China-ASEAN Digital Economy Cooperation: Malaysia’s Win-Win Story

The year 2020 is a year that will be remembered as the most surreal year in modern history, due to the unprecedented Covid-19 global pandemic. While the coronavirus crisis is wreaking socio-economic havoc around the world, it has its silver linings. Governments and businesses are putting digitalization at the forefront of their efforts to survive Covid-19, creating opportunities for more international collaborations.

Accelerated Digitalization

The Association of South East Asian Nations (ASEAN), has long been touted as the new frontier of the Internet economy. Already the world’s third largest population and fifth largest economy, ASEAN is a key market for investors looking for growth and expansion to remain resilient.

According to a recent study by Facebook and Bain & Company, 70% of consumers in ASEAN will go digital, five years ahead of previous forecast, with higher spending power and increased preference for contactless transactions amidst physical distancing efforts as key drivers. Malaysia leads the region, where 83% of its population are already digital consumers, the highest in ASEAN.

Malaysia has emerged to be a more attractive location for business continuity, amidst lockdown pressures necessitated to dampen the spread of Covid-19. For many companies that made Malaysia their regional/global business services hub, the transition from business-as-usual to remote working arrangement that happened almost overnight, was a smooth experience, enabling them to continue operations with minimal disruptions. This is largely due to the country’s reliable and affordable digital connectivity and infrastructure, as well as the agility and digital-savviness of its talent with a prevalent culture of working from home.

The Malaysian government also has ramped up efforts to drive digital adoption among businesses, especially micro, small and medium enterprises (MSMEs), and its citizens, through various economic stimulus and recovery plan. Malaysia Digital Economy Corporation (MDEC), tasked to lead Malaysia’s digital economy forward, is playing a critical role to accelerate the growth of the nation’s digital economy post-Covid19.

For example, 100 Go Digital is an initiative to rally brick-and-mortar enterprises to move towards digitalization by providing in-depth assistance for them to start their digital journey. The Smart Automation Grant is a matching grant under the PENJANA short-term economic recovery plan for services companies to kickstart automation of their business processes. ePENJANA is an initiative to enhance consumer spending and drive e-wallet adoption, impacting 15 million Malaysians.

Enhancing Digital Talent

The accelerated digitalization and the stability as a location for business services has created more digital jobs in Malaysia, outpacing the growth pre-Covid19 times. The demand for digital talent has spurred MDEC to launch the #myDigitalWorkforce movement, an initiative to marshal local talent to upskill/reskill themselves with digital skillsets and grab digital job opportunities, in collaboration with the private sector and academia.

The Global Online Workforce (GLOW) is a national program to train and provide free training for Malaysians affected by Covid-19 to compete for global freelancing opportunities and earn high income through digital work platforms.  

Malaysia’s young, multilingual, multicultural, agile, and digitally-savvy talent pool makes the country stand out as a location of choice for foreign direct investments.

Malaysia on the Digital Silk Road

Malaysia, strategically located at the centre of ASEAN alongside the Maritime Silk Road, has always been a major trading gateway between the West and the East since antiquity. Today, Malaysia continues to play a vital role in the Digital Silk Road, well-poised to be the heart of Digital ASEAN. Collectively, ASEAN’s digital economy is expected to increase from 1.3% of GDP in 2015 to 8.5% by 2025.

A rising number of Chinese tech giants and digital enterprises are leveraging the ASEAN opportunities for win-win cooperation. Market leaders such as Alibaba, China Mobile, ChinData and Beyondsoft, are expanding into this region, making Malaysia their technology and digital services operations hub.

Malaysia is also home to a thriving pool of fast-growing tech companies with regional and global footprint, spanning sectors such as cloud, big data, artificial intelligence, internet of things, e-commerce, cybersecurity and drone technology, making them invaluable partners for Chinese investors who are looking for opportunities outside of China.

For example, Aemulus Corporation, a leading provider of R&D and design services for the Automotive Test Equipment (ATE) industry, has setup a joint venture with China’s Tangren Microtelligence. Last year, Feitian Technologies acquired a stake in digital security solutions provider, SecureMetric, to form strategic partnership for the ASEAN market. Tencent has selected homegrown technology group, Green Packet, to be its local partner for the AI-enabled cloud computing solutions. Just recently, Huawei and Serba Dinamik, Malaysia’s international engineering services provider, have teamed up to bring 5G, Cloud and AI solutions to develop digital industry and smart campuses in Malaysia.

The growing wave of collaboration between Chinese and Malaysian digital enterprises is a prime testament to Malaysia’s strength in Digital Economy ecosystem, which prioritises greater growth, innovation, and shared prosperity.

Malaysia: Your Digital Home

The year 2020 is also the year of China-ASEAN Digital Economy Cooperation. ASEAN became China’s largest trading partner in the first quarter of 2020, overtaking the European Union.

The commitment of member countries to sign the Regional Comprehensive Economic Partnership (RCEP), a free trade agreement between ASEAN and China, Japan, South Korea, Australia and New Zealand, expected to be the world’s largest FTA, will further cement the region’s attractiveness for foreign investors keen to enter the ASEAN market.

As the specialist Investment Promotion Agency for Malaysia’s digital economy, MDEC is well-versed in facilitating and easing the entry of companies into Malaysia, supporting growth and expansion at all stages and as a springboard into ASEAN. Please reach out to MDEC (  and learn how to get started on this process.

MDEC welcomes you to make Malaysia your digital home.

The author is the Vice President of Investment Development at Malaysia Digital Economy Corporation. He oversees the investment attraction to client development and supporting Malaysian digital services companies to go global.

The Digital Silk Road Series: How Chinese Companies are Leveraging on ASEAN Opportunities

Pt 2: Malaysia: Leading the Regional’s Digital Economy

*In case you missed Part 1, you can read it HERE.

Continuing from the first in this two-part series, it’s time to learn and understand why Malaysia is a sought-after location for tech and digital investments.

Right now, it’s well-known that Malaysia is rapidly being recognised as an ASEAN testbed, a highly digital society fueled by many races and nationalities, with a well-developed and varied infrastructure.

New avenues of industry areas are being developed under Malaysia’s Digital Economy plan – focusing on Big Data Analytics (BDA), eCommerce, and the Internet of Things (IoT). It is this combination that will deliver the most impactful benefits to the new economy. Driven by consultative collaboration with industry, Malaysia is working towards a conducive framework to spur healthy, open AI innovation.

Providing a digital hard and soft infrastructure, comprising high speed internet, world class physical infrastructure, business friendly policies, innovative talent ecosystems remain priorities for Malaysia, as evidenced by the Malaysian Cabinet’s approval of the National Fiberisation and Connectivity Plan (NFCP) recently.

With the growth on different fronts of our digital economy ecosystem, you can see how strongly Malaysia is transitioning along the road of transformation. The marriage of IoT, Big Data Analytics is feeding Artificial Intelligence, which many see as the defining force of the 4th Industrial Revolution (also known as IR 4.0.).

These are stepping-stones to even greater things. As a trading nation, Malaysia is now moving up the value chain and trading in ideas, innovation and new technologies in a spirit of collaboration.

The Digital Silk Road is bringing new waves of tech opportunities to ASEAN – expansion of Chinese tech companies into this region, particularly in e-Commerce, smart cities and Industry 4.0, automation and AI.

Growing Wave of Investment

I see the increasing tide of collaboration between Chinese and Malaysian enterprises as the latest testament to the growing strength of Malaysia’s Digital Economy ecosystem, which prioritises greater growth, innovation and shared prosperity.

Let me share just a few more recent examples:

  • China’s Alibaba set up its first overseas electronic World Trade Platform (eWTP) hub in Malaysia linked to the Digital Free Trade Zone (DFTZ) initiative to accelerate eCommerce opportunities and growth
  • Closely linked to above is Malaysia Week – a successful collaboration between China and Malaysia to drive eCommerce opportunities for SMEs – will return for a second time following last year’s successful inaugural edition
  • Malaysia’s first AI park resulted from a collaboration between Malaysia’s G3 Global, China Harbour Engineering Company and China-based Sense Time Group, and is touted to be the most valuable AI startup, to set up Malaysia’s first AI park, which is expected to see more than USD1 billion in investments over the next 5 years
  • Malaysia is the first country outside China selected by Tencent to launch its digital payment/ewallet solution – WeChat Pay
  • Huawei Technologies has a regional presence from its Malaysia headquarters and continues to work closely with Malaysia to grow the country’s digital ecosystem
  • Beyondsoft officially launching its first office in Malaysia to help local talent and businesses build a healthy ecosystem, which includes a KL innovation hub for retail solutions
  • Just recently, an agreement was signed with National Development Reform Commission – International Cooperation Centre (NDRC- ICC) – enabling us to work closely to facilitate China’s digital tech companies entry into Malaysia

The Next Step

Let me return to discussing the ASEAN opportunity. The region’s combination of strong and vibrant economy, youthful demographics, rapid urbanization and ongoing economic integration makes it a very attractive market for business expansion. And let’s not forget the other factors: the region’s combined GDP of USD$2.5 trillion; 628 million people (~10% of world population), with about 40% of citizens under 30 and are digital natives; and a literacy rate 94%

Malaysia is strategically located in the heart of ASEAN, with a population of 31 million, 68% internet users, 65% smartphone users; 82% broadband penetration, 31% of internet users use mobile to purchase. From Greater KL, major cities in the region can be reached within 8 hours by flights.

In addition to Malaysia being the best springboard to ASEAN, I believe other factors such as being a hub for Asian languages, a rich culturally diverse workforce, which is buoyed by highly skilled and growing talent pipeline, strengthened by business-friendly government policies.

Malaysia Digital Economy Corporation (MDEC) is a government agency entrusted to lead Malaysia’s digital economy and drive shared prosperity for all. As a one stop centre, we at MDEC are well versed in facilitating and easing the entry of companies into Malaysia. These programmes include our Digital Hubs strategy, talent development pipeline, and the Malaysia Tech Entrepreneur Programme, which are focused on helping companies make the right decisions, ensure high speed growth, connecting companies with the local business ecosystem and to provide fast insights into the market landscape.

Furthermore, MDEC is also an investment promotion specialist for the digital economy and is able to help investors connect the dots in the ecosystem.

These ingredients will help to encourage knowledge sharing, which is vital to successfully fuel rapid growth for our mutual prosperity. Recently, the Maritime Silk Road Legend Concert celebrated the 45th anniversary of diplomatic relations between Malaysia and the People’s Republic of China. Indeed, Malaysia was the first country in the region to establish diplomatic ties with China when the second Prime Minister, Tun Abdul Razak Hussein, visited the Republic in 1974.

Today, the Digital Silk Road is connecting every country and all people: and Malaysia’s role, both hub and gateway to Asean, has become even more significant. New horizons are opening up for companies from China, and indeed for all of us!

The Digital Silk Road Series: How Chinese Companies are Leveraging on ASEAN Opportunities

Pt 1: The Next Century Silk Road

Asia’s history includes the colourful story of the Silk Road, which was made up of a crisscrossing in trade and communications routes, covering lands and seas. What I find specially fascinating about this story – where the East is linked to the West – is how Malaysia played the part of a strategic node through the centuries.

When Jack Ma visited Malaysia during the initial announcement of the Digital Free Trade Zone (DFTZ) in 2017, he said: “China is famous for the Silk Road – but without Malaysia, the Silk Road would not have been that successful. The Silk Road, at that time, forced businesses to make products – like tea leaves. These items were so expensive back then and very difficult to preserve. Malaysia provided the solution: tin. By mining tin in Malaysia, it allowed tea to be stored safely and ensure the that it can be sold on the Silk Road. This was what made the Silk Road so powerful.”

Today, a new chapter has opened in the story of the Silk Road. The 21st Century Maritime Silk Road sees ASEAN as a key starting point under China’s ‘Belt & Road Initiative  (BRI)’. By various estimates, this is one of the largest infrastructure and investment mega-projects in history. In relative terms, it covers more than 68 countries, an equivalent tally that represents 65% of the world’s population and 40% of the global GDP as of 2017.

The opportunities are staggering. According to AT Kearney, if the Southeast Asia region was a single country, it would rank #3 in population and #7 in GDP globally. The grouping of these nations, Association of Southeast Asian Nations (ASEAN) as it is called, has the potential to enter the Top 5 digital economies in the world by 2025.

With its strong digital economy growth and digital innovation ecosystem, Malaysia is powerfully poised to collaborate with Chinese tech companies in building a digital silk road that offers both a win-win cooperation. This was echoed in 2017 by President Xi: “We should pursue innovation-driven development and intensify cooperation in frontier areas, such as the digital economy, artificial intelligence, nanotechnology, and quantum computing. The world must also look at advancing the development of Big Data, Cloud Computing, and creating smart cities. These will all pave the way to establish the Digital Silk Road of the 21st century.”

Malaysia is an important strategic country along the 21st Century Maritime Silk Road. Situated in the centre of Southeast Asia and positioned along the Straits of Malacca, one of the busiest trade routes in the world, gives Malaysia an incomparable advantage in the forging of the 21st Century Digital Silk Road.

Malaysia’s Digital Landscape

In addition to being widely recognised as the ideal gateway to ASEAN, Malaysia is rapidly becoming a destination in itself for business opportunities and growth potential. The BRI has again highlighted Malaysia’s forte as a premier digital destination.

China has historically positioned Malaysia as a gateway to ASEAN, India, and the Middle East.  While the traditional maritime silk road also embraced India and the Middle East routes, Malaysia also enjoys a highly respected position. Besides being recognized as a moderate Muslim country, it also has a multicultural and multilingual heritage that ties back to centuries past. Digital talent in Malaysia is also highly sought after by India and the Middle East.

Where Malaysia used to be a base for shared services, multinationals are now using Malaysia as a hub for catalysing the development of new digital technology and services. As is, venture capitalists have eyed Malaysia both as  the de facto gateway to ASEAN and a fast accelerating digital growth hub.

I see these advances as additional testimonies to Malaysia’s economic transformation. In fact, these are all apparent in how the country is building the new economy. We have put many investments and incentives in place to make sure that Malaysia wins a good slice of the new global marketplace.

Our digital economy contributed 18.3% to the nation’s GDP in 2017, and this figure is expected to reach 21% by 2022, according to analyst firm IDC. Since China’s digital economy contribution reached 34.8% in 2018, this signals much more capacity for digital industry growth in Malaysia!

In these days of digital transformation and rapid disruption, it is more vital than ever to encourage collaboration between countries, companies, and its citizens. It’s a global community now, after all. Since the tabling of Budget 2020, new initiatives are now added onto the ongoing digital transformation agenda. This includes a National Regulatory Sandbox, which is a safe testbed for pilot solutions across different industry vectors. For the moment, this applies to anything related to dronetech, smart cities, and autonomous vehicles.

If anything, with all its new policies in place, Malaysia is rapidly being recognised as an ASEAN testbed and a digital society fuelled by many races and nationalities. These, along with a well-developed and varied infrastructure and solutions, are key to the acceleration and expansion of the digital economy.

(In the next part, this article series will explore what Malaysia had done to carve its place in developing the digital economy for the region)

National Budget 2020: 12 Reasons Why Malaysia is the Preferred Digital Investment Location

October 2019 has proved to be a most exhilarating month for us in MDEC!

Firstly, the National Budget 2020 was tabled at the Parliament on Oct 11th, and secondly, the landmark 30th MSC Implementation Council Meeting (ICM) was held and chaired again for the first time in 16 years by the PM of Malaysia, Tun Mahathir Mohamad on Oct 16th.

Both momentous occasions delivered a key message from the government: Digital Economy is firmly at the forefront of the nation’s Shared Prosperity Vision 2030 (SPV2030), which is a new development blueprint to turbocharge Malaysia’s economic development.

Attendees of the 30th MSC Implementation Council Meeting (ICM)

Making Malaysia the preferred destination for investment

I wish to highlight twelve key initiatives announced in the Budget 2020 that are vital in making Malaysia the preferred investment destination for digital technology and services.

Let’s start with the incentives to attract investment:

  1. The establishment of National Committee on Investment (NCI), jointly chaired by Ministry of Finance (MoF) and Ministry of International Trade and Industry (MITI), to expedite the process in approving foreign and domestic direct investments
  2. To attract Fortune 500 companies and global unicorns, up to RM 1 billion (USD250 million) will be made available in customized packaged investment incentives annually over 5 years
  3. Tax incentives to further promote high value-added activities in Electric & Electronics sector to transition into 5G digital economy and Industry 4.0

Going Seriously Digital in Infrastructure and Applications

With the National Fiberisation and Connectivity Plan (NFCP) as the foundation, the government has also announced major steps to propel Malaysia into the world of 5G, paving the way to higher digital adoption and fueling a robust domestic demand for digitalisation:

  • Matching grant mechanism to provide comprehensive coverage of high speed and quality digital connectivity nationwide, adopting public-private partnership approach, involving total investment of RM21.6 billion (USD5.4 billion).
  • 5G Ecosystem Development Grant amounting to RM50 million (USD12.5 million) to seed technological developments by Malaysian companies to ride the global 5G wave.
  • A contestable matching grant fund totaling RM25 million (USD6.25 million) to spur more pilot projects on digital applications such as drone delivery, autonomous vehicles, blockchain technology, other products and services that leverage on Malaysia’s investments in fiber optics and 5G infrastructure.
  • Smart Automation matching grants worth RM550 million (USD 137.5 million) for manufacturing and services companies to automate business processes.
  • 14 Digital Enhancement Centers to be built to facilitate access to financing and capacity building for businesses, specifically for SMEs, in line with Industry Revolution 4.0 (IR4.0); with RM70 million (USD17.5 million) earmarked for MDEC for this purpose.

Building Digital Malaysians

Economist Alfred Marshall, once said, “the most valuable of all capital is that invested in human beings.” Echoing this sentiment, the government is steadfast in investing to build digital Malaysians:

  • The introduction of Digital Social Responsibility concept as an initiative to contribute to digital economic development while improving digital skills of future workforce with initiatives such as technology scholarships, training & upskilling for digital skills for communities in need that are tax deductible.
  • An allocation of RM450 million (USD112.5 million) to implement a onetime RM30 digital stimulus to qualified Malaysians to increase the number of Malaysians, merchants, and SMEs to use e-wallets.
  • RM11 million allocated to inculcate Science, Technology & Innovation culture and encouraging more students in Science, Technology, Engineering and Mathematics (STEM).
  • RM20 million (USD 5 million) is also apportioned to match with RM20 million from Human Resource Development Fund (HRDF) towards encouraging working adults to undertake professional certification exams in fields relating to IR4.0.

(MYR 1 = USD 0.25)

Creating a Digital Utopia

To complement the National Budget 2020, two major initiatives were announced at the 30th MSC ICM to further boost Malaysia’s digital economy:

  • A Global Testbed initiative to attract next-gen emerging technologies to innovate in Malaysia, specifically in the fintech, blockchain, and drone sectors by attracting global digital talents and interest from investors.

DroneTech has been identified to be the Global Testbed pilot. To support this initiative, the government will be easing the work visa process for key talent in emerging technologies via a green lane facility, as well as other forms of visas such as the Digital Freelancer Pass.

  • A new Digital Talent Development Strategy Framework, designed to mobilise and coordinate the end-to-end nurturing of Malaysia’s tech talent both locally and on the international stage, is also proposed to address the growing demand for a digital-savvy workforce.

All the above signifies that Malaysia is investing heavily in building and enhancing the digital innovation ecosystem and adoption, a proof that we’re going seriously digital. It is small wonder that Malaysia’s digital economy’s growth has been outpacing the overall national economy’s growth in recent years, inarguably making us well poised towards the digital-first economy.

As a matter of fact, IMD favorably ranked Malaysia as number 2 in South East Asia in terms of future readiness in its World Digital Competitiveness Ranking 2019. Similarly, AT Kearney introduced digital resonance in its Global Services Location Index 2019 report, and Malaysia scored second highest among ASEAN economies in this new category.

Exciting Times Ahead

Opportunities abound as we speed towards the year 2020 and beyond.  

As the lead agency tasked in driving Malaysia’s digital economy forward, the excitement levels within MDEC are rising rapidly! And as the head of MDEC’s Investment team, entrusted to attract direct investments to Malaysia’s digital economy, I speak for all of us in the team that we are absolutely thrilled to work hand in hand with all industry stakeholders in ensuring the national digital economy agenda a continuous success.

We invite you, Mr. and Mdm. Investors, to come to Malaysia, capitalise the opportunities that we offer, and grow your digital business and operations from here, the heart of Digital ASEAN.


Hew Wee Choong is the Vice President for Investment & Industry Development, at Malaysia Digital Economy Corporation (MDEC)

How Malaysia Helps To Future Proof Your Business Services Operations

The digitalization of Global Business Services (GBS) was the main highlight recently when my team and I had the privilege of co-hosting more than 40 GBS business services companies, together with Outsourcing Malaysia (OM), a chapter of PIKOM, the country’s national ICT industry association, at the GBS Focus Group forum held in Kuala Lumpur. 

GBS is an abbreviation for shared services and outsourcing enabled operating model, is an important focus for Malaysia, especially as one of our key initiatives is to strengthen our country’s position as an ideal location of choice for digital services.

To help drive positioning, MDEC in 2011 initiated The GBS Focus Group initiative, which is a platform ‘for the industry by the industry.’

Caption: The GBS Focus Group consists of relevant stakeholders to the GBS industry in Malaysia, i.e. captive shared services, government agencies, industry association, professional bodies and academia.

The forum’s topic – the Digitalisation of GBS – is very close to my heart. In fact, I am heartened by SSON’s 2019 State of the Shared Services Market Report on Malaysia, which mentions that about half of the GBS centres in Malaysia are leveraging on Centres of Excellence (COEs), and shifting away from being just about transactional excellence and improvement.

Now, GBS is fast becoming a value adding partner to the business by offering insights based on thorough understanding of services delivered, optimized by digital technology such as automation and data analytics.

Ascending the value chain

Take Jabil, a US-based global manufacturing services as an example. They first set up their Global IT Services in 2009 in Penang, and 10 years later, they have expanded into a global business centre, spearheading digital transformation within the group with an impressive setup of COEs for Robotics Process Automation, API Management, B2B Services and Cloud Management.

The Penang GBS operation has ascended the value chain by moving from transactional to more strategic consulting and advisory roles that include global finance, centralised procurement and risk governance.

Capitalising on Malaysia’s quality talent (95% of their 950+ employees are Malaysian), they have ventured into data analytics and Factory of the Future initiatives, as well as investing in emerging technologies such as hybrid cloud computing, internet of things, edge computing, next-generation network, predictive analytics and artificial intelligence.

Caption: The GBS Focus Group is chaired by a GBS practitioner, supported by OM as the group secretariat. Immediate past chairman: DHL IT Services. Current chairman: Jabil Global Business Center.

Malaysia’s digital ecosystem: futureproofing business

The Jabil story is strong testament of Malaysia’s capabilities to move up the value chain in digital services.

To ensure that companies such as these continue to augment and accelerate their growth in Malaysia, MDEC is constantly strive to provide the industry with strategic and innovative initiatives, from talent to infrastructure to legal framework, to ensure that the country has a strong and robust ecosystem to meet the growing demand from investors such as Jabil.

Through our digital innovation ecosystem initiatives, we have setup ASEAN Data Analytics eXchange (ADAX), Asia Cybersecurity eXchange (AsiaCyberX) and Orbit, to further spur the growth of data analytics, cybersecurity and fintech respectively, in Malaysia.

 These initiatives focus on building and facilitating skilled digital workforce, as well as creating innovative solutions, increasing technology adoption and building a thriving tech startup ecosystem. We also play an advocacy role in ensuring that Malaysia has supportive government policies, such as national frameworks on big data analytics, artificial intelligence, internet of things, and eCommerce, to move the nation forward towards becoming a leading regional and global player in these areas.

Digitalisation of GBS: Move Up or Move Out

Among the topics discussed during the GBS Focus Group event that I mentioned earlier was on “GBS Moving Forward: Move Up or Move Out”.

The audience expounded the sentiment that as the world rushes headlong into the digitalized era, digitalisation and the holistic support structure that Malaysia offers is the key to futureproofing their operations here.

Digital services is a key sector in driving Malaysia’s digital economy agenda. As the country deepens our niche in digital economy, Malaysia is the right location with the right ecosystem to catalyse a business’ digital transformation.

No matter where you are in your digitalisation journey, it is our focus to encourage more GBS companies to drive transformational excellence and value for your business operations by embracing disruptive technologies such as big data analytics, automation, artificial intelligence and blockchain.

As the Head of the Investment team in MDEC, I welcome you to come talk to me and my team members to learn more about how you can leverage on Malaysia to futureproof your digital services operations.

Hew Wee Choong is the Vice President for Investment & Industry Development, at Malaysia Digital Economy Corporation (MDEC)

The Perfect ‘Storm’: Malaysia as World’s Most Ideal Location for Digital Services

It seems only a moment ago that we were all counting down the seconds to welcome in 2019, closely followed of course by Chinese New Year!

The close of 2018 saw the unveiling of Malaysia’s Industry 4WRD Policy – which has been designed to speed Malaysia into the digital age with an especial focus on our manufacturing sector.

It’s an open secret that our manufacturing sector remains a key economic pillar of Malaysia contributing more than 22 percent of GDP [Gross Domestic Product]. At MDEC, we see this policy as a prelude to even more exciting milestones that lie ahead for Malaysia’s Digital Economy in 2019. 

Investor Confidence

Investor interest in Malaysia’s Digital Economy continues to grow in the areas of Artificial Intelligence (AI), Big Data Analytics (BDA), Internet of Things (IoT) and cybersecurity.

We are seeing a surge of new accelerators and venture builders from abroad, which symbolises a healthy thumbs up for our nation’s startup ecosystem. This surge includes Lumenlabs (Insurtech) and Future Labs (AI and BDA). In fact, in the area of AI alone, Malaysia already is home to a healthy number of 70 startups – and growing rapidly.

As part of Malaysia’s digital transformation strategy, verticals such as healthcare, education and agriculture will be prioritised in order to speed up our rate of digital transformation. In the light of this, the Investment team will be on the lookout for innovative technology companies from abroad to spawn new opportunities in these sectors.

Healthy Confluence

As Head of the Investment team at MDEC, I see a recipe coming to the boil featuring a healthy confluence of vital ingredients: talent, capital and markets right here in Malaysia. In my ongoing engagement with many captains of industry – spanning the banking, oil and gas, consulting, technology and pharmaceuticals sectors, a common thread is emerging. And this is the tremendous power and potential of data. To use what is fast becoming a cliché, data truly is the oil of our rapidly dawning future economy.

As a result of Malaysia’s long-standing recognition as one of the world’s best locations for Digital Services, we are now poised to attract the capital, the markets and capabilities of large multinationals with nimble and innovative startups to generate the perfect “storm.” 

Key Digital Investment Hub

Despite the fragile global economy – with some MNCs revising their business models – Malaysia continues to be an attractive location for expansion of digital services. 

Indeed, another recent exciting instance of Malaysia’s attractiveness is the forthcoming expansion of the Shell Business Service Center, which has been operating in Cyberjaya for almost 20 years. 

By leveraging on Malaysia’s increasingly agile and versatile talent base, Shell has made another strategic move by bringing additional value adding activities to its Malaysia centre. With the transformation of the centre into a high performing competitive business operations hub, Malaysia is now the global hub for the Shell Group.

Powered by big data analytics, Shell’s Cyberjaya hub offers a wide portfolio of services, which goes beyond IT, finance, contracting & procurement functions, and now includes new, unique digital services such as legal, Retail Center of Excellence, Creative Solutions, and regional Human Resource Advisory Operations. Moving ahead, Shell will be providing more services from its Malaysia hub.

This translates into the creation of even more higher value jobs in Malaysia, which is in line with Malaysia’s aspiration to become a key regional digital investment hub.

More to come

As a teaser of things to come, MDEC is currently working on a national A.I. strategy that will provide a powerful platform to fuel this “storm.” 

On a related note, Malaysia’s continuous efforts in improving the ease of doing business is reflected in our international rankings considerably – we jumped 9 spots in World Bank’s 2019 Doing Business Report

On top of this, Malaysia’s global talent ranking according to IMD jumped 6 spots in 2018, even ahead of UK, France and Japan.

In closing, I am pleased to share that Malaysia will be playing host once again to the World Congress of Information Technology (WCIT) in 2020. Malaysia first graced the global stage at WCIT 2008 in Kuala Lumpur with luminaries such as Craig Venter, who led the world’s first draft of the human genome, and Bill Gates (who appeared as a holograph).  

Stay tuned for more updates: We are all looking forward to an exciting 2019 – so let me close by wishing everybody a great year ahead! 

Hew Wee Chong is the Vice President for Investment & Industry Development, at Malaysia Digital Economy Corporation (MDEC)

Malaysia: Gateway to the Fastest Growing Region in the World

As the ASEAN region continues to boom, investment opportunities in the region have become even more alluring.

However, the cultural complexities of the countries within ASEAN add to the challenges of forming a sound investment strategy. Understanding the big picture includes taking into consideration various factors such as the economics of a country’s Gross National Income (GNI), social landscape, state of digital adoption and talent resources.

So, what would be one of the most attractive investment destinations in the ASEAN region today? Which country would best leverage your investment and deliver significant growth for you?

Not only one of the most visited tourist locations in the world, Malaysia also boasts an economic ecosystem offering a rich ground for investment considerations. Located at the heart of ASEAN, the country is an ideal and cost-effective gateway to access the region’s population base of 640 million with a collective Gross Domestic Product (GDP) of US$2.5 trillion. With strong economic fundamentals, the World Bank anticipates Malaysia to become a high-income nation as early as the year 2020.

One of the fastest growing sectors in Malaysia is its digital economy, which consistently continues to be on upward trajectory and accelerates the country’s economic development.

Digital Economy: A Catalyst for Dynamic Growth

Malaysia’s digital economy development is impressive. In 2016, the digital economy contributed 18.2% (RM224 billion, or at current exchange rate, US$54 billion) to Malaysia’s economy, as indicated by Department of Statistics Malaysia. The contribution to the country’s total GDP comes from the digital industry (RM149.4 billion /US$36 billion) and the eCommerce industry (RM74.6 billion/US$18 billion). The digital industry continues to focus on exports (RM216.9 billion/US$52.23 billion); and employs more than 1.07 million people.

This growth seen by Malaysia is a result of its forward-looking vision on driving itself into becoming a highly productive economy through digital transformation. Various government agencies and ministries work in collaboration with the industry to drive digital transformation. Under the Ministry of Communications & Multimedia, Malaysia Digital Economy Corporation (MDEC) is the lead agency responsible for helping to chart a path for the holistic development of the nation’s digital economy. MDEC’s implementation efforts are centred on four strategic pillars – driving investments, building local tech champions to regional and global markets, catalysing digital innovation ecosystems to nurture start-ups and propagating digital inclusivity among its citizens.

Wooing Foreign Direct Investment

Malaysia has been at the forefront of foreign direct investment and these investments came from various parts of the world such as US, UK, Netherlands, Singapore, Germany, China, India, Australia, and Japan. Global corporations and hyper growth technology companies have been attracted to the conduciveness of setting up businesses in Malaysia. These companies have invested, and continue to invest, in technology and platform, digital and global business services as well as digital content development, to expand these services regionally and globally from Malaysia as their hub.

Malaysia’s position as a favoured country for digital investment has been recognized by its consistent 3rd ranking (behind world giants India and China) in AT Kearney’s Global Services Location Index since the ranking’s inception in 2004.

To ensure that Malaysia continues to attract foreign direct investment, various digital initiatives that fuel investment opportunities have been developed and implemented, including a number of high impact national programmes.  For example, to keep abreast of the Fourth Industrial Revolution, new frameworks are being developed under Malaysia’s Digital Economy plan focusing on Big Data Analytics, eCommerce and Internet of Things (IoT), offering massive growth potential.

In 2018, Malaysia started to promote the adoption and application of Artificial Intelligence (AI) technologies. With the objectives of maximising social and economic benefits, Malaysia is accelerating AI development across three key areas: Talent; Industry Development; and High Impact Use Cases in the areas of smart cities and smart manufacturing, resting on a foundation of progressive regulatory framework.

Another example is the Digital Free Trade Zone (DFTZ) – the world’s first outside of China that aims to capitalise on the exponential growth of the internet economy and cross-border eCommerce. Established to streamline and augment Malaysia’s constantly growing eCommerce space, this platform will also boost cross-border trade and position Malaysia as a transhipment hub for eCommerce logistics.

A thriving digital ecosystem

Malaysia is constantly looking at initiatives to transform its human capital infrastructure to be ready for the Fourth Industrial Revolution. Coupled with its proficiency in languages including English and other Asian languages such as Japanese, Korean, Mandarin, Bahasa, Hindi, Arabic and others, as well as the investment in the hard infrastructure of roads, railways, ports and high-speed internet connectivity, this has undoubtedly been the major attraction for enterprises to expand their operations in Malaysia.

With its diverse multilingual and multicultural population, Malaysia offers a conducive business environment through its unique cultural diversity, making integration of local talent to be part of the global workforce a seamless experience to many global multinationals and unicorns.

The government of Malaysia also places a major emphasis on talent development for the future of work, focusing from primary to tertiary education. MDEC is supporting the Ministry of Education’s efforts to integrate computational thinking including coding and other digital making activities into the national school syllabus. Another core initiative is a joint public-private-academia collaboration to strengthen tertiary-level digital technology curricula and teaching.

These efforts have already seen results and international recognition. Malaysia is 2nd in ASEAN in the Digital Evolution Index 2017; 5th in Asia in the Huawei Global Connectivity Index 2018; 6th in Asia for the Networked Readiness Index 2016 and the Asian Digital Transformation Index 2018; 7th in Asia in the ICT Development Index 2017; and 8th in Asia for the Cloud Readiness Index 2018. Its tech savvy population was also recognised by a 2016 Thomson Reuters Foundation poll, which ranked Malaysia the 9th best place to be a social entrepreneur in the world.

As of now, thousands of companies from 60 nations have already cast their anchors in Malaysia. Do not miss out on your opportunity to expand from Malaysia to Asia and the world!

Hew Wee Choong is the Vice President for Investment and Industry Development in MDEC.

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