20th June, 2019
Reaping the digital dividends:Key issues, challenges and potential for
the Malaysian economy
Yeah Kim Leng
Professor of EconomicsSunway University Business School
INTERNATIONAL SEMINAR ON UNITED NATIONS GLOBAL GEOSPATIAL INFORMATION
MANAGEMENT
“Integrated Geospatial Information Framework”
Hotel Istana, Kuala Lumpur, Malaysia
2
Outline
Malaysia’s digital economy
Digital dividends, issues and challenges
Potential of geospatial information or digital maps
Concluding observations
3
Malaysia’s digital economy
4
Key milestones1972
•Establishment of electronics FTZ in Penang transformed the country into a global electronics manufacturing hub
1996
•Creation of Multimedia Super Corridor (MSC)
2017 & 2018
• 2017: First in the world to establish a Digital Free Trade Zone (DFTZ)
• 2018: Launch of Industry4WRD: National Policy on Industry 4.0
Ranked 6th in electronic integrated circuits exports valued at USD45.8 bnor 6,4% share in world exports in 2018
National initiative to accelerate ICT and shift to a knowledge-driven economy; 3,241 active MSC-status companies at Feb-2018
Collaboration with Alibaba to create eFulfillment hub, Satellite services hub for e-Commerce and eServices hub. Launch of Industry 4.0
5
Size & growth rate
40.3 55.2 78.9 114.4 13.2
20.7 32.6
52.0
39.9 61.5
94.4
145.8
7.6%
8.2%8.5%
0
100
200
300
400
2010 2015 2020f 2025f
RM
bn
, c
urr
en
t p
ric
es
Other industries* Content and media
ICT services ICT trade
ICT manufacturing Average annual growth
RM106 bn
RM152 bn
RM226 bn
RM340 bn
4.9 4.8 5.0 5.8
1.6 1.8 2.12.6
4.9 5.36.0
7.40.8 0.80.9
1.1
0.7 0.40.4
0.3
12.9 13.114.3
17.3
2010 2015 2020f 2025f
ICT manufacturing ICT trade
ICT services Content and media
Other industries*
ICT GDP (value added) is forecast to rise by 8.2% annually from RM106 bn in 2015 to RM226% in 2020 and by 8.5%
per annum to RM340 bn in 2025
Its share to GDP is projected to rise from 13.1% in 2015 to 14.3%
in 2020 and 17.3% in 2025
Source: Department of Statistics Malaysia, “Economic Census 2016 Usage of ICT by Businesses and e-Commerce”;
own forecasts
Note: Malaysia’s Department of Statistics uses a broader definition of ICT particularly the inclusion of ICT
manufacturing and wholesale and retail trade compared to OECD definition. According to the World Bank,
Malaysia’s ICT share to GDP would be reduced from 13.1% to 9.7% in 2015 based on OECD classification
Share of GDP (%)
Digital (ICT) jobs
ICT
manufac
turing ,
411 ,
37.7%
ICT
trade,
224 ,
20.5%
ICT
services,
301 ,
27.6%
Content
and
media,
155 ,
14.2%
Source: Department of Statistics Malaysia, ICT Satellite Account 2017
1,8411,309
79
9,185
3,498
1,092 1,066
How does total ICT employment
compare with other sectors?
What is the total ICT employment
& breakdown by ICT segments?
(‘000)
Total employed in ICT sector: 1.092 million; Share of total employment: 7.6%
7
ConnectivityMalaysia is among the most connected upper middle income countries
0
10
20
30
40
50
60
70
80
90
100
Malaysia (80.1%)
Vietnam (49.6%)Thailand (52.9%)
Singapore
(84.5%)Philippines (60.1%)
Indonesia (32.3%)
Low Lower middle Upper middle High
995 3,895 12,055
GNI per capita, USD in current prices
80.1% of individuals using internet in 2017
0
50
100
150
200
250
300
350
Malaysia (134)Vietnam (126)
Thailand (176)Singapore (147)
Philippines
(110)
Indonesia (165)
Low Lower middle Upper middle High
995 3,895 12,055
GNI per capita, USD in current prices
134 cellular subs per 100 people
in 2017
Source: International Telecommunications Union, 2019; World Bank’s World Development Indicators database
8
Digital adoptionMalaysia ranks highly among ASEAN ex-Singapore and upper middle income nations
0.00
0.20
0.40
0.60
0.80
1.00
GNI per capita (USD in current prices)
Digital Adoption Index, 2016
High incomeUpper middleLower middleLow income
Malaysia
Vietnam
Thailand
Philippines
Singapore
12,2353,9551,005
Indonesia
Source: Digital Adoption Index (DAI) developed by The World Bank as part of the World Development
Report 2016: Digital Dividends
Highest
Lowest
9
However, Malaysia’s DAI business sub-index is below peers & global average
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
0.90
1.00
GNI per capita (USD)
Business Sub-index
High incomeUpper middleLower middleLow income
MalaysiaVietnam
Thailand
Philippines
Singapore
12,2353,9551,005
-0.10
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
0.90
1.00
GNI per capita (USD)
People Sub-index
High incomeUpper middleLower middleLow income
Malaysia
Vietnam
Thailand
Philippines
Singapore
12,2353,9551,005
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
0.90
1.00
GNI per capita (USD)
Government Sub-index
High incomeUpper middleLower middleLow income
Malaysia
Vietnam
Thailand
Philippines
Singapore
12,2353,9551,005
Source: Digital
Adoption Index (DAI)
developed by The
World Bank as part of
the World
Development Report
2016: Digital Dividends
10
Digital dividends, issues & challenges
11
How digital technologies promote development
3 key areas of development
impact
Mechanisms and markets
12
Uneven ICT adoption in Malaysia particularly low web presence of firms in most sectors
81.1
89.4
46.4
94.0
44.9
100.0 100.0 99.9 99.0
90.4
78.977.9
82.2
51.0
88.2
37.4
100.0 100.0 99.9 98.3
84.6
73.3
19.1
50.2
24.6
62.0
12.5
91.2
30.0
17.5
48.7 45.9
37.8
0
20
40
60
80
100
ICT usage in selected sectors, 2017
Computer usage Internet usage Web presence usage
Source: Usage of ICT and e-Commerce by Establishment 2018, Department of Statistics Malaysia
Survey covered 1,081 industries & 57,194 establishments
13
State of internet usage in selected sectors
Source: Usage of ICT and e-Commerce by Establishment 2018, Department of Statistics Malaysia
92.1
25.8
65.6
67.3
40.5
32.5
70.9
14.6
29.6
13.5
22.1
8.9
19.0
93.0
16.4
66.3
59.5
52.5
46.0
98.9
11.7
17.4
5.0
32.9
2.6
15.8
89.3
30.0
77.7
70.5
65.3
56.7
65.4
10.0
43.2
21.0
12.1
15.3
17.0
Sending or receiving e-mail
Telephoning over the internet
Posting information or instant messaging
Getting information about goods or…
Getting information from government…
Interacting with government…
Internet banking
Accessing other financial services
Providing customer services
Delivering products online
Internal or external recruitment
Staff training (e-learning application)
Others
% of establishmentsProfessional, scientific & technical Real Estate All sectors
Areas where
e-commerce
and
digitalisation
can raise
productivity
and service
quality of
real estate
and
professional
services
providers
14
Key issues and challenges
Digital divide
Cyber security
Privacy & openness
Business disruption & job displacement
Low innovation capacity
Low digital readiness of SMEs
Small talent pool & digital eco-system
Affordability & cost competitiveness of broadband
Global - general Malaysia - specific
15
Digital risks
Digital threats
Unequal access & sharing
Market disruptions
Natural monopolies
Cyber security, social ills & state/corporate control
Job displacements and
high social costs for workers
& entrepreneurs who lack
digital know-how
Widen inequality of
income, employment
and education
Concentration of
market power in big
firms; inhibit future
innovations
Rising cyber crimes,
censorship and invasion
of privacy
Negative outcomes
16
Necessary conditions to reap digital dividends
Analog foundation
Conducive business climate
Investment in health & education
Good governance
Digital foundation
Infrastructure &
technological investment
Public private partnerships
Effective regulations
Inclusion
Efficiency
Higher income
More jobs
Better services
Sustainable national growth
Individual well-being
Innovation
17
Unlocking the potential of digital technologies
More inclusive growth through
wider market access for
entrepreneurs
• Climbing the digital role ladder
Lower business cost and improve
efficiency
• Use of sophisticated technologies such as secure servers, enterprise network, inventory management, big data, analytics and e-commerce
Encourage innovation and
scale economies
• New digital products & services, eg. geospatial information
Enabling environment:•appropriate licensing mechanisms to conduct pilot projects,
•clarity of rules & regulations
•awareness about the potential of these technologies
Computer, internet & mobile users
Digital producers, creators & innovators
Digital entrepreneurs & business owners
18
Potential of geospatial information or digital maps
Value of geospatial services
19
Consumer benefits
• Commuting efficiency
• Fuel efficiency
• Personal safety
• Purchasing efficiency
Business benefits
• New products and
services
• Productivity benefits
for other sectors
• Sales growth
• Tourist spending
Societal benefits
• Job creation
• Traffic congestion
• Civic engagement
• Urban planning
• Public health
• Safety & emergency response
• Disaster preparation
• Environmental and wildlife preservation
• Knowledge creation and human capital development
Include tangible and hard-to-measure intangible benefits
13%
20%
26%
34%
35%
37%
40%
40%
46%
54%
62%
MobilityPurchasing Education
Navigation while/before driving
Discover businesses, places or services heard about in an unfamiliar area
Discover businesses, places or service in local area
Discover businesses, places or services in an unfamiliar area
Navigation while/before walking
Navigation while/before getting on public transportFind additional information about businesses, services or places
Discover new businesses, places or services in local area
Educate about geography, architecture, and other topics
Engage with a business (eg. book a class, call a business, order food, etc)
Book and use a ridesharing service
20
Consumer usage of digital maps
Source: Survey of Digital Map users; AlphaBeta analysis
Estimated benefits for Malaysia
amounted to RM4.4 bn or about 0.3% of
GDP per year
21
Geo-spatial educational tools & social networks
Source: Survey of Digital Map users; AlphaBeta analysis
17%
19%
21%
21%
23%
24%
24%
29%
32%Education (eg. Google Earth)
Social networking (eg. Foursquare)
Transport (eg. Grab)
Travel & hospitality (eg. Airbnb, Expedia)
Entertainment & games (eg. Pokeman Go)
Delivery (eg. Food Panda, Deliveroo)
Fitness (eg. Runtastic, Strava)
Real estate services (eg. property listings)
Online dating (eg. Tinder)
22
Geospatial benefits to business
New business models
Customer analytics
LogisticsCommercial
location planning
Environmental planning &
management
Network design &
management
Production efficiency
Global geo-spatial businesses generated business income estimated at USD400 bn; if Malaysia captures a share similar to E&E, it amounts to RM45.4 bn or 3.3% if 2017 GDP
23
Developing geo-spatial potential
Academia and social groups can
enhance efficiency of
education, health and social services
Firms can increase value and efficiency,
attract customers and
boost sales
Government can support the
development, sharing and use of geospatial data
• Increase academic programmes to produce more graduates trained in geo-spatial data sciences
• Encourage industry-university collaboration in applied geo-spatial research
• Raise awareness among firms and encourage investment in digital technologies
• Employ innovative schemes to accelerate digital adoption such as innovation vouchers
• Implement a national Spatial Data Infrastructure initiative to coordinate and spur geospatial industry
• Provide enabling framework to make geospatial content readily available
24
Concluding observations
25
▪ Untapped digital potential: Given its high digital adoption
ranking, there is tremendous scope and opportunities for Malaysia to
harness its digital potential to accelerate economic growth.
▪ Digital infrastructure and data: Policymakers and businesses
need to recognise that infrastructure in the digital economy includes
not only broadband networks but also data, including geo-spatial
data.
▪ Data sharing framework: We need to encourage investments in
data, data-sharing, and remove barriers to data flows that impede
innovation, integration and value chain creation.
▪ Focus on SMEs: Provide support for SMEs which face barriers to
adoption of digital technology and data-driven innovations.
▪ Digital HR development: Address inadequate capabilities and
competencies and skills shortages particularly data, ICT and e-commerce specialists, scientists, researchers and technologists.
Concluding observations
26
Thank you
Sunway University Business School
Tel : +603 7491 8622Fax : +603 5635 8633H/P : +6012 3787866Email : [email protected] : www.sunway.edu.my/university