sector champions - three companies have so far been engaged as potential private sector
champions, namely POS Malaysia Berhad, Sumisho eCommerce Sdn Bhd, ISIS Logistics Sdn Bhd and PKT Logistics
Group Sdn Bhd

SME

ASIAN eFULFILLMENT HUB

RM43m
16
5

2013 TARGET:

RM10m

TOTAL TRANSACTION VALUE OF GOODS AND SERVICES


2013 TARGET:

20

CERTIFIED LOGISTICS TALENTS


2013 TARGET:

NEW CUSTOMERS

106

Asian eFulfillment Hub project


capitalises on Malaysias strategic
location for regional connectivity to
develop the necessary infrastructure
and capabilities to serve as the regions
eFulfillment centre

Challenges and mitigation plans


Although the project met its KPIs, further plans were put in place to generate higher GNI.

MEASURES TO ADDRESS 2 ISSUES


To increase the transaction value by attracting new customers:
1. The private sector champion to increase their marketing and promotion activities.
To increase margins for existing customers:
1. Private sector champion is building relationship with existing customers to attract higher volume transactions
To add new private sector champions

Project: Shared Cloud Enterprise Services


Description of project
Local businesses, particularly SMEs, often lack the resources and knowledge to invest in new digital technology.
This impedes their ability to increase efficiency and improve competitiveness.
The key objective of this project is to steer Malaysiaseconomic organisation and human capital through the
development of enterprise shared services, making it the largest in the region with a strong foundation to
compete with leading regional players. At the same time, the project also targets the SMEs adoption of cloud
solutions in order to spur them to be global vendors, thus, increasing their business volumes by elevating their
level of business competitiveness and efficiencies.
This Digital Malaysia project hopes to accelerate the adoption of cloud-based enterprise application solution
by local companies while encouraging more independent software vendors (ISVs) to offer their services on the
Cloud. The project also aims to address the shortage of qualified ICT talents in the country by embarking on
initiatives that will unearth more ICT professionals in the Software-as-a-Service (SaaS) model through training
and certification.
Success stories and challenges in 2013
This project was on all accounts a success, easily surpassing the KPIs set for 2013 with a GNI of RM30.95 million
and 418 jobs filled.
During the year, more than 1,700 SMEs adopted the cloud-based Enterprise Application Solutions (EAS) with
procurement and eCommerce businesses representing more than half of these companies. To build on this
success, the goal moving forward is to make operations leaner by activating supply by recruiting private sector
champions while also increasing adoption via active promotion to SMEs.

2013 KPI ACHIEVEMENT:

SHARED CLOUD ENTERPRISE SERVICES


Macro KPI

2013 Targets

1.

GNI (RM)

25 mil

2.

Total Jobs

150

3.

Private Investment (RM)

No

Project KPI

1.

Number of new companies adopting


Cloud-based Enterprise Application
Solutions (EAS)

3.71 mil

2013 Targets

600

Current Achievement

% Achievement

30.95 mil

124%

418

279%

22.65 mil

611%

Current Achievement

% Achievement

1,725

288%

107

Project: Enabling ePayment Services for SMEs and Micro Enterprises


Description of project
Accepting ePayment in business is fast becoming a norm with todays lifestyle demanding higher mobility and
security in every area.

SME

SHARED CLOUD ENTERPRISE SERVICES

1720

2013 TARGET:

600

New companies that have adopted the


cloud-based Enterprise Application
Solutions (EAS)

APPROACHES TO
MAKE OPERATIONS

LEANER

Activate supply by recruiting private sector champions


Increase adoption via active promotion to SMEs

However, carrying out business via ePayment methods can be a costly affair to most SMEs and micro enterprises.
In 2012 when this project was launched, less than 3% of merchants in Malaysia were enabled with ePayment
facilities.
Recognising the importance of this method of transaction and the challenges the SMEs and micro enterprises
face, Digital Malaysia together with SME Corp Malaysia, embarked on a quest to encourage and enable easier
adoption of the ePayment method. Among others, the project aims to provide these SMEs and micro enterprises
easy access to affordable terminals and readers, thus enabling them to reap the rewards of ePayment
transactions.

108

Success stories in 2013


This project far exceeded expectations, returning a GNI of more than three-fold the target for 2013. It generated
a GNI of RM17.37 million and also filled 256 jobs, 56 more than the set target.

2013 KPI ACHIEVEMENT:

ENABLING ePAYMENT SERVICES FOR SME AND MICRO ENTERPRISES


No

Macro KPI

1.

GNI (RM)

2.

Total Jobs

3.

Private Investment (RM)

No

Project KPI

1.

Merchant outlet points enabled

2.

Set up Regional Service Hubs

3.

Transaction value (RM)

2013 Targets

2013 Achievement

% Achievement

5 mil

17.37 mil

347%

200

256

128%

10 mil

7.25 mil

73%

2013 Targets

2013 Achievement

% Achievement

42,581

43,863

103%

18

300%

14.4 mil

977.81 mil

6,790%

It is encouraging to note that a number of SMEs responded to this project. A total of 43,863 ePayment terminals
were installed and 31,188 SMEs enabled with ePayment facilities, giving a total transaction value of RM977.81
million.

SME

ENABLING ePAYMENT SERVICES FOR SMEs & MICRO ENTERPRISES

18
43000
RM900m

8 APPROVED PRIVATE SECTOR LEADS:

2013 TARGET:

REGIONAL SERVICE HUBS

2013 TARGET:

42,581

MERCHANT OUTLETS ENABLED

2013 TARGET:

The goal of the project is to introduce


low cost Point-of-Sales (POS) stations,
and speed up distribution of low-cost POS
terminals to SMEs and micro enterprises

SUCCESS STORIES

RM14.4m

TRANSACTION VALUE

109

Challenges and mitigation plans


Notwithstanding the success and achievements of this project, there were two areas of concern: the first being
the slower than expected adoption rate of epayment outlet points by SMEs and the second being the relatively
low transaction value. To address these issues, two solutions have been introduced.

2 SOLUTIONS TO INCREASE ADOPTION RATE


To embrace more TPAs in the programme:
1. Agreement between the approved TPAs and SME Corp is being finalised
2. Estimated potential of 30,000+ subscribers from these TPAs
3. Bank Negara will discuss with the host banks to share transaction value data with MDeC
To include micro merchants and business owners that do not have company registration but licensed to
conduct business (e.g: taxi drivers, insurance agent, direct selling agents)
1. Recruiting additional TPAs
2. Promotions and awareness to SMEs

The way forward for the community


A new project will be implemented in 2014. The Accelerate international trade through eCommerce (eTrade)
project will enable SMEs to capitalise on eCommerce to increase exports and accelerate their presence in multiple
marketplaces, thus gaining access to all major export destinations. The eTrade was submitted under RMK-10
RP4 and was recently approved under Budget 2014 for implementation in 2014. As part of the programme, SME
readiness to competitively trade online will be assessed. In addition, strategic partnerships with identified global
eMarketplaces and countries will also be forged.

110

SECTION 05

VIEW AHEAD

111

# CHAPTER 7
Looking Ahead

Malaysia has made commendable progress in moving towards the goals and
aspirations of Vision 2020. We have also gained significant ground in developing
and implementing Digital Malaysia, a critical component for national digital
transformation.

Nevertheless, there is still much to be done to ensure


the nation can sustain momentum to achieve the
objectives we had set out for ourselves and become a
developed digital economy and society. To fulfill this
mission, it is imperative that we set out the myriad
tasks to be done in a clearly-defined and meticulouslycoordinated manner.
With 2013 come and gone, it is heartening to note that
various strategies, plans and projects have been put
in place to drive Digital Malaysia via the collaborative
efforts of multiple stakeholders including the Ministry
of Communication and Multimedia Malaysia (KKMM), the
Ministry of Finance (MoF), the Malaysian Communications
and Multimedia Commission (MCMC), the Economic
Planning Unit (EPU), the Performance Management
and Delivery Unit (PEMANDU), the National R&D Centre
in ICT (MiMOS), the Department of Statistics Malaysia
(DoSM), the Malaysian Administrative Modernisation and
Management Planning Unit (MAMPU), and MDeC. All the
above parties are the current members of the Digital
Malaysia Steering Committee (DMSC).

112

These initiatives represent a collective effort to drive


the goals forward and are a symbiosis of all parties
working hand in glove. Yet, it is important we grasp
and understand the complex task ahead as the digital
economy is a fluid and dynamic entity, one in which
multiple players are often working independently
on different moving parts, but towards the same
overarching goals.
As such, moving forward will require a concerted effort
from all parties, with each sector playing its different
role. Responsibility and initiative are key components
as this inter-dependence between the various players is
crucial towards the success of the efforts.
As in any initiative or effort, a central role is required
to align, coalesce and direct these independent players
into a collective set of measurable actions to achieve
the nations digital aspirations.
This central role is undertaken by Digital Malaysia.

GROWING NATIONAL DIGITAL ECONOMY


THROUGH CONCERTED EFFORT
KKMM
NATIONAL B
ROADBAND
INITIATIVE
M
K
N
EPU
MAP .MY
OGY ROAD
L
O
N
H
C
E
T
NATIONAL
ITY
CUR
E
S
R
E
MAMP
CYB
U
8
8 6
MYICMS

EXISTING
INITIATIVES

MAXIMISE & LEVERAGE

BENEFITTING
STAKEHOLDERS:
GOVERNMENT/
BUSINESSES/
CITIZENS
STRATEGIC
THRUSTS

Supply to Demand:
Consumption to
production:
Low knowledge-add to
high knowledge-add:

reallocate resources to more


demand-focused programmes
and activities
change the way people behave
to produce as they consume

GAME CHANGERS
& BEHAVIOURAL
CHANGERS

enhance competitiveness by
focusing on knowledge-added
activities

DM354 STRATEGIC ROADMAP


Tap Demand
Citizen Income/
Entrepreneurship
IT-savvy Youth
SME Productivity

DM
INITIATIVES

DM
PROJECTS

BLOCK 1, 2 & 3
PROJECTS

*
**

Block 2 Initiatives*
Block 1 Initiatives**
Digital Access, Adoption & Use
Digital Economy Sub-Sectors

PRIVATE SECTOR
DIGITAL PRODUCTS
& SERVICES

PRIORITY AREAS & FOCUS


BASED ON HIGH IMPACT &
SPEED OF DELIVERY

CURRENT, ANNOUNCED,
EXISTING & NEW PROJECTS
BY MINISTRIES, AGENCIES &
PRIVATE SECTOR

ICT initiatives in ETP and GTP


Existing 10th Malaysia Plan (RMK-10) initiatives

113

Rolling out in stages


Digital Malaysia is a long-term national initiative that will be rolled out in various phases. Although it will continue
to grow and develop beyond 2020, the plan is to focus on three main clusters of activities from now until the end
of the decade. The graphic below illustrates the respective timelines.

ROLL OUT OF DIGITAL MALAYSIA IN PHASES

DIGITAL
ECONOMY
Use of ICT in
Vertical
Sectors

ICT
Sector

PHASE 1

PHASE 2

PHASE 3

2012-2020

2021-2030

2031-2040

Behavioural Change via 3 DM Strategic Thrusts


Operationalise Phase 1 through DM 354 Strategic Roadmap

114

The immediate step in year 2014


At the present time, we continue to put in place the building blocks to ensure a strong foundation for Digital
Malaysia and these include:
1. Integration with long-term national plans via RMK-11 planning process
2. Fine-tuning the governance structures to steer and drive a holistic DM 354 Strategic Roadmap roll-out
3. Strengthening the Digital Economy Impact Framework
4. Ideating new initiatives and projects to broaden impact and extend footprints
5. Implementing existing Digital Malaysia projects
6. Strengthening the collaborative framework with local and international strategic partners to accelerate winwin outcomes.
7. Increasing awareness and ensuring positive engagement with targetted stakeholders and beneficiaries of DM
initiatives
In particular, the first four items are further explained as below:
1. Integration with long-term national plans via RMK-11 planning process
In charting the path ahead, the most immediate task at hand is the establishment of an implementation
structure for the DM354 Strategic Roadmap. This would essentially function as the master plan to systematically
piece together a developed digital economy for Malaysia as envisioned by the Roadmap. On this score, the
DM Steering Committee, working through MDeC as the DM secretariat, will establish 12 Digital Malaysia Focus
Groups which will be aligned to the Technical Working Groups (TWG) set up under the EPUs RMK-11 InterAgency Planning Group (IAPG) for the ICT Sector. The Digital Malaysia Focus Groups shall play an important
role in providing strategic implementation recommendations, expediting execution, assessing impact and
recommending course-corrective actions along the journey to implement Digital Malaysia. The proposed
alignment is yet another move to strengthen integration of Digital Malaysia with national plans such as the 11th
Malaysia Plan (RMK-11).

INTEGRATION WITH LONG-TERM NATIONAL PLANS UNDERWAY


Various
RMK11 IAPGs

ICT SECTOR

SERVICES

MANUFACTURING

SOCIAL

N...

ICT SECTOR
FOCUS GROUPS

Infrastructure
(KKMM)

ICT Industry
(MDeC)

Digital
Opportunities
(MCMC)

ENABLING
ENVIRONMENT AREAS

SUB-SECTORS

COMMUNITIES

Talent
(Universiti Malaya)

Indigenous
Technology
(MIMOS)

Key elements of DM354


Strategic Roadmap are
embedded within the ICT
Sector IAPG
IAPG: Inter-Agency Planning Group
MCMM: Ministry of Communication & Multimedia Malaysia
MCMC: Malaysian Communications & Multimedia Commission

115

2. Fine-tuning the governance structures to steer and drive a holistic DM 354 Strategic Roadmap roll-out
Rolling out the Roadmap in the years ahead will require a flexibility and fine-tuning of the governance structures
as necessary. As such, with the expansion of the scope for Digital Malaysia, the membership for the DMSC and
relevant Focus Groups will be assessed to ensure participations from relevant stakeholders are factored in.

Key roles will be played by the following:


DM Steering Committee (DMSC) for the provision of strategic direction and oversight for Digital Malaysia
DMSC Secretariat to support, coordinate, facilitate, align and monitor the programmes, intervention and
initiatives. MDeC is tasked by the Government with this role
DM Focus Groups to provide strategic implementation recommendations, expedite execution and assess
impact for the respective areas of policy, strategy and programme
Note: DMSC and DMSC Secretariat have been established. DM Focus Froups shall be established in year 2014
after the completion of the RMK-11 planning process.

3. Strengthening the Digital Economy Impact Framework


The impact framework of yesteryears may require some strengthening which is best suited for Malaysias Digital
Transformation for many years to come. Starting with the formulation of an Impact Framework for the DM354
Strategic Roadmap for all Digital Malaysia Focus Areas will be a key focus for next year. The Digital Malaysia
Impact Framework will also become an input source for the establishment of baselines and annualised targets
within the Digital Malaysia Satellite Account (DESA).
On this score, the framework must be clearly identified and well documented with data collection and analysis
being the imperatives. Towards this end, Digital Malaysia will need to work with multiple parties such as DoSM,
EPU, MPC at the local front and also IMD, WEF, ITU at the international arena to arrive at a robust impact
framework which will outline the performance measurement for Digital Malaysia.
Publication of data points related to the digital economy of Malaysia is being planned. For example, the ICT
Satellite Account Report for Year 2013 can now go public after the limited circulation of two preliminary
publications during the previous two years (2011-2012). These data points will be very useful to ensure datadriven interventions and relevant indicators shall serve as baselines in the Digital Malaysia Impact Framework.
4. Ideating new initiatives and projects to broaden impact and extend footprints
We are heartened that Digital Malaysia has been expanded and extended during the year under review beyond
the 2012 focus on the four Communities to encompass the three Enabling Environment Focus Areas (Access,
Adoption and Use) as well as the five Digital Economy Sub-sectors (ICT Services, eCommerce, ICT Manufacturing,
ICT Trade and Content & Media). As an evolving initiative, Digital Malaysia will continue to grow and adapt in
response to new trends and opportunities in the coming years.
It is pertinent to note that since the global digital economy is undeniably large, varied and complex, there is
no fixed model or approach in terms of efforts to guide and sustain its development. What may work for one
national economy may not be replicable or suitable for another. As such, every nation has to develop its own
strategy according to its specific requirements and aspirations.
This being the case, the challenge before us is to draw from similar initiatives around the world as a guide in
ideating new initiatives that are tailormade for Malaysia.Various ministries and agencies have to join hands to
come up with impactful initiatives and projects so as to broaden the impact and extend the footprint for the
national digital transformation agenda.

116

In closing
The way forward requires a collaborative effort of all the stakeholders and players in the game. Each of the parts
has a specific function as a whole and as part of the larger community which must be worked as a well-oiled
machinery to achieve the set targets and goals as much as possible. The progress and achievements of each subsection is dependent on each other, whereby the delivery of the required results of one section would initiate the
next move of another.
Significant progress has been achieved in 2013 to drive Digital Malaysia forward. The challenge in the years ahead
is so generate momentum to the point when Digital Malaysia can grow and expand to the desired state.

117

118

SECTION 06

APPENDICES

119

ary

Glossary

Glossary

Tenth
Tenth Malaysia Plan
10MPMalaysia Plan
Eleventh
Eleventh Malaysia Plan
11MP Malaysia Plan

Islamic
Finance
Institute
IBFIM Banking and
Islamic
Banking
and of
Finance Institute
o
NITC
Malaysia
Malaysia
NKEA
Implementation
Council
Meeting Council Meeting
ICM
Implementation
NKRA

ICM

Business-to-business
B2B
Business-to-business

ICT

Information
and communications
ICT
Information and communications
OECD
technology
technology

ICTSA

ICT
Satellite Account
ICTSA
ICT Satellite Account

Business-to-consumer
B2C
Business-to-consumer
Bank
BNMNegara Malaysia
Bank Negara Malaysia
Biro
BTN
Tatanegara (National
Biro Tatanegara
Civics Bureau)
(National Civics Bureau)
Compounded
CAGR
Annual
Compounded
Growth Rate
Annual Growth Rate
Capital
CAPEXexpenditure
Capital expenditure

Customised
CELEX
education
Customised
and learning
education and learning
exchange portal exchange portal

Glossary

Agreed
Agreed Upon Procedures
AUP Upon Procedures

IBFIM

Glossary

Creative
CMC Multimedia
Creative
ClusterMultimedia Cluster
Centre
CoE of Excellence
Centre of Excellence
Customer
CRM
relationship
Customer
management
relationship management
Corporate
CSR
Social Responsibility
Corporate Social Responsibility

ICU
IHL
iLMS

OPEX
Implementation
Council
Unit
ICU
Implementation
Council Unit OPPA
Institutions
of Higher
Learningof Higher LearningPEMANDU
IHL
Institutions

InfoTech

Intelligent
Learning
Management
iLMS
Intelligent
Learning Management
System
System
PHMS
Information
InfoTech Technology
Information Technology
PKNP

IRB

Inland
of Revenue
Malaysia Board of Malaysia
IRB Revenue Board
Inland
PMO

ISV

Independent
service
vendors service vendors PNM
ISV
Independent
Committee
for Ministerial
IT and
Internet IT and
JITIK
Committee
for Ministerial
POSIntern
Initiatives
Initiatives
PPP
Ministry
Family of
and
KPWKMof Women,
Ministry
Women, Family and
PTP
Community Development
Community Development
QoL
Low
LIHIncome Household
Low Income Household

JITIK
KPWKM

Community
CTP
Transformation
Community
Programme
Transformation Programme
Domestic
DDI
Direct Investment
Domestic Direct Investment

LIH

Digital
DESA Economy Satellite
Digital Economy
Account Satellite Account

MAMPU

RFID
Malaysian
Modernisation
MAMPU Administrative
Malaysian
Administrative Modernisation
and Management and
Planning
Unit
Management
Planning Unit
ROI

MASTIC

Malaysian
and Technology
MASTIC Science Malaysian
Science and Technology
SaaS
Information CentreInformation Centre
SCM
Malaysian
Angel Network
MBAN BusinessMalaysian
Business Angel Network
SME
Malaysian
MCMC Communications
Malaysianand
Communications and
SME Corp
Multimedia Commission
Multimedia Commission

Digital
DM Malaysia

Digital Malaysia

Outcome-based
DOBA
approach
Outcome-based approach
Department
DOSM
of Statistics
Department
Malaysia
of Statistics Malaysia
Electrical
E&E
and electronics
Electrical and electronics
Electronic
EDI
data interchange
Electronic data interchange

MBAN
MCMC

Employees
EPF
Provident
Employees
Fund Provident Fund

MDeC

Entry
EPP Point Projects
Entry Point Projects

MIDA

Economic
EPU
PlanningEconomic
Unit
Planning Unit
Enterprise
ERP
Resource
Enterprise
PlanningResource Planning
Economic
ETP
Transformation
Economic
Programme
Transformation Programme
Foreign
FDI Direct Investment
Foreign Direct Investment
Facilitating
FSU
social Facilitating
uplift
social uplift
Gross
GDP Domestic Product
Gross Domestic Product
Government-linked
GLC
Government-linked
companies
companies
Get
GMBO
Malaysia Business
Get Malaysia
Online Business Online

MITI
MOF
MOHE
MOHR
MSIC

Multimedia
development
Corporation
MDeC
Multimedia
development Corporation
SRI
Malaysian
Industrial
Development
MIDA
Malaysian
Industrial Development
SSO
Authority
Authority
STEM
Ministry
and
MITI of International
MinistryTrade
of International
Trade and
Industry
Industry
STP
Ministry
MOF of FinanceMinistry of Finance
TPA
Ministry
Education
MOHE of Higher Ministry
of Higher Education
UiTM
of Human Resources
Ministry
Resources
MOHR of HumanMinistry
WR
MSIC
for B40 Implementation
Microsourcing
forMicrosourcing
B40 Implementation
Committee
Committee

MSU

MSU
and Science University
Management
and Management
Science University

MTM

MTM
Market-to-Market
Market-to-Market

MVCA

MVCA VentureMalaysian
Venture
Malaysian
Capital and
PrivateCapital and Private
Equity AssociationEquity Association

MyICMS

MyICMS Information,
Malaysian
Information, Communication
Malaysian
Communications
and Multimedia Services
and Multimedia Services

Gross
GVA Value AddedGross Value Added

NCI

NCI
National
Committee on Investment
National
Committee
on Investment

Gross
GNI National Income
Gross National Income
Global
GSC Sourcing Cluster
Global Sourcing Cluster
Global
GSIACScience andGlobal
Innovation
Science
Advisory
and Innovation Advisory
Council
Council
Government
GTP
Transformation
Government
Programme
Transformation Programme
Human
HRDF Resources Human
Development
Resources
FundDevelopment Fund

NDBM

NDBM
NewModels
Digital Business Models
New
Digital Business

Human
HRM resource management
Human resource management

NEF

NEFEntrepreneurNew
Entrepreneur Foundation
New
Foundation

High
HSBB
Speed Broadband
High Speed Broadband

NEM

NEMEconomic Model
New Economic Model
New

International
IAP
Advisory
International
Panel
Advisory Panel

NFC

NFCField Communications
Near Field Communications
Near

NGO

NGO
Non-governmental
organisations
Non-governmental
organisations

120

Glossary

titute of

NITC

National Information Technology Council

NKEA

National Key Economic Areas

NKRA

National Key Results Areas

OECD

Organisation for Economic Co-operation


and Development

OPEX

Operational expenditure

OPPA

Opportunity-based approach

PEMANDU

Performance Management and Delivery


Unit

PHMS

Performance Monitoring Hub System

PKNP

Perbadanan Kemajuan Negeri Pahang

PMO

Project Management Office

PNM

Perpustakaan Negara Malaysia

POS

Point-of-Sales

a
Internet

nisation

gy

ork

ation

nd

tation

PPP

Public-Private Partnership

PTP

Political Transformation Programme

QoL

Quality of life

RFID

Radio Frequency Identification

ROI

Return on Investment

SaaS

Software-as-a-Service

SCM

Supply chain management

SME

Small and medium enterprises

SME Corp

Small and Medium Enterprise


Corporation Malaysia

SRI

Strategic Reform Initiatives

SSO

Shared Services and Outsourcing

STEM

Science, Technology, Engineering and


Mathematics

STP

Social Transformation Programme

TPA

Third Party Acquirers

UiTM

Universiti Teknologi MARA

WR

White Room

rsity

rivate

cations

ent

2014. Multimedia Development Corporation Sdn Bhd (MDeC). All rights reserved. No part of this publication may be reproduced in any material
form (including photocopying or storing it in any medium by electronic means and whether or not transiently or incidentally to some other use of
this publication without MDeCs written permission except in accordance with the provisions of the Copyright Act 1987). The doing of unauthorized
act in relation to a copyright work may result in both a civil claim for damages and criminal prosecution.

121

Multimedia Development Corporation Sdn Bhd


2360 Persiaran APEC, 63000 Cyberjaya,
Selangor Darul Ehsan,
MalaysiaTel: +603 8315 3000
email: clic@mdec.com.my
URL: www.digitalmalaysia.my

124