How Malaysia Helps To Future Proof Your Business Services Operations

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

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

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

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

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

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

Ascending the value chain

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

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

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

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

Malaysia’s digital ecosystem: futureproofing business

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

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

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

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

Digitalisation of GBS: Move Up or Move Out

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

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

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

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

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

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

DFTZ’s Second Anniversary: eCommerce Milestone

It seems just like yesterday to me – but it’s actually now the second anniversary of the launch of what is turning out to be a major stride forward in Malaysia’s eCommerce trajectory: the Digital Free Trade Zone (DFTZ).

This is just a brief note to mark the anniversary, so I will briefly run through just a few thoughts:

First of all, DFTZ was an initiative to spearhead our national eCommerce framework and it was launched to intensify Malaysia’s participation in cross border eCommerce.

The aim was to start establishing Malaysia as regional and global eCommerce fulfilment hub and to drive exports. It’s about empowering entrepreneurs and small businesses to do cross-border commerce seamlessly: The vision was to opening up the doors to global markets and to simplify eCommerce by digitalising the trade process.

The DFTZ is a milestone in the national digital economy agenda, which is providing a platform for Malaysian businesses to go online with more ease than before. A growing number of companies have already started to export via the DFTZ partners’ platform and this will only increase as more and more players become aware of and understand the value of participating in this initiative.

Onwards and upwards

I recall that when Jack Ma came to launch DFTZ in Malaysia, he said Malaysia had caught his eye a few decades ago, and that he was proud to be able to do something with the nation. He told world media: “Malaysia inspired me [back] in 1996-1997. When I was starting my Internet business in 1995, I remember that around that time, I read news in China about the Multimedia Super Corridor [MSC Malaysia] in Malaysia… it made me think: ‘Hmm! There is something there in that country! It’s a brave idea for the digital world.”

Indeed, Malaysia now has the potential to become a Stand Out country of the future. In terms of speed of digital transformation, Malaysia ranked second, just behind China and way ahead of India, Singapore and Indonesia (Global Digital Evolution Index 2017). The World Bank puts Malaysia in the league of high-income economies where digital adoption levels are high, and higher than roughly 1/3rd of OECD countries.

An important component of our digital economy is eCommerce, which is an opportunity anyone can take up. We are working in collaboration with government agencies, industry and academia to solidify and guide SMEs to adopt the opportunities in the local, regional and global markets. High inclusivity – ensuring everyone is future-ready – is one of the key building blocks of the digital economy.

Digital adoption and digital transformation are opening up the possibility of a new era of prosperity. Of course, much more needs to be done and we need to move forward wisely. We at MDEC are honoured and thrilled to play our part in forging a digital future for every Malaysian: #LetsBuildTogether!

Dato’ Ng Wan Peng is the Chief Operations Officer of Malaysia Digital Economy Corporation (MDEC)

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

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

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

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

Investor Confidence

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

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

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

Healthy Confluence

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

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

Key Digital Investment Hub

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

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

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

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

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

More to come

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

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

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

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

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

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

Talent: Vital Building Block for Malaysia’s Digital Future

In my previous article Outsmarting Smart Robots, I said that there is an increasing consensus that jobs are changing in drastic ways and getting our current and future workforce ready for such changes is critical.

More of the same will no longer be enough. This message has been recently affirmed by LinkedIn, the global professionals platform, with the release of its 2019 Emerging Jobs in Malaysia Report. The study, which analysed millions of unique, user-input job titles from the last five years, noted that the top five emerging jobs were linked to technology. And just as important, the report highlighted the demand for ‘hybrid’ skills.

Developing a rounded skill set, which rests on digital competency, needs to be balanced with other core soft skills such as problem solving, communication, creativity, and a measure of what has been called EQ (emotional quotient).

Our strategy to become a stand out nation in the global digital world is powered by five building blocks. Implementing much of this strategy lies within the remit of Malaysia Digital Economy Corporation (MDEC), a government-owned agency under the Ministry of Communications & Multimedia (KKMM). The KKMM Minister, YB Gobind Singh Deo, first outlined these building blocks towards the end of last year.

These building blocks, which are important drivers of a strong online ecosystem, are: high-quality infrastructure at affordable prices; tech talent development; increased cybersecurity vigilance; development of platforms and enablers such as Digital ID, open data and so on; and the legislation, policies and industry structures to support the growth of the digital economy.

While the building blocks are intended to produce two key outcomes – widespread digital adoption, and the enhanced growth of digital entrepreneurship throughout the nation – building the right talent is the fuel to power our trajectory into the our future.

Deepening the Momentum

When we look at the top five emerging roles highlighted in the LinkedIn report (data scientist; full stack engineer; drive test Engineer; user experience designer; and content writer), we note that the easiest to teach at scale are the technical skills. While advanced digital skills are usually top of mind – such as coding, data analytics, and so forth – the basics are just as important for all of us to adapt to the workplace of the future.

A vital aspect of our nationwide initiatives is inclusivity. Everyone has an opportunity in Malaysia’s digital future. The basic digital skills required to perform daily tasks online need to be shared across underserved communities, the disabled and the elderly.

Our digital future will increasingly come into the hands of the next generation. MDEC has been actively complementing the Ministry of Education’s initiatives to integrate and embed computational thinking, computer science including coding into the national school syllabus. We are also work closely with a premier group of local universities to strengthen tertiary-level Computer Science curricula and teaching.

Meanwhile, the collaborative approach amplifies another public-private-academia movement, MyDigitalMaker, to transform Malaysian youth from digital users to producers in the digital economy. Digital skills both feed and complement the hybrid skill portfolio by developing problem solving and creativity among our young generation. More than half million students are actively participating in digital making activities such as coding, robotics, data analytics and more.

Transformative support to help teachers includes learning tools and further training through an Educator network. Essentially, short courses and certification programmes on programming/coding, embedded systems, digital making and more offered by #mydigitalmaker partners and university-based teacher-training hubs during weekends and school holidays to support educator readiness. To-date more than 30,000 teachers have become part of this network.

MDEC’s efforts to prepare our future workforce includes working with 12 universities to act as local training hubs for teachers who need to get trained in various digital tools. MDEC provides a computational thinking specialist to train the universities and accredit them to be training centres for the teachers. Some of them are also acting as Digital Maker Hubs, which gives students another option outside of their schools to go and explore and learn about various digital tools. There are currently 48 Digital Maker Hubs around the country, some are hosted by private companies and non-governmental organisations.

MDEC and industry partners further develop students with especial digital innovation and creative potential to help them into tertiary studies with Premier Digital Tech Universities and Preferred Digital Tech Polytechnics. The Premier Digital Tech Institutions comprise local universities and polytechnics with high graduate employability in the digital technology sectors and which have the potential to becoming top regional institutions. To date. MDEC and the Ministry of Education have jointly endorsed 8 Premier Digital Tech Universities and 5 Preferred Digital Tech Polytechnics.

Learning as a Way of Life

Before I sign off, I would like to again stress the importance of remaining relevant in the world we have entered. We must together address the 4th Industrial Revolution as an opportunity to enrich our lives through evolving ourselves and our skills by constantly learning.

One of the results of rapidly evolving digital age is that most of us will have different jobs through our lives. Very few will remain in the job for which they were formally trained. I believe that every day is a day for learning something new: An essential sign that we are producing the right talent for a standout digital future in the world will be a mindset that includes adaptability and one that is tuned always to learning.

Sumitra Nair is the Vice President for Talent & Digital Entrepreneurship in MDEC

Malaysia: Gateway to the Fastest Growing Region in the World

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

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

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

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

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

Digital Economy: A Catalyst for Dynamic Growth

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

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

Wooing Foreign Direct Investment

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

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

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

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

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

A thriving digital ecosystem

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

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

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

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

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

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

Outsmarting Smart Robots

How can humans outsmart robots equipped with artificial intelligence (AI)? This is the million-dollar question that one group of experts the world over is scrambling to answer, while another group races to build machines with near-human capabilities.

One among many predictions is by McKinsey Global Institute, which sees millions of jobs being be wiped out. Others take on a more optimistic view: humans will survive the 4th industrial revolution. Accenture suggests – that if we pick the best from each – humans and machines will work together in harmony, A recent Harvard University study shows that doctors are able to diagnose cancer with greater accuracy when working with AI.

Nevertheless, there is a consensus that jobs are changing in drastic ways and getting our current and future workforce ready for such changes is critical. More of the same will no longer be enough.

Skills to complement AI

As machines become more intelligent, three types of complementary skills are expected to become more important for people to develop.

The easiest to teach at scale are technical skills: Both basic and advanced technical skills are equally important. While advanced digital skills have received much attention – such as coding, data analytics, etc. – basic digital skills will be just as critical for the current workforce to survive the changing workplace.

Learning how to use digital productivity tools, doing online research and transacting are a few of the basic skills many still struggle with, especially in underserved communities like urban poor, rural, disabled and elderly communities. Earlier this year, Sundar Pichai, Google CEO affirmed this when talking about Google’s move to train people with basic digital skills.

Coming back to advanced technical skills, these will be most critical for the next generation of workforce.  Digital natives will need to know how to harness and complement their intelligent-robotic counterparts. A McKinsey survey of 3000 business leaders suggests that demand for technical skills is expected to grow the most compared to the 3 types of skills mentioned in this article, hence the emphasis on STEM, computational thinking, computer science and coding in educational institutions must continue, be it in schools or universities.

Aligned to this, MDEC is supporting the Ministry of Education’s efforts to integrate computational thinking, computer science including coding into the national school syllabus. We are also work closely with a premier group of local universities to strengthen tertiary-level Computer Science curricula and teaching.

The second set of essential skills for the future workforce are higher cognitive skills, or higher order thinking skills. These include creativity, critical thinking, decision making, complex information processing. Basic cognitive skills such as, literacy and numeracy which have been a strong focus point for industrial era education systems, are increasingly becoming hygiene factors, i.e. important for basic survival, but do not give us any edge over AI machines. Higher cognitive skills require deep learning experiences, for example, guiding a student to be aware and understand his/her own thought process. This kind of deep learning is challenging to deploy at scale, and will require significant changes across the education delivery system.

The third set of skills are unique to human beings, i.e. social and emotional skills. These are expected to be the hardest for AI to replace. Inherent but less emphasised skills like adaptability, interpersonal communication, negotiation, empathy, leadership, managing people and relationships, entrepreneurship and innovation, teaching and training people are critical if we are to remain relevant in the future workplace. These skills are often neglected in most conventional education systems which tend to focus more on academic excellence.

Never stop learning

As technology and roles in the workplace evolve, forecasts suggest that most people will have 4-5 careers (not jobs) in their lifetime, hence re-skilling will become extremely important. Formal education may prepare us for our first careers. Thereafter, life-long learning via self-directed, informal learning, and on-the-job training will be key to facing rapidly evolving jobs of the future.  Employers can no longer expect graduates or for that matter, any new employee to come fully-equipped for the role. Instead, they must be prepared to invest in training and re-training staff. From a policy perspective, we must find ways to encourage the culture of life-long learning; and support employers, especially SMEs to provide on-the-job training. In Singapore, for example, all citizens aged 25 and above receive periodic credits of SGD500 to pursue training courses for in-demand skills. Here in Malaysia, similar efforts could be prioritised for those at risk of being displaced by AI.

Education is for life, not just to make a living

Given rapid changes and uncertainty in the type of skills/jobs that will be in demand, experts suggest that universities should prepare students for life, emphasising cross-curricular learning instead of over-specialisation for specific jobs. There is also consensus that real-world experiences will be highly valued compared to pure classroom learning, hence, tertiary institutions and employers must work together to structure robust internship or apprenticeship programmes. Given these scenarios, universities need to re-think and re-focus on the fundamentals of education, while regulatory and policy measures are needed to encourage employers to offer internships or apprenticeships. With regards to the latter, the UK government’s apprenticeship funding model is interesting to study.

There’s obviously a lot that needs to be done to prepare our current and next generation for a future with AI. Tremendous political will and excellent coordination between the powers-that-be will be required to move this massive mountain in the right direction. But we must play our part: Simple acts like taking an online course, and encouraging life-long learning among our employees, colleagues, and loved ones. As the saying goes, “Be the change that you wish to see in the world.” So, go ahead and secure your seat in the AI world.

Sumitra Nair is the Vice President for Talent & Digital Entrepreneurship in MDEC.

POV from Silicon Valley: Malaysia is Helping to Reimagine Commerce in the Wake of the “Retail Apocalypse”

The economic prospects of traditional retailers in many global markets are in a widespread state of deterioration.  Their situation even has its own term of art – “retail apocalypse” which actually now exists as a Wikipedia entry.  Even strong companies and those who realize a material share of their revenue from e-commerce sales are feeling pressure to close stores. Using the US market as an example, over 20,000 retail stores closed between 2013 and 2018. Close to 7000 of these closed in 2017 alone, despite very high consumer confidence ratings, low unemployment and continued growth of the US economy.

Beyond the retailers themselves, global brands are rethinking their distribution strategies in ways that indicate a pivot toward e-commerce. Nike, for example, forecast at its October 2017 Investor Day conference that its e-commerce sales would represent 66% of its corporate revenue growth over the next five years. At that same conference, Nike also announced a massive revamp of its wholesale strategy, indicating that it would place a primary focus on just 40 out of its current 30,000 retailers. The message is clear, simply distributing product out to lots of stores is not their going-forward priority – e-commerce makes the vast majority of those physical points-of-sale obsolete.

The global offline-to-online movement is unquestionably a factor in the decline of traditional retail, but not the sole factor. US government statistics show that e-commerce sales in 2017 still account for less than 10% of all retail sales.  A driving factor in the recent run-up in retail store closings is the large debt load carried by large traditional retailers, which in many cases is a consequence of leveraged buyouts made by private equity firms in recent years. Rising interest rates and changing market conditions are making this debt more difficult to refinance than in the past, driving several large retailers toward, or into bankruptcy.

As it relates to the realm of MDEC, there are at least two important takeaways from this trend.  The first is that the dominant position large retail corporations hold over manufacturers in reaching consumer markets is rapidly coming to an end.  While neither these companies nor brick and mortar retail stores would ever completely disappear, their consumer trust and convenience advantages over dealing directly with product suppliers of any size through e-commerce have been decimated.  Consumers worldwide are becoming accustomed to using platforms such as Alibaba’s Electronic World Trade Platform (eWTP) to purchase goods directly from SMEs, and infrastructural improvements such as Malaysia’s Digital Free Trade Zone (DFTZ) make it possible for those goods to delivered anywhere in the world in three days or less.  The opportunities for SMEs to serve customers anywhere in the world are now already large, and destined to do nothing but increase.

The second, as illustrated by Nike’s announcement, is the major pivot of global brands toward direct distribution through e-commerce on a mass scale. Datuk Yasmin identified our opportunity this way:  “Through the DFTZ, Malaysia is optimized for e-commerce transshipment, with the infrastructure, policies, procedures, talent pool, and experience to provide the world-class support global leaders require. We are optimized end-to-end. We are already receiving enquiries from global brands who understand the potential of what we have built here, as well as the larger market opportunity.” Strategically situated as the gateway to Southeast Asia’s 630 million consumers, Malaysia is destined to become one of the world’s handful of major e-commerce hubs, and a principal contributor to the reimagining of commerce.

Perhaps more importantly, at roughtly 10% of total trade, e-commerce has cleared hit tipping point and yet is just at the early innings of a global shift towards an omni-channel consumer experience.

Datuk Dan E Khoo is the President of MDEC Americas Inc; a Silicon Valley organization established to drive the global expansion of Malaysia’s digital economy.

“Building Local Tech Champions” means Growing Fast and Going Global

Uber has exited the region, selling out to Grab. Was it a lack of appetite, being late to the game, or simply not understanding how to negotiate outside their home market in the US?

Before I come to that, here are a couple of intriguing stories that came to my mind when thinking about the intricacies of the local business landscape: First, the Malaysian used-car platform company, Carsome raised US$19 million in March 2018. The funding was led by Burda Principal Investments, through their Singapore office. StoreHub, a Malaysian company that built a Cloud-based Point of Sale (POS) application that is used by 3,000 retail stores across 15 countries, raised US$5.1 million from Vertex Ventures. Vertex, an investor in Grab, is owned by Singapore’s Temasek Capital.

Then you may remember that last year, Soft Space, the Malaysian Fintech company raised US$5 million from Japan’s Transcosmos. Carsome, StoreHub and Soft Space, join almost 3,000 other companies that have been accorded MSC (Multimedia Supercorridor) status by Malaysia Digital Economy Corporation (MDEC). Since its inception in 1996, MDEC has been actively pursuing Malaysia’s digital agenda. This was done by initially encouraging technology companies to set up in Cyberjaya, and then bringing in shared services companies, and now by working to build globally competitive Malaysian headquarters companies.

In my last article, I provided examples of the first generation of Malaysian companies, many of whom achieved billion-Ringgit valuations with very little capital. Starting with founder’s money, these companies at best raised two to three million US dollars, which had to take them straight to an IPO. With few exceptions, except Grab and iflix, which raised US$ $170 million, Malaysian companies have not appeared on the radar of major VC firms.

Money chasing Malaysian deals

Well, as they say, times have changed: Money is now chasing local deals because of the ability of Malaysian companies to navigate the fragmented and tightly regulated markets of Southeast Asia. This is very important to note, as this is changing the landscape in Malaysia.

N2N Connect, a company that provides securities trading platforms used its Malaysia-base to grow into the region. We are fortunate to have a forward-thinking central bank. In addition to allowing for crowd funding platforms, and a sandbox for testing of new products, Bank Negara Malaysia (BNM) recently finalised electronic Know-Your-Customer (e-KYC) guidelines.

This is a huge step, allowing for much faster and more seamless customer acquisition. These guidelines made it possible for Internet payment provider iPay88 to launch a virtual account for the “unbanked” market.

I am pleased that MDEC has continued to play an active role in building the ecosystem that has allowed these companies to flourish. We maintain a constant and consistent dialogue with several stakeholders, including BNM and the Ministry of Higher Education – where we led the push to introduce coding classes in schools. While we continue to work on the digitalization agenda, we recognise an urgent need to bring larger VCs into Malaysia.

Companies like Carsome, StoreHub and Soft Space are building businesses, which are like utilities. There are differences though if one was to compare them with Tenaga or Celcom, Maxis and Digi. What are the differences? Utility businesses have large capex needs but their business is protected by licenses. They didn’t start off with a small bunch of customers and build the infrastructure from customer revenues; that business model just doesn’t work that way. Build a small power plant in Petaling Jaya, supply a few hundred customers and from the revenue build a megawatt plant. Big money is raised up front.

Scale up at speed

Well, the startup guys don’t have the protection of a license, so they start with a small bunch of customers and what is typically called a “Minimum Viable Product.” They then get feedback, gain traction and often go through a few product iterations. Once that has been achieved they need money – lots of it – to build the infrastructure, delivery capability and capture market opportunity ahead of potential competition. As we say in MDEC, it’s a matter of “Grow Fast and Go Global”.

Just last week, Zilingo, a Singapore based start-up raised US54 million for an expansion into the region from their base in Bengalaru, capital of the Indian state of Karnataka. That’s big money! The company provides a platform for customers to browse and buy fashion products from retailers in Southeast Asia. Since inception in October 2015, Zilingo has raised US82 million, to launch in Thailand and expand into Malaysia, Indonesia, the Philippines and Vietnam. Like other platforms, the technology relies on artificial intelligence – AI – to learn buyer behaviour and then propose the “right” product.

The need to achieve scale and leverage on engineering capability probably led GHL Systems Berhad to acquire rival company Paysys (M) Sdn Bhd for RM80 million, with half paid in cash and the balance in shares. GHL is no stranger to corporate exercises. In 2013, GHL acquired e-Pay Asia Limited, a company founded by Simon Loh, now vice-Chairman of GHL. Local PE firm, Creador, sold its stake to Actis in 2017, and they are now are pushing for growth in the payments, or fintech space, which is seeing a lot of new entrants.

Malaysia on the VC Map

Digitization coupled with the porosity of borders has meant that competition lands at your doorstep almost from the word go! Scale and speed of growth are important and the fuel for that is cash – and plenty of it! This is one of the reasons why MDEC is pleased to have attracted Vickers Venture Partners, to open their Kuala Lumpur office.

The presence of Vickers on our shores is yet another indication of investor interest in Malaysian-originated deals. Have we done enough to put Malaysia on the map? Only time will tell, but the good news is that investors are now getting off the plane at KLIA. At MDEC, we are busy making sure they continue to keep Malaysia firmly on their radar.

One major initiative we recently worked on this year was the “Sea Dragon Venture Platform” event (10-11 May2018), which was organised by PIKOM. MDEC was pleased to support this major initiative, which saw 30 global VCs and corporate investors visiting Kuala Lumpur. About 35 technology companies from Malaysia and the region were shortlisted to pitch at this event. SEAD are targeting companies that have the potential to be leading players in the Asian and North Asian markets that are looking for growth capital of US$5-25 million. This event was yet another opportunity to showcase to the region why having a startup to scale is best done from Malaysia.

It’s time to “Grow Fast and Go Global,” which is in line with MDEC’s globalization strategy; “Building Local Tech Champions!”

Gopi Ganesalingam is MDEC’s Vice President of Enterprise Development.

This article first appeared on 5 May at 2018 at Business Today, titled “Building Local Tech Champions” means Growing Fast and Going Global

POV from Silicon Valley: Location Matters – Particularly with Cross Border eCommerce

As consumers continue to expand the use of electronic commerce channels as their preferred method of shopping, the traditional retail industry “location matters” adage seems fated to obsolescence. Clearly, the location of a physical retail location is becoming less important than it was as recently as five years ago – the retail location is often in the cloud, accessible from wherever the consumer and his or her smartphone happens to be.

“Location matters” still rings true despite the evolution of commerce from physical to electronic, but its meaning has also evolved.  We all understand the concept of instant gratification and the feeling of frustration that can arise from waiting for a purchased item to be delivered. Jack Ma, founder and Executive Chairman of Alibaba, the world’s largest retailer has set the success requirement for their Electronic World Trade Platform to delivery within 72 hours of purchase to anywhere in the world, 24 hours within a country. Being able to consistently meet this requirement requires a highly sophisticated set of inventory management and logistics systems to be sure, but those things alone will not guarantee success. As it turns out, the shipping point’s location matters to a great extent in timely and efficient delivery – particularly when cross-border shipments are involved.

In an e-commerce world where this location matters, Malaysia enjoys many advantages, just as it has since the beginnings of international commerce centuries ago.  Strategically located on the Strait of Melaka, Malaysia is the natural gateway to southeast Asia, within easy reach of many of the world’s most dynamic economies. The ASEAN region is home to 630 million consumers and collectively the world’s sixth largest economy at over US$2.4 trillion annually. However, it’s not only the physical location that matters. What Malaysia and its partner Alibaba have put in place in that location are what make it one of the world’s most advanced e-commerce hubs.

Reliable and efficient shipping operates on a hub and spoke system, with few hubs connecting out to many spokes in a region.  The hubs are the most vital parts of the system, where synchronization of warehousing, packaging, transportation, and other logistical aspects of fulfilling an e-commerce transaction such as customs clearances or dealing with returned merchandise.  Malaysia’s recently launched Digital Free Trade Zone, which has within it the first international hub of Alibaba’s Electronic World Trade Platform, is among the e-commerce industry’s most advanced hubs worldwide.

Why did Jack Ma and Alibaba choose Malaysia for its first deployment of its Electronic World Trade Platform? Location was clearly one of the reasons. Our geopolitical stability and deeply ingrained trading culture were reasons.  The others relate to a powerful shared vision and the leadership commitment to execute an aggressive development plan. Making the Digital Free Trade Zone a reality involved the Prime Minister and other senior members of the government setting directives that cut across 26 different agencies and ministries. This top-down leadership, plus the sector-specific knowledge of MDEC and others driving the growth of the nation’s digital economy were what made it possible to transform vision into reality in under one year. Datuk Yasmin summed it up this way: “It was many things, but most importantly, he and the Alibaba team saw that we had the vision for it and the ambition to see it through.”

Jack Ma said, “the first-e-hub under the Electronic World Trade Platform outside of China will go a long way towards making global trade more inclusive and provide much-needed support to a hugely important constituent:  SME’s and the younger generation.” Clearly, the significance of the partnership with Alibaba, and the capabilities it has brought to market have industry, socio-economic, and other far-reaching implications. Datuk Yasmin expressed the following in conclusion:  “My dream is that we will rediscover and reposition the glory days of the Straits of Melaka during the silk and spice trade.  Melaka was right in the center of the universe then, and I feel it can be that in the e-commerce universe.”

Datuk Dan E Khoo is the President of MDEC Americas Inc; a Silicon Valley organization established to drive the global expansion of Malaysia’s digital economy.

Malaysian Leaders Must Build World-Class High Impact teams

When I joined Malaysia Economic Development Corporation (MDEC) in February 2015, I took on the role of Vice President of Enterprise Development. It was a new division created to identify and catalyse Malaysia-based companies into the global arena as eventual world icons. This was and still is one of MDEC’s four strategic pillars – to build world class tech champions.

It’s usual for MDEC to move people around internally to lead teams to drive various corporate objectives, so my MDEC story moved through different chapters. Currently, I am leading a laser-focused team using MDEC’s GAIN (Global Accelerator and Innovation Acceleration) initiative to elevate Malaysian companies onto the international stage, starting with the ASEAN region.

World-class ambitions demand a high-performance culture, which is a fast-emerging trend in many key organisations. Personally, I point to football teams (mysteriously called soccer by Americans) as examples of some “secrets” of what it takes to successfully develop and drive high performing teams.
Malaysia has already seen several inspiring success stories, moving in the right direction and gathering momentum. Just to run through a few:

  • Vitrox Berhad is a global player in automated vision inspection solutions. Founded by Chu Jenn Weng and Steven Siaw Kok Tong, both graduates from University Sains Malaya. Vitrox was first admitted to the ACE market in 2005 and moved to the Main Market in 2009. On 19th March 2018, their market capitalization stood at RM2,755 million.
  • Aemulus Holdings Berhad is another listed MSC status company. Founded by Ng Sang Beng and Yeoh Chee Keong, it listed on the ACE Market of Bursa Malaysia in 2015. Co-founders, Ng Sang Beng and Yeoh Chee Keong were colleagues at Altera Corporation in Penang. Their market capitalization stands at RM107 million.
  • Other MSC-status champions include Inmagine Group, now 16 years in operations, best known for their stock image business (123rf.com) and Piktochart, which produces visual stories from charts.
  • Green Packet Berhad is a Malaysian company that started out in Silicon Valley in 2000 and achieved listing in 2005. In true Silicon Valley style, the company evolved, selling its wireless broadband business to Telekom Malaysia to focus on the Internet of Things (IoT) and fintech.
  • iflix, a video on-demand service, was founded by Patrick Grove, who also built the hugely successful Catcha Group, a leading internet player in the region. In 2016, iflix secured a US$45 million investment from pay-tv giant Sky Plc.
  • MDT Innovations is the leading innovator in the region for IoT. Driven by Liew Choon Lian, CEO and Sim Hon Wai, COO, its revenue is 95% export driven. It was listed in Gartner’s Cool Vendor and featured as top 25 IoT companies by APAC CIO Outlook Magazine in 2018.

Passion, Diversity and Innovation

There are several other Malaysia-born companies that are now serving customers around the globe. All of them started with a core team of founders, who recruited their team and infused it with a mission, and – as they say – a dose of passion to achieve performance. As well as performance, they developed and continue to maintain high performing teams: It’s easier when you start from scratch, but if you don’t – you do need to continually add to your talent pool.

That means having to be in a location, which is attractive for talent, like Malaysia. MDEC has played a major role in making this possible, as one of the benefits of MSC (Multimedia Supercorridor) status is the ability to bring in talented staff from around the world.

In the corporate world, managers don’t have the luxury of building their teams from scratch. They join an organization, work their way up the ranks and if all goes well they get to run a department, division, etc. It’s fully staffed but nonetheless it is incumbent upon the leadership team to ensure diversity and inclusiveness. That’s how you get innovation – new ideas are needed from the outside: New blood to enable a fresh perspective, so to speak!

Incentives and a common goal are key to building a high-performance team

What does it take to build a high-performance team? A common goal is clearly important. Incentives also work, as you can see with football players and sales people, in general.

However, one should be wary of incentives driving the wrong behaviour. When too ‘significant’, incentives can sometimes cause problems. Most recently the big four Australian banks were hauled up by regulators and told to stop their product-based incentive payments, as customers were sold products they did not understand or need. The independent commissioner, Stephen Sedgwick said, “some current practices carried an unacceptable risk – of promoting behaviour, which is inconsistent with the interests of customers”.

In my earlier article, I talked about the need to have a strong story. If the story is clear and meaningful, and shows purpose, then you can actually recruit and motivate a team without relying on large monetary incentives! A high purpose generates powerful energies that will drive high performance: That is indeed the practice at MDEC, because working in MDEC is more than a job or a career, it’s about ‘serving the nation with your hand over your heart’.

Coming back to the issues faced by most managers, who after climbing up the corporate ladder have a team to lead: It is often assumed that they have the skills to manage a team, but in practice that might not be the case. A great salesman might not be a great sales team lead, where his job is to motivate, assist and plan for his salespeople to perform. This is where mentoring and coaching is required.

The other point to understand is that in a team, there will some who perform and others who don’t. If you have team members who are not contributors and in fact turn out to be disruptors, they need to be removed quickly and in an open and visible manner. Unfortunately, a lot of line managers prefer to keep these staff on the payroll and avoid uncomfortable conversations. When there is confusion about responsibilities, and no one is really held accountable for performance, managers will struggle to have an open and fair conversation about an individual’s performance. Without accountability, you cannot build a high-performing team.

“Well Done!”

Managers who want to build high-performance teams need to really understand this. If I could borrow again from football: All top Premier League teams are packed with talented, committed athletes, but the reality is that at this level, you can’t build a winning team without a superstar. Liverpool might have discovered one such star in, Mohamed Salah, who just turned 25 years of age and joined the club in June 2017 from A.S. Roma.

In his book, “Leading” Alex Ferguson (with Michael Moritz) said, “the two most powerful words in the English language are ‘Well Done!’ Much of leadership is about extracting that extra 5 percent of performance that individuals did not know they possessed.”

In building a high-performance team, you need a powerful story, committed team members, a couple of superstars and an evaluation system that is fair and open. What’s good for the goose is not always good for the gander, so rewards and expectations must be specific to each member. Add to this a courageous leader and you will have a winner!

Gopi Ganesalingam, Vice President, Enterprise Development, MDEC.

This article first appeared on 27 April 2018 at Leaderonomics, titled “Malaysian Leaders Must Build World-Class High Impact Teams

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