There is a unique synergy between the growth of a country’s economy and the development of its information and communications technology (ICT) sector.
In this age, the digital revolution of a country is no longer an option but a much-needed necessity when it comes to pushing a nation to rank amongst the top and outline its appeal to foreign investors.
Hence, Malaysia has placed a great importance on the development of its ICT sector by actively injecting investments and spearheading programmes and efforts to boost the ICT talent and market in all parts of the country.
The country’s ICT sector is currently standing at an interesting crux of its cycle, whereby it is mid-way through its charge forward into a new and faster digital world.
Over the past decades, the digital revolution in Malaysia have possibly gone beyond what former Prime Minister Tun Mahathir Mohamad could have imagined back in 1996,when he first launched the Multimedia Super Corridor Malaysia (MSC Malaysia); the country’s ICT programme.
Almost two decades later, smart devices are no longer a thing of luxury for the average-income Malaysians. Personal computers are in almost every urban household in Malaysia, and faster internet connection is constantly in demand by the country’s discerning consumers.
“The ICT industry has been charting an impressive 10 per cent average growth yearly for the last five years.
Woon Tai Hai, KPMG Management and Risk Consulting and Pikom immediate past chairman
“The industry is now worth at RM55 billion and targeted to hit RM100 billion by 2017 and a contribution of 20 per cent to the country’s gross domestic product (GDP) by the year 2020,” said Woon Tai Hai of KPMG Management and Risk Consulting and the national ICT association of Malaysia (Pikom) immediate past chairman.
While lightning-fast digital connectivity is still far from Malaysia’s list of achievements, the nation can be seen as one step closer to achieving this feat as it rolls out of the second phase of High Speed Broadband project via a RM1.8 billion investment (RM1.6 billion for rural areas) announced during Budget 2014 last year.
Additionally, the government has undergone various efforts to step up its game in the ICT sector which include efforts to push the country’s data centre sector in order to make Malaysia a regional data centre hub.
“Within the business world, local organisations have been receptive and experimental in some cases, towards ‘transformational technologies’ such as cloud computing and analytics to harness the big data — the ICT developments that fuelled by the on-going enterprise mobility trend,” current chairman of Pikom, Cheah Kok Hoong, said.
“With the 4G spectrum roll-out, the interest in the adoption of smart devices such as smartphones and tablets shot up – demonstrating the dynamism of the consumer IT retail market in relation to the advancements in the local telecommunication and connectivity segments,” he added.
Gearing up the ICT sector
Pikom, which is an association representing the ICT industry in Malaysia and has a membership of over 1,500 companies, believes ICT is a primary enabler of Malaysia’s transformation into a knowledge-based and high-income country.
To strengthen the current ICT market state to achieve the RM95 billion revenue target by 2017, the association has laid out five-year strategic plan outlines six core thrusts to realise more digital opportunities for its members.
Among these core thrusts, Cheah highlighted, Pikom is looking to globalise Malaysia’s ICT market.
“All of PIKOM’s strategic core thrusts are closely aligned to the country’s ICT vision that is also carried by Multimedia Development Corporation (MDeC), PEMANDU, MOSTI and MITI.
“But a highlight would be our advocacy for the local data centre and outsourcing services developments under the National Key Economic Area’s (NKEA) Entry Point Programme 3 (EPP3) initiative for Malaysia to be a regional world-class outsourcing hub.
“As well as the introduction of the Uptime Institute’s Data Centre certification programme to measure the reliability of Malaysian data centres to encourage more related IT investments here,” he explained.
As a first step, Pikom said in 2014 it will focus on building the professionalization of the ICT sector and enable more ICT engagements in the private and public sectors via ITO Consortium; a core effort between MDeC and Outsourcing Malaysia (a chapter of Pikom).
The programme is set to bring together key outsourcers in Malaysia to collectively bid for large and global IT outsourcing projects.
Emphasis on data
Over at MdeC – which is aware of the rapid influx of smart devices usage among Malaysians and the growing importance of developing the data industry – the agency had recently launched an alliance for data centre industry called the Malaysian Data Centre Alliance (MDCA) in line with the government’s development of the Entry Point Project 3 (EPP3) which aims to position Malaysia as a world class data centre hub.
MDCA will lead key initiatives towards growing the industry, and will play an instrumental role in transforming Malaysia into a preferred data centre hub in the region.
“The data centre sector was identified as a key growth area under the Economic Transformation Programme (ETP) and has in the past couple of years shown steady progress,” said Datuk Seri Ahmad Shabery Cheek, Minister of Communications and Multimedia.
MDeC said the data centre industry is thriving with the current trends and push for it that are so pervasive in today’s businesses, with its services for enterprises and consumers that include social media, cloud, big data and mobility.
“With the formation of MDCA and the initiatives that it will undertake, the data centre industry is set to grow further and contribute to a total of RM2.1 billion to the country’s Gross National Income (GNI) by the year 2020,” Ahmad Shabery added.
(SOURCE: Department of Statistics, Malaysia)
(SOURCE: MCMC)
MDeC chief operating officer Ng Wan Peng said, “We are working with the industry to elevate Malaysia’s standing in the robust global data centre sector.
“Such initiatives include understanding the needs of the industry through regular forums, creating the awareness of the importance of data centre in a business entity, catalysing the industry through incentives and programmes for data centre professionals, provision of comprehensive facilities, services and expertise that create a conducive business environment for the sector.
“With the establishment of MDCA, this effort will be more streamlined and will attract more Domestic Direct Investments (DDI) and Foreign Direct Investments (FDI) which will subsequently contribute to the country’s economic growth.”
MDCA is set to cater approximately thousands of customers across diverse business sectors such as telecommunications, information technology, manufacturing, financial services, small and medium enterprises (SMEs) as well as the government and public sector.
The association’s chairman, Billy Lee commented that MDCA is expected to act as a platform for members to contribute to the establishment of best practices, education programmes, industry leadership initiatives and technical standards to which the data centre industry adheres.”
He added that MDCA’s initiatives will centre on five main areas which are business development, connectivity and bandwidth, green technology standards, energy, and standards and policies.
MDCA has also identified key initiatives for the implementation to support the objectives of EPP3 which include benchmarking data centres to identify gaps and improve performance, designation data centre parks with world-class telecommunications network, power and other infrastructures, and many more.
Meanwhile, Telekom Malaysia Bhd (TM) chief executive officer Tan Sri Zamzamzairani Mohd Isa had previously highlighted that data growth is expected to increase tremendously over the next few years, which is in tandem with an increasingly dynamic and high growth business environment in Malaysia.
Overall, according to Malaysian Communications and Multimedia Commission’s (MCMC) statistics, broadband penetration nationwide has reached 67.3 per cent in the first quarter of 2014 (1Q14), with over 40 per cent broadband penetration for every state in Malaysia; an increase from an overall 66.6 per cent seen in 1Q13.
More recently, to meet the ever growing demand for data and increasing requirements for capacity, TM had entered into an Investment Agreement with Green Packet Bhd (Green Packet) and SK Telecom Co Ltd (SK Telecom) to collaborate on developing a next-generation long term evolution (LTE) infrastructure.
The exercise will also see TM as a 57 per cent of shareholder in Packet One Networks (Malaysia) Sdn Bhd (P1).
TM said, the parties will seek to leverage on LTE technology to deliver high-quality and reliable data services across all segments of the community.
“P1 will capitalise on its spectrum assets, existing wireless platform and network footprint of close to 2,000 sites, and experienced management and organisation to expedite its entry into the LTE space,” it added.
Zamzamraini commented, “We are further expanding our capabilities into the adjacent wireless broadband space, as a natural evolution of our suite of internet and data services, in order to better serve our customers’ needs.
“The partnership provides an LTE-ready platform for us to more efficiently roll out wireless broadband products and accelerate time-to-market for our customers.”
In addition, to improve digital connectivity nationwide, TM had also collaborated with two other major telco giants, namely; Celcom Axiata Bhd (Celcom) and DiGi Telecommunications Sdn Bhd (DiGi), for the development of TM Next-Gen Backhaul Services.
All these collaborations, efforts and investments were done to meet the massive and ever growing demand from Malaysian consumers.
Sarawak’s growing digital demand
Across the South China Sea, Sabah and Sarawak have much to catch up in the digital race.
Over recent years, the government has implemented various efforts boost the digital growth in all parts of Malaysia.
Zamzamraini highlighted that the announcement during Budget 2014, for the establishment of a submarine cable network to serve the bandwidth capacity requirements of Internet users in Sabah in Sarawak is much welcomed in the anticipation of the increasing future capacity requirements and the ever-growing data needs.
Overall, according to the department of statistics, Sarawak’s percentage of household with access to personal computers has reached 16.7 per cent, while those with access to laptops have reached 41.8 per cent, and tablets at 9.5 per cent.
These statistics are almost on par with other states in Malaysia as the average household access to personal computers, laptops, and tablets nationwide are 21, 46.3, and 15.3 per cent respectively.
As for cellular telephones as of 2012, MCMC reported that penetration rate per 100 inhabitants in Sarawak is at 105.7, an increase from 94.8 seen in 2011.
Currently, according to MCMC’s ‘Communications & Multimedia Pocket Book of Statistics’, Sarawak’s broadband penetration rate has reached 53.4 per cent in the first quarter of 2014.
Despite that, more efforts are needed to achieve 100 per cent broadband penetration by 2020, as proposed by Malaysia’s Prime Minister Datuk Seri Najib Tun Razak.
Datuk Amar Abang Johari Tun Openg, Minister of Housing and Minister of Tourism, recently lamented that due to infrastructure and capacity constraints, Sarawakians are faced by a congested ‘ICT highway’.
“We have to put our investment for the industries of tomorrow. We need the basic infrastructure for us to move forward towards the future. The future, is the ‘digital era’,” he said during the launch of this year’s SME BizFest Kuching leg, which was hosted by TM.
He also noted that the population is increasing and Malaysia’s population consists of more youths compared to most countries.
A young population means the capability to produce high level of productivity that can be roused via necessary infrastructures or technology that can complement or support their needs.
Corellation between Internet and GDP
Former Sacofa Sdn Bhd chief executive officer and managing director Dato Ir Abg Jemat Abg Bujang also believed that there is a direct correlation between Internet usage and national gross domestic production (GDP).
In a previous interview with Investvine, regional analysts for Inside Investor, he said, “If we reach a high internet penetration, we can also bring up the GDP and the economic status of the people in Sarawak. And I want to see the ICT sector growing. Without this, we will lag behind.”
Aware of the burgeoning demand for data and faster digital connectivity, especially in rapidly growing places such as Sarawak, major telecommunication services companies have stepped up their game to provide efficient and quality services to customers in Sarawak.
Leading integrated solutions provider in Malaysia, and one of Asia’s leading communications companies; TM has said that it has plans to improve the broadband access in Sarawak.
“It includes fibre optics, using fibre to the home, and fibre to the building technology. At the moment, we are finalising the purchase of P1, a wireless company.
“Once we finalise the purchase, we plan to go nationwide. We believe P1 has the infrastructure that can meet customers in Sarawak’s demand for improved quality and coverage,” commented Azizi A Hadi, executive vice president of small and medium enterprise (SME) division for TM.
Meanwhile, giant telcos such as Celcom and Maxis have said that they have already rolled out 4G LTE to enhance internet and data speed in Sarawak.
Maxis has observed that Sarawak and Sabah long-term opportunities for the mobile carrier’s business and has thus continued to expand its presence in this region during the year 2012, adding new 2G and 3G sites and improving network speeds for faster broadband and mobile Internet access.
The company also highlighted significant investments to improve connectivity for underserved communities and in 2012, Maxis had extended coverage and lowered broadband costs in Sabah and Sarawak.
Meanwhile, Celcom had previously told BizHive Weekly that it has already launched the LTE network and will continue to invest in Sarawak’s data services network
So far, it has also invested over RM125 million in capital expenditure (capex) in Sarawak for its mobile radio access network, and circa RM85 million in capex and RM160 million in operational expenditure (opex) will be invested in East Malaysia between June 2013 to the end of 2014 for LTE rollouts, with a total capex and opex allocation of RM130 million for Sarawak alone.
Celcom had also recently announced that it is working together with Ericsson to enhance network quality in Sabah, Sarawak and the East Coast of Peninsular Malaysia.
Celcom said the collaboration between Celcom and Ericsson is to address end-to-end network quality improvement, customer experience on voice and data services, and overall network performance at 10 cities in the Eastern Region.
These includes Kuching, Miri, Sibu, Bintulu, Kota Kinabalu, Sandakan, Tawau, Kuantan, Kuala Terengganu and Kota Bharu.
Making headway into a digitalised economy
Aside from consumers’ growing acceptance and demand for current ICT, the growth of the ICT sector also greatly hinges on the level of acceptance and usage by companies and businesses.
Najib had said the next wave of economic growth will come from the knowledge-based economy, with digital technologies as a key driver of progress.
At this note, as part of its effort to support the government’s digital transformation initiatives, TM has organised an annual SME ICT event, pegged the SME BizFest.
The event’s objectives are to gather entrepreneurs and to motivate SMEs into innovating their businesses with the use of technologies.
Azizi said, ICT is fast becoming the way of life, not for consumers, but also for SMEs to allow them to communicate, collaborate and also to run their business efficiently.
“There’s already 30 per cent of our SMEs today who acknowledge and already conducted ICT in their business. We believe ICT is a vital component to the success of SMEs business today,” he said.
“Being one of the top five states with the highest number of SME establishment in the country, we see that SMEs in Sarawak has huge potentials to grow, given the right platform and ICT resources.
“We believe that adopting the latest ICT innovations is an important element to a complete business ecosystem – from starting up a business, to interacting and engaging your customers and enhancing your end-to-end business operations – to keep you ahead of the game,” Azizi shared.