digital malaysia report 2013

8/10/2019 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.

10


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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



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

Like Comment Share about an hour ago


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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



PROFIT

PRODUCTIVITY

Like Comment Share

about an hour ago

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

$$$

$




37/12437

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


Out of 144 economies surveyed.Source: World Economic Forum (WEF) GITR 2011

28th

1441

TOP20

IMD WORLD COMPETITIVENESS YEARBOOK

2011

591

2020


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




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


58/12458

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


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


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


* 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



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Use:Assessment to improve the 6 indicators


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


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



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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


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



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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




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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



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

digital malaysia report 2013

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