Coding Sarawak’s own digital economy

Less than three decades ago, going digital for most businesses meant merely investing in one or two expensive computers for a select few employees to enter data into. Documents and data were still mostly recorded physically until it came time for data entry clerks to archive them onto the now obsolete floppy disk.

Back then, it was not necessary for the majority to be computer literate to work. Documents were created by a typewriter, inventory calculated by hand, and communication was done through analogue phones.

Fast forward to the present and you’d be hard pressed to find a single white collar job that does not involve some form of digital technology.

Nowadays, most working Malaysians are required to have Information Communication Technology (ICT) skills and knowledge.

Even coffee shop attendants are well versed in using tablets to place drink orders!

According to the Malaysian Digital Economy Corporation (Mdec), a digital economy is powered by internet and digital technologies and allows anyone to participate from anywhere.

In a digital economy, businesses and individuals are creating, innovating and growing new business opportunities faster than ever before.

There’s no denying that this is exactly what is happening right now as our business activities and commercial trade are now more globalised than ever before. We buying and selling products on a global scale and new businesses involved in technology are launching daily.

In just a few decades, the landscape of how we do business and conduct our lives has changed drastically but technology has also advanced exponentially in the past few years.

Thus bears the question: where exactly do we stand when compared to the rest of the world?

 

Malaysia’s rank in global comparison

According to an Internet Users Survey 2016 by the Malaysian Communications and Multimedia Commission (MCMC), 77.6 per cent of fellow Malaysians are internet users. In Sarawak, the figure is slightly higher at 77.9 per cent.

In contrast, data from the International Communication Union (ITU) showcased that in 2016, 81 per cent of the population in developed nations were internet users while the figure was 41.6 per cent in the Asia and Pacific region.

Just these figures alone showed that our adoption of internet use and in turn technology seems to be in line with the rest of the developed world.

Nevertheless, based on the research done by the MCMC, it is apparent that we are nearly not as responsive to utilising digital technology for commercial purposes.

Only 36.2 and 35.3 per cent of our nation’s internet users were found to have actively used the internet for banking services and shopping, respectively.

While these reported figures from the MCMC are national figures, newly-minted Minister of International Trade and e-Commerce (MITeC) and Second Minister of Finance Dato Sri Wong Soon Koh affirms the situation in Sarawak to be of no exception to this scenario and even alludes to the fact that perhaps we might even be worse off.

“In Sarawak, we are quite far behind. At the moment we are handling goods and services in the traditional way. We have not made greater use of the digital devices and it is about time we upgrade ourselves to a higher level so that it will be fast and easy to buy and sell products and services,” he said to BizHive Weekly in an interview.

In contrast, the European Commission reported that in 2016, nearly 60 and 75 per cent of European internet users would actively engage in financial and commerce activities online.

That’s nearly double our national rates! And with predictions from research firms such as Ovum TMT predicting that the global digital economy will hit over US$4.8 trillion worth in global opportunity by 2025, why are we still hesitating to jump head first into this exponentially growing economy?

The answer to that question is rather complex one as there are a multitude of factors that are inhibiting our march into a digital economy, but a generally accepted answer to that is: fear.

 

Fear of cyber security

According to the MCMC, the main cause for the lack of online financial activities among local  internet users is due to concern regarding change and cyber security issues.

“Internet users were prudent over online financial activities as the adoption of e-banking and online shopping was stationary for the past few years.

“This was due to security issues and their hesitance to learn complex systems,” the MCMC reported revealed.

This comes as no surprise, seeing as how the recent number of consumer data leaks and hacks from corporations around the world has increased rapidly in recent years as hackers become more and more sophisticated in their craft.

Combine that with fear mongering from news and social media outlets and sceptics around the world, it is of little surprise that we would have second doubts whenever we are asked to upload our financial or personal details online, even if it’s from a trusted and well-known entity.

However going off this, people and businesses around the world would all be equally affected by this so it still doesn’t explain the disparity between us and the rest of the developed world.

Why are we just as willing to use the net for social media and educations purposes like everyone else but not as willing to use it for our commercial purposes?

SOURCE: MCMC, AT Keanery, MyCERT

One possible answer is the perceived lack of regulation over e-commerce and e-business activities from authorities.

Because of this, consumers and merchants are hesitant to commit to engaging in online financial and business activities as they might feel that there not enough mechanisms in place to protect themselves.

The reality however, is that Malaysia does boast a rather comprehensive suite of e-commerce and e-business laws which are based on a combination of the Electronic Commerce Act 2006, the Electronic Government Activities Act 2007, the Personal Data Protection Act 2010 and a few amendments and added regulations into the Consumer Protection Act 1999 that focuses specifically on transactions made electronically.

And while these laws seem to have some effect on reducing rates of cyber-crime rates as reported by the Malaysia Computer Emergency Response Team (MyCERT), perhaps it is still not enough to combat the ever evolving art of cybercrime activities as these activities remain rampant around the world.

Though it sounds like depressing scenario, it’s the same for every other country and all we can really do is move forward and adapt to our environment, because it would far costlier for us to get left behind as the economies of other countries advance.

For Sarawak’s economy which seems have already fallen behind on times however, Wong notes that trailing behind is also positive as we as State can easily catch up by learning form the failure and successes of others.

“This (cyber security and crime issue) is a worldwide problem, it can happen anywhere and a good thing is that more developed countries have already attempted instituting rules and regulations to control them.

“And so our process of getting our system regularised and protected will much easier as it would be easier to identify the key needs that we need and come out with a set of rules and regulations to effectively govern our e-commerce activities and or any digital transactions.”

 

Coding our own set of rules and regulations

Wong guided that one of the first steps his new Ministry – MITeC – will be doing is to actively consult and collaborate with industry and government entities to help gather enough information to develop a strategy and rules and regulations that will fit our state’s unique business landscape.

“We have to first work closely with SME Corporation Malaysia (SME Corp Malaysia) because they have been on the scene for a much longer time than we have – particularly in  e-commerce training and talent training – so they will likely be able to shed some insight to us on some of the pit falls that an e-commerce merchant might encounter.

“Next, we need to consult with Ministry of Domestic Trade, Co-operatives and Consumerism (KPDNKK) to find out how to protect our consumer rights and what more needs to be done on this facet of the situation.

“The MCMC as well would be an invaluable collaborator, as their last mile delivery network (developed in conjunction with the Association of Malaysian Express Carriers) has the best capabilities and we will work with them to come up with some solutions on how we can combat some of the common issues e-commerce platforms face.

“Then there is the Malaysian investment development authority, again we have to work closely with this agency if we want to transform Sarawak into a regional hub.

“Finally, we will need to work with Bank Negara Malaysia (BNM) as this will have to do with e-payment innovations and security and we would need to see what can be done to protect our e-payment system and also the benefits of the people involved while ensuring that there is complete security in the system.”

In addition, it was also highlighted in order to enhance efficiency and speed of e-commerce activities taken place within the state, collaboration and consultation with the Ministry of Finance (MoF) and the Ministry of International trade and Industry (MITI) would also be required.

In particular, working with MITI can help our Ministry to better understand the limitations and requirements of border clearance of inbound and outbound parcels in order for them to develop guidelines and procedures that will help bring about a faster and more efficient customs system.

 

Community support gears up for digital initiative

With new ministries being formed and solid plans announced, Abang Johari’s vision of a booming digital economy for our state is starting to come to a reality. It’s an exciting time for all of us as the move has garnered community support from all across the State.

The formation of our first e-commerce association – The Sarawak e-Commerce Society – for one is a solid step forward to our digital future.

Officially formed on May 26, 2017, the association was created by a band of young business owners led by Sarawakian Chew Heo Lee as their chairman.

While the association is less than two months old, it has garnered immense support from entrepreneurs across the state, boasting branches in four major divisions  of Kuching, Sibu, Miri and Bintulu.

The association seeks to complement the state’s move into the digital era by providing education on how to utilise e-commerce and e-business activities, and how it can help to enhance their lives and businesses as trade moves online.

In doing so, the association hopes that there will be more community involvement and participation in the rapidly growing industry.

And complimenting that, the association has also stated that hope to work closely together with the State government and MITeC in order to act as an open line of communication between them and the local merchants directly involved in digital trade.

The move is intended to be a mutually beneficial initiative between the ministry and association as it would allow the association and its members a better understanding of future implemented e-commerce trade laws as the industry begins to get more standardised, while helping the ministry effectively implement these new regulations.

 

Our economy is changing: What to expect?

With regulations possibly being tabled at the year-end State Legislative Assembly sitting this year, it seems like it should be only a matter of time before we get the ball rolling on our advent into the digital era. So what changes are we going to expect?

On the e-commerce front, Wong believed that overall trade would improve drastically, adding that the main advantages was that it would allow merchants and consumers alike to access fast and easy products and services globally.

“Buying and selling can occur 24 hours and 7 days a week. There is no time limit when it comes to e-commerce and it can happen anywhere in the world,” he added to BizHive Wekly.

“This means you can have greater customer bridges and not limited to geographical boundaries.

“The whole world becomes borderless and they are interconnected through ICT. And with that, there will be more variety of products and services offered – promoting healthier competition within industries which will result in higher quality of products and services.”

These benefits are to be expected and with our e-commerce industry projected to be worth over RM114 billion by 2020 with no interference from government initiatives, our economy is likely to receive a significant boost from it.

 

Changing job scopes

But beyond financial gain and e-commerce growth, what else can we expected to change?

Well, according to president of the Australian Computer Society Anthony Wong, there will also be plenty of positive societal impacts and changes to look out for also.

In an interview with BizHive Weekly, Anthony who was also an invited speaker to the recent International ICT Infrastructure and Digital Economy Conference Sarawak 2017, highlighted that embracing our digital economy will not only spur economic growth as it has in Australia but also change the requirements of our workforce.

Anthony, who is also Sarawakian, explained that as businesses adopt more digital tech, their employees will similarly need to learn to adapt and navigate in their new environment by picking up more ICT skills.

Currently, the MCMC is reporting that 43.2 per cent of our internet users require ICT usage skills at their place of work while 17.9 per cent require ICT technical skills.

Anthony expects these figures to boost drastically as we continue to embrace technology, with some of our jobs disappearing entirely to be replaced by computer and robots.

While a takeover by computer and robots might sound terrifying, Anthony explained that it would only be for the more repetitive jobs and most jobs on the market right now would most likely be safeguarded as long as it requires form of skill that robotics cannot replace.

“The problem with computers and robots is that they rely on data which is derived from the past. So the biggest challenge we have our hand right now is whether or not we can build intelligent machines to learn from past data and predict the future.

“And in a way, we already achieved this as some our tech innovations like IBM Watson  have already demonstrated learning capabilities.”

What this means for our market is that some jobs might be rendered redundant while some future jobs will have more of a focus on having ICT technical skills.

Anthony predicted that in terms of future ICT jobs, the two top ones would be within the Cyber security industry as data becomes more a more valuable commodity and data analytics to help us analyse the data and create new methods and solutions from it.

On the hand, other professions and industries are all expected impacted by digital advancement but Wong opines that they will not turn obsolete but rather just different in the sense that ICT technical skills and diversified skills will much more desirable.

For example, an engineer in the future will not be the same engineer that we know now because they will need to pick up programming skills in order to effectively utilise the new and improved programs for design.

Similarly, car mechanics will need to improve their skills sets in ICT as cars are getting more and more digital by the day which requires mechanics to build their skills further.

And besides ICT skills, findings from the Australian Digital Pulse 2017 report also note that our workforce of tomorrow are also expected to have creative, innovative, collaborative and analytical skills

“Yes, we might lose some repetitive jobs but in turn we will create higher skilled jobs as well which can help”

 

Are we ready for a digital economy?

With much to expect from our move into the digital realm, are we ready for it?

According to Anthony, it’s not matter of whether or not we accept the change but rather at what rate it will occur.

“Around the world, thing are moving to a digital stage. Everything from payments systems, transport systems, buying and selling, banking – everything is being digitalised now. And if you are not digitalised how to you expect to participate in this new world?

“You can try to resist from digitalisation but sooner or later even it is bound to occur and tagging along with are change and enrichment of our daily lives and work.”

 

CM’s Vision

To recap, ever since our sixth chief minister Datuk Amar Abang Johari Tun Openg took helm of our state affairs, there has been a shift in state government priorities as the push for digitalisation has intensified.

He first announced his intentions of spearheading a digital economy initiative with an promise of committing a fund of RM2 billion towards boosting internet connectivity through the state and estimated that it take a timeframe of four to five years to achieve.

“Such amount (RM2 billion) is required for us to, among other things, lay down the fibre optic cloud computing and satellite to cover the whole of Sarawak,” Abang Johari told a press conference after giving the chief minister’s key note address to state civil servant earlier this year.

Following the announcement, our chief minister further cemented his intentions to the public with the announcement of his new cabinet where he revealed two new ministries, MITeC led by Dato Sri Wong and the Ministry of Education, Science and Technological Research led by Dato Sri Michael Manyin.

As to why the keen focus on creating a digital economy for the state, Abang Johari declared that the reason for it was due to our overreliance on natural resources as economic consolidation of China has brought a fall in commodity prices.

“We, therefore, have no choice. If we want to get out of our dependence on natural resources, we need to get into the digital world which has been growing by leaps and bounds – creating millionaires by the day.

“The Sarawak government shall spearhead this digital development but we will leave it to the private sector and young entrepreneurs to do whatever they can do best to make living and a name for themselves. We shall also not forget the rural villages, which we want connected in order for us to bring them tele-medicine, e-learning and e-commerce.

“This is my vision and indeed the vision of Barisan Nasional for Sarawak. God willing, it will come true,” he said during his first winding-up speech as Chief Minister during the State Legislative Assembly (DUN) held in May.

In addition, Abang Johari has also announced that the State government would also be releasing a nine-point action plan to turn the state into a cyber-power house and that its first step would be to set up the Development Bank of Sarawak (DBOS) to provide capital and finance to bring about this vision of a developed digital economy.

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