digital malaysia report 2013
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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 theeconomy 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 rst half of the following year to
ensure all the events, information and data relevant to the year under review can be claried and
veried before production.
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SECTION 1: FOREWORD Prime Minister of Malaysia 06 Minister of Communication &
Multimedia 08
CEO, Multimedia DevelopmentCorporation (MDeC) 10
Vice President,Corporate Strategy Division,MDeC 12
SECTION 3: OVERVIEWChapter 1:National Initiative for Digital
Transformation 30Chapter 2:Roadmap for the Way Forward 42
SECTION 4:REVIEWChapter 3:Key Highlights 46
Chapter 4:Nurturing an Enabling Environment 54
Chapter 5:Generating Growth in Sub-sectors 65
Chapter 6:Creating Opportunities andChannelling Benets to Communities 75
SECTION 5: VIEW AHEADChapter 7:Looking Ahead 112
SECTION 6:
APPENDICES 120
SECTION 2:EXECUTIVE SUMMARY 16
Table of Contents
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#FOREWORDBy The Prime Minister of Malaysia
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 touchingdistance 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 gures 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 afrmationof 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 nationalvision and aspirations by 2020.
(DATO SRI MOHD NAJIB ABDUL RAZAK)
Malaysia is another step closer to 2020, the year when we envisage ourcountry as a fully-developed nation with a robust and sustainable economyand a knowledgeable and skillful society. As we take stock of the progress
made on this journey, we can reect that 2013 was a momentous year withmany milestones achieved and challenges faced.
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#FOREWORDBy The Minister of Communication &Multimedia
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 rst nations
in the developing world to recognise the need to putin place a comprehensive framework to coalesce and
coordinate ideas and intentions so as to optimise our
migration towards a developed digital economy and
society.
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.
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 ourish
and benet the nation at every level. Over the past
two years, this initiative has taken shape and form. Itis 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.
(DATO SERI AHMAD SHABERY CHEEK)
The onset of digital technology over the past 20 years has changed the globallandscape in which nations and economies compete against one another. Onecould argue that the eld is levelling out like never before as traditional factors
like capital, labour and land have given way to knowledge, innovation andentrepreneurship.
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#FOREWORDBy The CEO, Multimedia DevelopmentCorporation
Although 2012 marked the ofcial launch of Digital
Malaysia, it was in 2013 that results could be qualied
and quantied 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 practicalityand 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 signicant 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
inuence to eventually encompass the entire economy
and society.
(DATUK BADLISHAM GHAZALI)
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 beneciaries. At the same time, Digital Malaysia continues to
evolve as a comprehensive blueprint to accelerate Malaysias digital transformationencompassing all aspects of the nation, its economy and its people.
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#FOREWORDBy The Vice President, Corporate StrategyDivision, MDeC
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 benets 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.
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)
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 shiftingopportunities created by an increasingly digital world and economy.
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SECTION 02
EXECUTIVE SUMMARY
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# 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 theprimacy of developing an innovative digital economyfor economic sustainability and societal integration.
Indeed, a digital economy with its transformativecapabilities and capacities is considered a criticalstrategy to capitalise on the wealth of globalopportunities now emerging from the pervasive use ofdigital technologies in every aspect of work and life.
For this reason, many other countries and economiesare now jumping on the bandwagon to embark on theirown digital economy frameworks, even as the worldcontinues to evolve and revolve around game-changingdigital innovations that are redening so many of theparameters we have grown accustomed to.
As it stands, we are well-placed to race ahead, withDigital Malaysia as the spearhead towards a developeddigital 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. Adigital revolution can form the foundation of a sustainable
global economy.
Source: 2009 World Economic Forum Annual Meeting Report
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BASELINE STANDINGS TO ASPIRATIONALGOALS
Digital Economycontribution toGDP1
WEF Global IT
Report (GITR)ranking(rank amongst 144economies)2
IMD WorldCompetitivenessYearbook(ranking amongst59 economies)3
INCREASED
GNI
ENHANCED
PRODUCTIVITY
IMPROVED
STANDARD
OF LIVING
13%
#28
#16
12%
#30
#16
17%
TOP
20
TOP
10
202020122010
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 guideits 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 whileensuring 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 thesame time addressing gaps and providing intervention in critical areas to ensure growth and development.
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Growth ofSub-sectors createopportunities and
channel benefits toCommunities
CONTENT&
ME
DIA
ICTMANUFACTURING
ICTTRADE
ICTSERVICES
eCOMMERCE
Create suitable
conditions for
ICT Sub-sectors
to grow
5
ENAB
LING
ENVIRONMENT
FOCUSAREA
S3
ACCESS
ADOPTION
USE
4
B40* YOUTH SMEDE*
* DE - Digital Entrepreneur, B40 - The 40% of Malaysians in the lowest income group.
DIGITAL ECONOMY
SUB-SECTORS
DIGITAL MALAYSIA
COMMUNITIES
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
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In essence, the three Enabling Environment Focus Areas serve to create a suitable environment for the digitaleconomy to ourish. This will form the building blocks for the ICT sub-sectors to grow and thrive. Focusedintervention on these sub-sectors would then create opportunities and channel the benets to the selectedcommunities.
The formulation of the DM354 Strategic Roadmap was based on a methodical process that harnessed data-driveninsights from the various components used to calculate the Digital Economy Satellite Account (DESA), as well asthe myriad indicators tapped to produce the WEF Global IT Report (GITR) rankings and IMD World CompetitivenessYearbook. These components and indicators were ltered 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 partsinvolving multiple parties and beneciaries. As such, it is critical for a governing framework to streamline andcoordinate all strategies, approaches and processes. While the initiative is driven by MDeC, other agencies andorganisations from within and outside the Government also play key supporting roles under the stewardship of the
Minister of Communication & Multimedia.
DESA SteeringCommittee
DM/MSC MALAYSIAImplementation
CouncilEconomicCouncil
DM SteeringCommittee
(Chaired by YBM KKMM)
NKEASteering
Committees
PEMANDUSecretariat
MDeCSecretariat
Submits report to
ICT DATA
As part of efforts towards greater transparency, we adhere to a set of Agreed Upon-Procedures (AUPs) developedby PricewaterhouseCoopers Malaysia (PwC) to ensure accuracy of reporting. This exercise serves to establish clearaccounting and best practices as we move forward.
Additionally, the national initiative is shared with the MSC Malaysia International Advisory Panel (IAP) to invite anddraw out further ideas and advice as well as to seek the collaboration of the IAPs global technologists.
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3 Enabling Environment Focus Areas
The right environment is always a crucial component for any initiative or endeavour as it can support and stimulategrowth while mitigating threats and addressing concerns. The DM354 Strategic Roadmap highlights three enablingenvironment focus areas that require strengthening and reinforcing:
Access Adoption Use
5INDICATORS
6INDICATORS
ICT ENABLING ENVIRONMENT FOCUS AREAS
ACCESS ADOPTION USE
7INDICATORS
Intervention would be carried out in each of the focus areas on selected digital economy-related indicators culledfrom the WEF Global IT Report (GITR) rankings and IMD World Competitiveness Yearbook. The aim, essentially, is tomove up Malaysias aggregated maturity levels in terms of the respective indicators relevant to these Focus Areas,whose denitions are listed below:
AccessKey Communities have access to affordable, reliable and high capacity digital infrastructure, includingbroadband, applications, content and devices.
AdoptionKey communities overcome various barriers to adoption of digital technology, such as skills, cost andknowledge thresholds.
Use
More members of key communities use digital technology to improve productivity and enhance theirquality 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 areaswithin the ve selected Digital Economy Sub-sectors. More focus will be placed on ICT Services and eCommerce asthey can offer higher and faster yield.
Focus on ICT ServicesWith its 48.4% contribution towards overall digitaleconomy GDP in 2020, the ICT Services sub-sector hasthe highest margins of the ve sub-sectors within theDigital Economy. In 2012, the total contribution ofthis sub-sector was RM41.3 billion, with the historicalgrowth of ICT Services aggregated at 12%. Theobjective is to increase the growth rate to 16.7% toachieve the targeted RM142.4 billion contribution toGDP by 2020. Five steps have been outlined to propelthe potential growth for ICT Services: Focus on ICT Services exports Malaysia should push forward in ve 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 telecommunicationsand ICT services
Position Malaysia as a value added BDA hub to tapBDA business and as delivery centre for mobilitysolutions
ICT SERVICES REQUIRED GROWTH
ICTSERVICES
GDP CONTRIBUTION
Source: Base data referenced from ICTSA 2005 to 2012 by DoSM.
Further analysis and breakdown by MDeC & IDC
16.7%
12.0%
RM
18.7B
RM
41.3B
2005 2012 2020
RM
105.5B
RM
36.9B
RM
142.4B
ICTSERVICES
GDP CONTRIBUTION
16.7%
12.0%
RM18.7B
RM41.3B
2005 2012 2020
RM105.5B
RM36.9B
RM142.4B
14.8%
5.9%
RM12.7B
RM19.0B
2005 2012 2020
RM30.1B
RM27.2B
RM57.3B
4.8%4.8%
RM8.0B
RM11.1B
2005 2012 2020
RM16.1B
RM16.1B 16.2%
8.0%
RM2.5B
RM4.3B
2005 2012 2020
RM7.9B
RM
6.3B
RM14.2B
5.5%
-0.6%
RM33.8B
RM32.3B
2005 2012 2020
RM32.0B
RM17.7B
RM49.7B
ICTMANUFACTURING
GDP CONTRIBUTION
ICTTRADE
GDP CONTRIBUTION
CONTENT& MEDIA
GDP CONTRIBUTION
eCOMMERCE
GDP CONTRIBUTION
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
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Focus on eCommerceThe eCommerce spending market size is projectedto witness substantial growth in the years between2011 and 2016. Worldwide, this gure is anticipatedto move from RM31.5 trillion in 2011 to RM64.5 trillion
in 2016. For Malaysia, the gures are expected togrow from RM62.1 billion to RM263 billion. MalaysiaseCommerce industry contributed RM19.0 billion tothe GDP in 2012 and this is anticipated to increase by14.8% to reach RM57.3 billion in 2020. eCommerce hasbeen targeted as the new growth engine for privateenterprises. To capture the required portion of thisever-expanding pie, Malaysia must put in place newincentives for growth. To achieve this, the plan is to: Balance imports with more eCommerce exports by
encouraging players (especially SMEs) to convertfrom traditional to digital business models for cost
and productivity efciencies Increase the adoption of eCommerce among LocalLarge Corporations (LLCs)
Promote the creation of digital goods for exports Promote the purchase of Malaysian brands through
online portals
4 Communities
One of the key goals of Digital Malaysia is to benet all Malaysians by creating opportunities as well as channellingthe benets of a growing digital economy to the people. For now, projects rolled out under the national initiativetarget specic groups of people or Communities, specically those that either have the highest potential tocapitalise 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).
eCOMMERCE REQUIRED GROWTH
14.8%
5.9%RM
12.7BRM
19.0B
2005 2012 2020
RM30.1B
RM27.2B
RM57.3B
eCOMMERCE
GDP CONTRIBUTION
Source: Base data referenced from ICTSA 2005 to 2012 by DoSM.
Further analysis and breakdown by MDeC & IDC
YOUTH Develop On-demand, Customised Online Education
Microsourcing to
Generate Income
for the B40
Facilitating Societal
UpliftmentB40
PROJECTS*OBJECTIVES OF
INTERVENTIONCOMMUNITIES
DIGITAL
ENTREPRENEUR
Grow the Embedded
Systems Industry
Develop a trusted Mobile
Digital Wallet System
Tap demand for digital
products and services
Improve income and quality
of life of the B40 community
Create knowledge
workers of the future
Enhance SME productivitySME
Asian
eFulfillmentHub
Shared Cloud
Enterprise
Services
Enabling ePayment
Services for SMEs and
Micro Enterprises
* 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).
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A total of 8 projects were launched in 2012 to catalyse change and drive progress within the four selectedCommunities. 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 alsoattracted private investment worth RM340 million.
Moving Forward
The task of developing a vibrant and innovative digital economy and society is a challenging one. It is a complexundertaking, given that the digital world is a constantly evolving entity and that a host of different parties areinvolved and engaged. On this score, moving forward will require concerted efforts from all concerned to bringabout this generational change.
ACHIEVEMENTS HAVEEXCEEDED TARGETS FOR 2013
TARGET
RM334.68M
ACHIEVED
RM360M
GNI
108%
TARGET
3,674
ACHIEVED
4,010
JOBSCREATED
108%
TARGET
RM345.11M
ACHIEVED
RM309.09M
PRIVATE**
INVESTMENT
90%
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GROWING NATIONAL DIGITAL ECONOMY
THROUGH CONCERTED EFFORT
GAME CHANGERS& BEHAVIOURALCHANGERS
PRIORITY AREAS & FOCUSBASED ON HIGH IMPACT &SPEED OF DELIVERY
MAXIMISE & LEVERAGE
Supply to Demand:
Consumption toproduction:
reallocate resources to moredemand-focused programmesand activities
change the way people behaveto produce as they consume
Low knowledge-add tohigh knowledge-add:
enhance competitiveness byfocusing on knowledge-addedactivities
+
BENEFITTINGSTAKEHOLDERS:
GOVERNMENT/BUSINESSES/
CITIZENS
CURRENT, ANNOUNCED,EXISTING & NEW PROJECTSBY MINISTRIES, AGENCIES &PRIVATE SECTOR
BLOCK 1, 2 & 3PROJECTS
PRIVATE SECTORDIGITAL PRODUCTS
& SERVICES
EXISTINGINITIATIVES
DMPROJECTS
STRATEGICTHRUSTS
DMINITIATIVES
NATIONALBROADBANDINITIATIVE
MYICMS886
MAMPU
NATIONALTECHN
OLOGYROADMAP
CYBERS
ECURITY
MKN.MY
EPU
M I M 8
MAMPU
TI N LTE HNOL
GYM
C B R
C ITY
M
KKMM
* ICT initiatives in ETP and GTP** Existing 10th Malaysia Plan (RMK-10) initiatives
Tap Demand Citizen Income/
Entrepreneurship
IT-savvy Youth
SME Productivity
Block 2 Initiatives* Block 1 Initiatives**
Digital Access, Adoption & Use
Digital Economy Sub-Sectors
DM354 STRATEGIC ROADMAP
3 5 4
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Digital Malaysia is a long-term national initiative that will be rolled out in various phases. Although it will continueto grow and develop beyond 2020, the plan is to focus on three main clusters of activities from now until the endof 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 digitaleconomy initiative will produce a developed economy and society that is innovative, enterprising and ultimately,global.
ROLL OUT OF DIGITAL MALAYSIA IN PHASES
2012-2020 2021-2030 2031-2040
DIGITAL
ECONOMY
ICTSector
Use of ICT inVerticalSectors
PHASE 1 PHASE 2 PHASE 3
Behavioural Change via 3 DM Strategic Thrusts
Operationalise Phase 1 through DM 354 Strategic Roadmap
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SECTION 03
OVERVIEW
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# CHAPTER 1National Initiative for DigitalTransformation
Digital Malaysia, the national initiative to advance the country towards avibrant digital economy by 2020, is on track to meet its targets and achieve itsgoals following two years of preparation and implementation.
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.
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.
Projected ICTspending by 20201
US$5.4TProjected eCommercerevenue by 20202 US$44.2T
GLOBAL DIGITAL ECONOMY
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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 WealthThe 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.
What Contributes to aDIGITAL ECONOMY?
ICT Manufacturing
ICT Services
ICT Trade
Content & Media
eCommerce
Digital Malaysiashared a link
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Enhancing ProductivityThe wide and increasing use of digital technologies has long been determined as a key factor in generating
greater efciency 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.
HOW TO
CALCULATE
GROSS
VALUE
ADDED
(GVA)
DEFINITION OF GVAThe value of output less the value ofintermediate consumption; it is ameasure of the contributions to GDPmade by an individual producer,
industry or sector.
ICT GVAThe value of output of ICT productsat basic prices less the value ofintermediate consumption (atpurchasers prices) used inproducing these ICT products.
Source: DOSM
Digital Malaysiashared a link
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PROFIT
PRODUCTIVITY
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Total Employees
=
Source: OECD (Organisation for Economic Cooperation and Development)REV
EN
U
E
PROFIT
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Improving Standard of LivingMalaysians 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.
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.
CHANGING
MINDSETS &
SKILLSETS
CONSUMPTION
SUPPLYDEMAND
PRODUCTION
LOW
KNOWLEDGE
HIGH
KNOWLEDGE
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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 quanties 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 ASPIRATIONALGOALS
Digital Economycontribution toGDP1
WEF Global ITReport (GITR)ranking(rank amongst 144economies)2
IMD WorldCompetitivenessYearbook(ranking amongst59 economies)3
INCREASED
GNI
ENHANCED
PRODUCTIVITY
IMPROVED
STANDARD
OF LIVING
13%
#28
#16
12%
#30
#16
17%
TOP
20
TOP
10
202020122010
Source:1. ICT Satellite Account 2012
2. Global IT Rankings 2013
3. International Institute of ManagementDevelopment 2013
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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
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 gures for the US and Germany are 11.1% (2012) and 8.5% (2011) respectively.
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Determining baselines to plot outcomes
One of the rst 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 claried and formalised the denition of a DigitalEconomy 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
DESADIGITAL ECONOMY SATELLITE ACCOUNT
SHARE ofICT to GDP
INCOME COMPONENTSby ICT INDUSTRY
SUPPLY and USE ofICT PRODUCTS
DOMESTIC OUTPUT ofICT PRODUCTS by INDUSTRY
IMPORTS & EXPORTS ofICT PRODUCTS
EMPLOYMENT inICT INDUSTRY
$$$
$
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Share of ICT to GDPThe industrys contribution to GDP in 2012 amounted
to 12% from ICT products and services representing
a provisional Digital Economy.
Imports and exports of ICT productsThe 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
Source for all graphics above: DOSM ICTSA 2012, MDeC analysis
Domestic output of ICT products by industryThe 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% prot in 2012.
Supply and use of ICT productsThe 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.
Employment in the ICT industriesThe ICT industries provided employment to more
than 750,000 workers in 2012, constituting almost 6%
of the total workforce.
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 otherindustries.
DOMESTICOUTPUT
RM327.3B
GVARM108.9B
(33% PROFIT)
12%
67.4%
Income components by ICT industryThe average gross wages of ICT employees, which is
used as a benchmark for productivity, was at least
double the national average in other industries.
ICT employeesOther industries
ICTEMPLOYMENT
762,400
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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 ndings 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
MoE PMD MoSTI MoF NRE MICC MoHA MHLG MRRD MDTCC MoHE MITI Others ETP GTP SRI
43
32
18 18
1310
6 5 4 4 4
13
91
52
12
4,722Total RMK-10 projects(Rolling Plans 1 & 2,
ETP & GTP)
426Total ICT-relatedprojects RMK-10
(RP1&2): 271ETP & GTP: 155
9%are ICTprojects
Development Expenditure271 ICT Projects
GTP, ETP & SRI155 ICT Projects
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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 beneciaries. 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 depictedin the graphic shown in this section)
DM Steering CommitteeA 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 rst 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
DESA SteeringCommittee
DM/MSC MALAYSIAImplementation
CouncilEconomicCouncil
DM SteeringCommittee(Chaired by YBM KKMM)
NKEASteeringCommittees
PEMANDUSecretariat
MDeCSecretariat
Submits report to
ICT DATA
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ICT Satellite Account (ICTSA) Steering CommitteeAnother 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 Denitions, Process &
Methodology and Indicators from the supply as well as demand sides using 2010 as the baseline year. It held
its rst 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 uid and dynamic rather than a
rigid and inexible 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 modied 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 newly-
formulated DM354 Strategic Roadmap going forward. Specic 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.
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Driving the nation towards digital transformation is a multi-layered and multi-faceted challenge. It requires a holistic approach to build a comprehensive eco-system that in the long run will create a conducive, yet resilient environment
and generate the necessary momentum for all stakehholders to act in unisontowards the aspirational goals set out under Digital Malaysia.
# CHAPTER 2Roadmap for the Way Forward
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.
3 5 4Sub-Sectors
ICT EnablingEnvironmentFocus Areas
Communities
ACCESS
ADOPTION
USE
ICT SERVICES
eCOMMERCE
ICT MANUFACTURING
ICT TRADE
CONTENT & MEDIA
DIGITAL ENTREPRENEUR
B40
DIGITAL-SAVVY YOUTH
SME
DM354 STRATEGIC ROADMAP
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In essence, the DM354 Strategic Roadmap reects the following components of the aspirational goals. The three
Enabling Environment Focus Areas serve to create a suitable environment for the digital economy to ourish. These
are specic 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 ourish. Their
respective growth rates have been extrapolated and projected in order to maintain the specic growth trajectory
needed to achieve the 17% GDP contribution target of 2020.
Focused intervention on these subsectors would then channel the benets and create opportunities for the selected
communities. Currently, four initial communities have been selected as the beneciaries 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 ltered 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
12% 17%
2012 2020
From as-is to to-be...
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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 benet 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
WEF GLOBAL IT REPORT (GITR) RANKINGS
2011
1441
2020
From as-is to to-be...
Out of 144 economies surveyed.Source: World Economic Forum (WEF) GITR 2011
28th
1441
TOP20
IMD WORLD COMPETITIVENESS YEARBOOK
2011
591
2020
From as-is to to-be...
Out of 59 economies surveyed.Source: Institute of Management Development (IMD) 2011
16th
591
TOP10
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SECTION 04
REVIEW
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Digital Malaysias aspirations to advance the country towards a developed digitaleconomy by 2020 is an all-inclusive vision encompassing every Malaysian fromall walks of life.
The embrace of digital technology in the various sectors, especially that of communication and business, is one ofthe 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 andcondence 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
benets. 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 signicant outreach programmes for the year:
# CHAPTER 3Key Highlights
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5thDM 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.
January 29
POKOK platform was launched inPJ 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.
April 25
Talk on Digital Malaysia was jointlyheld 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.
June 24
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DM Awareness Campaign waslaunchedDo More Lah is the campaigns
rally cry. It is an easily-undertstood
colloquial phrase that can rallyMalaysians behind the Digital
Malaysia national initiative.
August 19
Awareness Campaign: TVcommercials for the DigitalEntrepreneur community
August 19
Awareness Campaign: CreativeDirectionThe campaign features animated
3D characters called Domorelings.
They represent digital touch pointsin a playful reminder to Malaysians
that they already have the tools
and knowledge to make digital work
harder for them.
August 19
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Awareness Campaign: TVcommercials for the B40community
August 19
Awareness Campaign: TVcommercials for the Digitally-savvyYouth community
August 19
Awareness Campaign: TVcommercials for the SMEcommunity
August 19
Awareness Campaign: MDeC ofcebuilding banner
August 19
Awareness Campaign: PrintAdvertisements
August 19
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ETP & DM Business PlanningWorkshop at MDeC, CyberjayaThis workshop was jointly organised
by MDeC and MyNEF.
September 4
DM Proposal Submission System(DMPSS) is ready to be deployedDMPSS is the automated system for
submission of DM proposals. The
system covers and tracks the entire
process of ideation until approval.
December 20
6thDM Steering Committee meetingat Parliament, Kuala LumpurChaired 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.
November 11
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#Achievements and Highlights in
key Communities and Initiatives(C&I)
Joint embedded forum withIntel at Sheraton Imperial, KualaLumpurThis session was intended to create
and develop opportunities for
Malaysian companies to develop
technology based on the Intelplatform.
July 18
Project: Grow the EmbeddedSystems IndustryDuring the year, 2 additional
technology partners were signed upto grow the ecosystem. Additionally,
8 more projects were approved for
funding to capture market share.
Digital Entrepreneur
Project: Develop a Trusted MobileDigital Wallet SystemA National Mobile Proximity
Payment Industry Roadmap,
which was jointly developed byMyClear and Smarttag Solutions,
was completed. The Roadmap was
presented to Bank Negara Malaysia
(BNM) in July. BNM has agreed to
the proposal.
Digital Entrepreneur
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#Achievements and Highlights inkey Communities and Initiatives(C&I)
Project: Facilitating SocietalUpliftmentThe 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.
B40
Project: Develop on-demand,customised online educationDuring the year, 7 contentproviders 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.
Digital-savvy Youth
Project: Microsourcing to generateincome for the B40Krowdin.com was brought
online, joining four other similar
platforms launched in 2012 to offer
crowdsourcing opportunities to the
underprivileged.
B40
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Project: Asian eFullment Hub
During the year, 5 new customers
were secured, 25 logistics talents
were certied while more than RM43
million in goods and services were
transacted.
SME
Project: Shared Cloud EnterpriseServicesMore than 1,720 small and medioum-
sized companies adopted an
cloud-based Enterprise Application
Solutions (EAS) in 2013.
SME
Project: Enabling ePaymentServices for SMEs & MicroEnterprisesFor 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
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For any initiative to work and grow, and better yet to thrive and yield positiveresults, the right environment is a crucial component. This has to be the rst
step in the implementation of a programme or idea as it serves to set the stagefor 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 renement as well as
additions. For instance, indicators used for benchmarking by the International Telecommunication Union (ITU) may
be added as and when deemed necessary.
# CHAPTER 4Nurturing an EnablingEnvironment
5
4
3
2
1MaturityLevels
Classifications
Top 10 Ranked Economies
Top 1120 Ranked Economies
Top 2130 Ranked Economies
Top 3150 Ranked Economies
Economies Ranked 51 & above
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The graphic below offers a guide as to how the WEF and WCY ranked economies according to a maturity model.
Their respective classications were based on:
The countrys ranking reects 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
5INDICATORS
6INDICATORS
ICT ENABLING ENVIRONMENT FOCUS AREAS
ACCESS ADOPTION USE
7INDICATORS
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 signicant 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 dened
within ve 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 witheconomies 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 competitivelevel on par with other economies.
3. Households with internet access Emphasis was placed to increase the number of households with internetaccess, 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 forexample via the internet, mobile telephone and satellite services. This would lead to the sharing of information
and applications which more people can benet 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.
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6. Availability of latest technology Malaysia must keep up with the introduction of new ICT technology toposition 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 thepenetration of the latest technology and services
7. Laws relating to ICT A review of the laws pertaining to ICT, specically to remove roadblocks, must be madeto enable the more efcient and wider use of ICT. Applications would encompass cloud services, data privacy
and IP protection.
11 Access-related Indicators
7 Generate Highest Yield
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. Availability of latest technology (GITR = Rank 35)5. Internet access in schools (GITR = Rank 38)4. Accessibility of digital content (GITR = Rank 40)3. Households with internet access (GITR = Rank 42)2. Mobile telephone tariffs (GITR = Rank 43)
1. Fixed broadband tariffs*(GITR = Rank 76, WCY = Rank 23)
*According to MDeC modelling
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Access:Assessment to improve the 7 indicators
to facilitate maturity progression
5 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
6 Availability of latest technology (GITR=Rank35)Position Malaysia as a hub for Asian demandBetter enforce IP protection lawsLower perceived barriers to entry e.g. tax, localisationrequirements, standards
MITI, MoF, Ministryof 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, IPprotection, open data)
NITC, KKMM
Generals OfficeMDeC, Attorney
7
No Indicators and Assessments Potential Stakeholders
Fixed Broadband Tariffs (GITR=Rank76; IMD=Rank23)Ensure that broadband tariffs are competitive with rivaleconomies ranked above MalaysiaImprove internet and broadband infrastructure and coveragein 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)Incentivise uptake of Internet usage amongst rural population
MCMC
Mobile Telephone Tariffs (GITR=Rank43)Ensure that mobile tariffs are competitive with rival economiesranked above Malaysia
MCMC
1
2
3
4
* According to MDeC modelling** The list above is not exhaustive
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Adoption
Following closely on the heels of access is the adoption of ICT services. With the availability of efcient 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 benets 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 ve of the highest yielding indicators, out of a total of 8.
1
2
34
5Maturity Level
Maturity Level
Maturity Level
Maturity Level
Maturity Level
8. Importance of ICTs to government vision of the future (GITR=Rank 6)7. Development & application of technology
(WCY=Rank 6)
5. Information Technology Skills (WCY=Rank 24)
4. Mobile phone subscriptions per 100 population(GITR=Rank 35)
3. Percentage of households with computer (GITR=Rank 41)
2. Fixed broadband Internet subscriptions per100 pop (GITR=Rank 67)
1. Mobile broadband Internet subscriptions per100 pop (GITR= 6)
Indicatorswit
hhighestyield
Access-related Indicators
Generate Highest Yield
*According to MDeC modelling
8
5
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1. Mobile broadband internet subscriptions per 100 population The MCMC and MoF have been charged withproviding 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 ruralcommunities. 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
3 MCMC
4 KKMM, MCMC,MDeC, MoF
5
Mobile phone subscriptions per 100 population(GITR=Rank35)
Provide competitive mobile packages for both individualsand enterprises
Percentage of households with computer (GITR=Rank41)Provide higher incentives (or tax relief) for households thatembrace technologyIntroduce computer voucher for students similar to the
1Malaysia Book Voucher programme
Information Technology Skills (IMD=Rank24)Increase no. of ICT hours in school curriculumEnhance IT skills amongst graduates, professionals and civilservants
MoE, MDeC,MIMOS, MoHR,INTAN
1 Mobile broadband Internet subscriptions per 100
population (GITR=Rank69)Provide competitive broadband packages for bothindividuals and enterprisesEnhance internet adoption tax incentives
MCMC, MoF
2 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
No Indicators and Assessments Potential Stakeholders
* According to MDeC modelling** The list above is not exhaustive
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4. Percentage of households with computers- Higher incentives are needed to encourage households to investin 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 learningand 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 thecivil 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 benets and advantages of digital commerce.
This could be due to a lack of awareness, uncertainty and in some cases, insufcient knowledge. Financial
considerations could also be an issue for some quarters.
12
3
4
5Maturity Level
Maturity Level
Maturity Level
Maturity Level
Maturity Level
17. Employment Growth (WCY=Rank 6)16. ICT Impact on new organization models
(GITR-Rank 9)
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)
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)
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)
Indicatorswith
highestyield
17 Access-related Indicators
6 Generate Highest Yield
*According to MDeC modelling
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Use:Assessment to improve the 6 indicators
to facilitate maturity progression
4 Productivity Real Growth (IMD=21)Identify sectors that have low comparative productivity and developprogrammes to catalyse adoption of digital technologies toincrease productivity within targeted sectors
MDeC, MPC, SMECorp
5 Use of virtual social networks (GITR=30)Create awareness campaigns (include safe and responsible usage),training, as well as programmes to encourage productive use ofsocial networks
MDeC, MCMC,CSM
6 Business-to-consumer Internet use (GITR=26)
utilisation of online services
Remove barriers to participation amongst consumers
SME Corp, MDeC,CSMImplement eCommerce interventions that will increase
No Indicators and Assessments Potential Stakeholders
1 E-Participation Index (GITR=Rank31)Promote wider use of digital technology amongst all strata ofsociety with particular focus on vulnerable groups such as B40,elderly, OKUs, housewives, rural population, etc.
MCMC, MDeC,KPWKM, KKLW (LuarBandar)
2 Percentage of individuals using the Internet (GITR=Rank41)
Ensure availability of relevant content that will promotetechnology utilisation for positive use
Enhance digital navigation skills amongst the vulnerable groups
MCMC, MDeC, MoE
3 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
* According to MDeC modelling
** The list above is not exhaustive
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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 thepopulation. Nevertheless, special attention must be paid to the B40, elderly, OKUs (handicapped), housewives
and the rural population as a whole. These groups contribute a signicant portion towards the index.
2. Percentage of individuals using the internet There must be relevant content which is readily available andaccessible 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 adoptionand 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 benet from the adoption and use ofICT services. These areas need to be identied 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 ofcommunication today. The dissemination of information via these channels is immediate and can be innitelyuseful in various applications and situations. The people must be made aware of the benets 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 benet 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 ourish, 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 benets 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.
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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 aglobal phenomena as the digital world is not restricted by physical boundariesor limitations. This being so, the benets and advantages are tremendous andare still growing. Economic impact is delivered via the 5 ICT Sub-sectors.
An overview of Malaysias ICT Industry
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 RM38.3billion in 2012. However, this represented a downtrend as it only contributedRM119.2 billion towards the overall RM941.2 billion in GDP. The 2012 gure alsotakes into account two additional components of the Digital Economy, namelyeCommerce and Share Services and Outsourcing (SSO).
This drop was likely due to the decline in ICT manufacturing due to the globalrecession. On top of this, Malaysias position in the IMD World CompetitivenessYearbook dropped to 16th in 2010 from 10th the previous year.
One of the key thrusts of the DM354 Strategic Roadmap is to increase revenueby generating new growth areas within the existing ICT Sub-sectors.
# CHAPTER 5Generating Growth inSub-sectors
1. ICT SERVICES
2. eCOMMERCE
3. ICT MANUFACTURING
4. ICT TRADE
5. CONTENT & MEDIA
ICT
SUB-SECTORS
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
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AGGRESSIVE GROWTH IN MALAYSIASDIGITAL ECONOMY
2020 Goal
294B
119.2B
2012
80.9B
2005
185.7B
2020 est.
543.6B 941.2B 1.733T*
8.2%
CAGR 5.7%+RM38.3B
CAGR 5.7%+RM66.5B
CAGR 11.9%+RM174.8B
7.9%
NationalGDP (RM)
14.
9%
ofGDP
12.
7%
ofGDP
10.
7%o
fGDP
17%o
fGDP
108.3B*Requiredon top ofhistoricalgrowth
rate
Note:
2020 National GDP target incorporating ETP contribution
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
This same downtrend in GDP contribution was repeated from 2010 to 2012. In turn, this was likely caused by thesevere oods 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 theoods.
ICT Manufacturing, specically, has also been recording a progressive decline in growth from 2005 to 2010 and 2012respectively. 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 opposedto the 20.7% from ICT Manufacturing.
ICT Services also saw a leap of 12% in the seven years between 2005 and 2012. The actual gures went fromRM18.7 billion (2005) to RM41.3 billion (2012).
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It is noted here that eCommerce is not fully factored into DESA as yet and the upside is that the potential growthis sizeable.
This positive uptrend improved Malaysias position in the IMD Global Competitiveness Ranking by one spot tonumber 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 tocome from the digital sector. Assuming the growth adheres to the trend of previous years, at a CAGR of 5.7%, thiswould only amount to RM185.7 billion, translated to only 10.7% of the projected GDP. This very signicantly fallsshort of the projected gure of RM294 billion from the digital sector expected in 2020. As such, there is a need tocontribute 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 seento accelerate in each area.
ICTSERVICES
GDP CONTRIBUTION
16.7%
12.0%
RM18.7B
RM41.3B
2005 2012 2020
RM105.5B
RM
36.9B
RM142.4B
14.8%
5.9%
RM12.7B
RM19.0B
2005 2012 2020
RM30.1B
RM27.2B
RM57.3B
4.8%4.8%
RM8.0B
RM11.1B
2005 2012 2020
RM16.1B
RM16.1B 16.2%
8.0%
RM2.5B
RM4.3B
2005 2012 2020
RM7.9B
RM6.3B
RM14.2B
5.5%
-0.6%
RM33.8B
RM32.3B
2005 2012 2020
RM32.0B
RM17.7B
RM49.7B
ICTMANUFACTURING
GDP CONTRIBUTION
ICTTRADE
GDP CONTRIBUTION
CONTENT& MEDIA
GDP CONTRIBUTION
eCOMMERCE
GDP CONTRIBUTION
GROWTH IN DIGITAL ECONOMY NEEDS TO BE DRIVEN BY 5 KEY SUB-SECTORS
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
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However, two out of the five key focus sub-sectors were identified as the higher yielding areas and more attention wasdirected to these areas.
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 thecustomer engagement standpoint, they are either buying systems integration, IT outsourcing or IT educationservices 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 ServicesWith its 48.4%, contribution towards the overall digital economy GDP, the ICT Services sub-sector has the highestmargins 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 industrysaspirational macro targets, however, the sub-sector has to grow at a CAGR of 16.7% to achieve a GDP contributiontotalling RM142.4 billion by 2020.
For the export market, historical trends charted a 11.1% growth in ICT Services exports between 2005 to 2010, withthe gures 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% totalemployees among ICT Services sub-sectors) in 2020.
FOCUS IS ON 2 SUB-SECTORS
ICTSERVICES
GDP CONTRIBUTION
16.7%
12.0%
RM18.7B
RM41.3B
2005 2012 2020
RM105.5B
RM36.9B
RM142.4B
14.8%
5.9%
RM12.7B
RM19.0B
2005 2012 2020
RM30.1B
RM27.2B
RM57.3B
eCOMMERCE
GDP CONTRIBUTION
Source: Base data referenced from ICTSA 2005 to 2012 by DoSM.
Further analysis and breakdown by MDeC & IDC
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This ICT Services sub-sector is made-up of multiplecomponents. It is imperative that this growth issufcient to make up 48.4% of Malaysias DigitalEconomy 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 asizable opportunity that requires urgent attention.
48.4%BY 2020
BIG DATAANALYTICS
SOCIAL
MEDIA
CLOUDMOBILITY
SSO TELCO
SOFTWARE
DEVELOPMENTOTHER IT SERVICES
ICT SERVICES CONTRIBUTION TO
MALAYSIAS DIGITAL ECONOMY
Recommendations for ICT Services GrowthFive steps have been outlined to propel the potentialgrowth for ICT Services:1. Focus on ICT Services exports2. Malaysia should push forward in 5 growth areas
namely in mobility, cloud, social media, big data &outsourcing
3. Promote business adoption of cloud-based enterpriseapplication solutions
4. Expand outsourcing activities, eg. data-centerservices to drive growth in telecommunication & ICTservices
5. Position Malaysia as value added BDA hub to tapBDA business and as delivery center for mobilitysolutions.
ICT SERVICES REQUIRED GROWTH
ICTSERVICES
GDP CONTRIBUTION
Source: Base data referenced from ICTSA 2005 to 2012 by DoSM.
Further analysis and breakdown by MDeC & IDC
16.7%
12.0%
RM18.7B
RM41.3B
2005 2012 2020
RM105.5B
RM
36.9B
RM
142.4B
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DATA OWNERS
TECHNOLOGY
SYSTEM USERS / PROVIDERS
MINING
DATA IN SILOS
ANALYTICS SYNTHESIS
SHARED DATA
PREDICTIVE
OPEN DATA
SOCIALAPPLICATIONS
VALUE-ADDED
ELEMENTS
DATA MIX
PRIVATE SECTOR
PUBLIC SECTOR
DATA SOURCES
ENABLERS
GOVERNMENT ECONOMIC
TALENT INFO / INFRA FUNDING REGULATORY
Private Companies
DOSM, MACRES, Bernama,MET, DOE, MOH, MKN, etc
System integrators, Solution Providers,Business Intelligence, etc
Universities, Research Institutions
TRADITIONAL
MEDIA
SOCIAL
MEDIA
TRANSACTIONAL
DATA
NATIONAL
STATISTICS
96+MSC MALAYSIA STATUS COMPANIES
INVOLVED IN VARIOUS ASPECTS OF BDA
DataMicron
XYBASE
TESS International
Pulse
Ganti Teknologi Sdn Bhd
Fusionex
Isentric
G-Asia Pa
N2N Connect Bhdcific
Malaysias BDA Journey
From the ve recommendations outlined above, we willhighlight the new area of Big Data Analytics (BDA) whichrepresents a new frontier in ICT services. The others are
existing recommendations and these will be expandedaccordingly.
Recognising the potential in BDA, Malaysia has embarkedon a journey to tap into this market with the goal of aprojected RM0.72 billion in revenue in 2020.
A widespread adoption of BDA by industries will createspillover multiplier benets such as cost savings,productivity gains and competitiveness enhancements.
To maximise the benets 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 sectors2. Catalyse adoption and usage of BDA in the public sector3. Build the BDA industry in Malaysia
The government is considering a move to embark on BDA in 2014.
Holistic (BDA) F
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