Malaysia dials up its digital economy push

By Ming En Liew

For a digital economy to thrive, adoption needs breadth and depth. The Malaysia Digital initiative is taking aim at both dimensions.

A thriving national economy is only made possible by the sum of many moving parts – a stable and open business landscape led by the government, companies with global know-how and resources bringing in jobs and financing, local SMEs catering to ordinary people, and workers and consumers supporting businesses.

In moving towards a digital economy, all of these elements must transition as one for success. Yet the “digital divide” remains a persistent problem, as access to digital technologies remain unequal in many countries – Malaysia included. As the nation looks towards digitalising its economy, it falls to the government to ensure that no one individual or business is left behind.

In trying to boost Malaysia’s digital economy, digital adoption needs to spread not just horizontally across the business landscape, but also vertically through society, which is why a key pillar of the Malaysia Digital initiative is empowering ordinary people.
Mahadhir Aziz, CEO of MDEC, is leading the organisation to improve digital inclusion in Malaysia. Image: Malaysia Digital Economy Corporation​​​​​​

According to Mahadhir Aziz, Chief Executive of the Malaysia Digital Economy Corporation (MDEC), the aim is to improve digital inclusion by increasing digital literacy among the lowest 40 per cent of income earners – young people, senior citizens and others who are economically disadvantaged. It does so through  a nationwide roadshow named the #SayaDigital Movement that features training sessions and digital literacy workshops.

The training sessions are designed to cater to all Malaysians, regardless of their familiarity with technology. The #SayaDigital course for daily matters, for instance, starts with training in basic technology for communication and digital services such as WhatsApp, Facebook and booking ride-hailing services.

Once individuals have basic digital know-how, they then have the option to boost their digital skills to enter the digital economy and generate income for themselves.

For instance, they can participate in the Global Online Workforce (Glow) programme, which seeks to reskill and upskill workers to thrive in a rapidly digitalising gig economy. Since it was set up in 2016, the Glow programme has trained more than 70,000 people who have gone on to generate more than RM240 million (US$53.5 million) combined, Mahadhir says.

To help digital freelancers be globally competitive, MDEC launched the Glow Aspirasi (aspiration) programme earlier this year. The initiative focuses on providing intensive training and mentoring sessions for aspiring digital freelancers, with the aim of helping at least 75 per cent of participants generate income.

“We want to utilise and unlatch the idle assets in our economy and seize the opportunity to improve household income, and that can be done through enhancing skills and improved employability of gig workers,” Mahadhir says.

Digitalising MSMEs

Micro, small and medium-sized enterprises (MSMEs) are the backbone of Malaysia’s economy, according to the nation’s coordinating agency for SMEs, SME Corporation Malaysia. They represented more than 97 per cent of all businesses last year and contributed over 37 per cent of Malaysia’s gross domestic product in 2021.

Despite the contributions of MSMEs to the economy, many lagged when it came to entering the digital economy. Before the Covid-19 pandemic, SME Corporation Malaysia found that some 77 per cent of SMEs in the country were at the basic digitalisation stage, with only around 60 per cent of businesses even operating a website. Only around 6 per cent were using more advanced technology such as data analytics.

Digitalisation has great potential for allowing MSMEs to improve their business performance and productivity, but many remain hindered by issues such as costs and skills gaps.

MDEC seeks to change that through a range of targeted initiatives. Its 100 Go Digital initiative, for instance, provides digital coaching and funding to SMEs to help them determine which digital tools can most benefit their businesses. MDEC connects these SMEs with appropriate technology companies.

MDEC is also focused on building up the e-commerce capabilities of smaller businesses.

“E-commerce can help local businesses and economically vulnerable communities reach a wider audience and market their products and services regardless of their location,” Mahadhir says.  For example, a business based in a rural area can reach a larger pool of customers in urban areas in Malaysia, he explains.

This has been particularly crucial during the pandemic, in which bricks-and-mortar operations have suffered amid lockdowns. “E-commerce enables these owners to connect with the customer base they may have lost due to the pandemic,” Mahadhir says.

MDEC helped to bring Malaysia’s retail sector online under the Go-eCommerce and Shop Malaysia Online campaigns last year, a drive to encourage the adoption of e-commerce and e-payments.

The results have been encouraging. As of last year, both campaigns had benefited more than 830,000 MSMEs that had generated a combined RM7.39 billion of income.

Digitalisation across industries

“MDEC is constantly focusing on various aspects of the digital economy to ensure it thrives,” Mahadhir says. A key industry that needs to be brought into the digital fold is agriculture, which employs around 10 per cent of Malaysia’s labour force and generates 8 per cent of the country’s GDP.

One way MDEC is doing so is through drone agritech, which can help farmers better manage their farms and plantations through more efficient disease detection and improved soil analysis.

In addition to agriculture, MDEC has also developed initiatives to support creative industries such as animation, movies and gaming.

For instance, MDEC developed its Digital Content Grant to support local creative content companies develop, co-produce and market their digital content in animation, digital games and interactive media. The grant supports firms in respect of labour, intellectual property protection and licensing.

MDEC is also behind the Kre8tif conference, an annual get-together attended by professionals across the digital content industry in Malaysia and Southeast Asia to network, learn, and be recognised for their work through the SEA Kre8tif! Awards.

Malaysia is looking forward to embracing emerging technologies such as 5G and extended reality, but before breaking new ground, the country must first ensure that all of its citizens and residents are equipped with adequate skills so it can progress as one.