For centuries, Malaysia has been a center of international commerce, owing to its strategic location in the Strait of Melaka, and the resulting trading orientation that developed among its people. And while it remains an important player in the traditional forms of international commerce conducted principally among large corporations, the power of e-commerce has been harnessed in Malaysia specifically for the benefit of its expanding the cross-border trade of its small and medium-sized enterprises (SME’s).
Capitalizing on its culture and heritage rich in trading and commerce, Malaysia’s drive to grow its digital economy has always focused on inclusiveness. This approach aligned well with the vision of Jack Ma, the founder and executive chairman of Alibaba, the world’s largest and most profitable retailer, for an Electronic World Trade Platform (EWTP). In Ma’s view, the globalization of trade, though geographically widespread is flawed in its implementation because it has benefitted only big, multinational companies. This flaw is largely due to cost of cross-border trade that is driven by its complexity, rendering it inaccessible to SME’s. Putting an e-commerce platform in place that removes the complexity and therefore the cost that excludes most SME’s from cross-border trade will enable SME’s to profitably reach markets beyond their own borders.
This aligned view of inclusion forged a natural partnership between Alibaba and Malaysia to develop and launch Malaysia’s Digital Free Trade Zone (DFTZ). Effectively eliminating the complexity associated with customs, foreign exchange, warehousing, shipping and reaching a marketplace of potential customers, the Alibaba Electronic World Trade Platform (eWTP) hub within the DFTZ gives SME’s from Malaysia, and ultimately throughout the ASEAN region and beyond unprecedented capabilities to reach large consumer markets. In his remarks on the launch of the DFTZ, Jack Ma said: “Today we are witnessing a historic moment in Asia, where one country has begun to use technology to enable its SME’s and young people to become more competitive on the world stage.”
About 2000 Malaysian SME’s were part of the initial launch of the DFTZ. There is a Malaysian Pavilion on the Alibaba platform and various powerful tools that connect potential buyers outside of Malaysia with Malaysian products for the first time. So far the results have been interesting. The top Malaysian product sold into China through the Malaysian Pavilion is white coffee. Durian is number two. Bird nests for bird nest soup is also a popular SME export – leveraging our not quite as well-known location advantage of being on the flight path of swallows traversing southeast Asia. The mix of products and volume sold through the DFTZ to the world’s consumers will continue to evolve and grow in interesting ways, but whatever the products, it’s the growth of SME’s ability to benefit from streamlined cross-border trade that really matters.
Reflecting on the launch of the DFTZ and the partnership with Alibaba, Datuk Yasmin said: “I’m really happy with how this came together. Of course it was a lot of work on our part, but it didn’t seem so due to the sheer excitement of doing something so new. To be working with the global leaders at Alibaba and such an innovative leader as Jack Ma, has been truly a pleasure for us, and also has brought us to a whole different mindset now. The platform that we built was developed by locals. I must say that it was at a high standard. Through this initiative we raised the standard of our local suppliers to that of a global caliber, an Alibaba caliber, and that’s something that will have lasting effects.”
Dato’ 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.
Today, as it has been for centuries past, the Straits of Melaka is one of the world’s most important trade routes. Malaysia’s prime location on the commercial artery that connects the Pacific and Indian Oceans and the major economic centers of Asia has been a major factor not only in the growth of the Malaysian economy but also in the development of trading and commerce as a key dimension of Malaysian rich history and culture.
The United Nations Conference on Trade and Development (UNCTAD) estimates that roughly 80 percent of global trade by volume is enabled by shipping. A relatively narrow channel, the Straits of Melaka is relied upon by a third of total global shipping. In dollar terms, an estimated US$5.3 trillion worth of goods transits through the South China Sea annually.
As early as the first few centuries A.D., trade on the Straits of Melaka helped to create economic and cultural links among China, India, and the Middle East. Europeans also plied the Straits during this time. By the middle ages, it had become the hub for trade and commerce that it is today, with ships using points along the coast of the Malayan Peninsula to dock and conduct commerce. It is said that the Chinese, Indians, Omanis, Yemenis, Persians, and Africans exchanged goods and established trade agreements with traders from Sumatra, Java, Bali, and Canton. Silk, brocades, porcelain, and perfumes from the Middle Kingdom were traded with hardwoods, carvings, precious stones, cotton, sugar, livestock and even weapons from India. From the interior of Malaya came tin, camphor, ebony, and gold. Surrounding traders brought spices, perfume, rice, gold, black pepper and sandalwood.
The regional prosperity that came from being the hub of activity for traders of all ilk (and silk) led to a self-reinforcing loop that perpetuated an affinity for the virtues of commerce. The strategic location of the Straits at the heart of the Eastern trade routes, coupled with favourable seasonal winds, were critical natural factors that encapsulated the trade-hub potential of Penang and Melaka. But it still took the inspired decision of the then administrators to build the infrastructure, establish the network and train the local population to turn Penang and Melaka into major entrepots of their time.
While the world and its modes of commerce and trade have evolved greatly over the past several hundred years, the Straits of Melaka has sustained its position as a preeminent trade route. Today, Malaysia is the gateway to the 630 million consumers of the ASEAN region – collectively the world’s sixth largest economy at over US$2.4 trillion annually.
Malaysians’ commercial sensibility is a key underlying factor in the growth of Malaysia’s digital economy. Entrepreneurship and understanding, producing and trading the goods markets want are deeply ingrained among Malaysians. As Datuk Yasmin observed, “we are traders – locally, nationally, and internationally, giving the various programs undertaken by MDEC and others access to a deep talent pool that is readily adapting to the possibilities and opportunities of digital.”
This dimension of our culture also affords Malaysia the ability to have a highly inclusive agenda for building its digital economy, one that touches a large proportion of our people, extending their outlook and what they already know into exciting new digital endeavors. Datuk Yasmin outlined the scale at which this was being undertaken: “on a national level, we are doing things to expose our entrepreneurially-inclined population to digital entrepreneurship. Digital marketing and digital e-commerce instruction is now a formal curriculum in our vocational schools. We will have over 400,000 vocational school graduates each year who have had in-depth exposure to digital marketing and e-commerce.” This program is now being expanded to the university level.
After only two years, the transformative impact has been phenomenal. We already see cases of successful young e-commerce entrepreneurs going from renting a small house to being to buy a house for their family, and then having sufficient demand for their product to warrant moving production from their backyard into a brand-new factory. International expansion of the markets where these small and medium-sized enterprises (SME’s) do business is the next step, and one, given our trading culture and heritage, that is coming naturally, and now more easily, leveraging the partnership between Alibaba and the Malaysian government and the capabilities of Malaysia’s recently launched Digital Free Trade Zone.
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.
When national agency Malaysia Digital Economy Corporation (MDEC, previously known as Multimedia Development Corporation) was formed in 1996, the aim was to support the development of Malaysian-based technology companies — MSC (Multimedia Super Corridor) Malaysia status companies.
Over the years, the number of these MSC-status companies has grown to more than 2,500.
Many of these companies are already market leaders here, and some are ready to take the next step, which is to succeed in the ASEAN market.
To help crystallise their expansion efforts, MDEC recently launched the GAIN (Global Accelerator and Innovation Acceleration) programme.
We saw their potential to global players, and even to become global icons: ASEAN was envisioned as the next major stride forward.
Why is Malaysia a fertile ground for emerging global icons? Firstly, Malaysia is centrally located, and for companies based here, many markets are easy to reach. We have gained a deep understanding of buyer behaviour and market dynamics.
Also, Malaysia – with a population of some 30 million limits the growth potential of any business, especially a technology one.
This fosters a creative tension, a drive to answer the strategic challenge: How does a company stand out from the rest of the field? During the infancy stage, most companies start by selling to customers that they can connect by a sharp focus on competencies, pricing, and delivery.
However, the next chapter of the story demands answering the overpowering need to stand out from the crowd. This will always remain a challenge, of course, for most companies throughout the entire life-cycle of the company: it’s the pressure to adapt.
But just to stop the story here: Consider that most companies will only look into this issue when they achieve a certain scale, a certain milestone along their growth journey.
Can you be differentiated by your product, service or is there something else? Looking at a sampling of the successful local technology companies such as iPay88, Fusionex International, N2N Connect, iflix, Sedania Innovators, Les Copaque, Mindvalley, I would say that only a couple have engaged the power of story.
Having worked at several MNC’s – such as Lucent, American Express, Telstra, and others – I have had first hand opportunity to delve into the sales process from the inside.
The truth, they say, always lies within. It has become crystal clear to me that the truly successful companies have been able to craft powerful strategic stories to explain their relevance.
Yes, we needed to have the right product-value mix, but the deal is definitely lost if our story lacks meat, lacks structure, and misses telling the unique selling point.
Why stories work?
Stories are powerful differentiators, and for this reason have always appealed to the human psyche. The first clear stories that remain visible for human-kind are probably the Palaeolithic cave paintings in Lascaux, France, which are estimated to be 20,000 years old.
For centuries our ancestors were captivated by stories, and long before the written word, history was passed down verbally through the generations in the form of stories.
It was paintings, visual work and the spoken word that captivated our imaginations.
Interestingly, fast forward to the modern era and noted linguist, Noam Chomsky, who in the 1960’s said that we are all born with an innate language.
He went on to say that the primary purpose of language was for thought – not communication!
Yet leaders and sales people continue to throw facts and figures at us. I am not saying that these are not important, but they need to be placed within the engaging, compelling structure – that we call an overarching story.
This is something that NGOs do very well. Talk to any successful NGO and they are able to explain the reason for their existence without using facts and figures.
Companies, possibly influenced by the finance and product specialists, seem to just jump straight into why the product is better or cheaper, and the better ones are able to sell the value proposition.
It seems we have deliberately ignored the wisdom of generations in order to get into a “you can never win” race to prove our product is better than competitive offerings.
Companies that are not able to climb out of this abyss will find it difficult to survive in an increasingly competitive and connected world.
It is tough to win the features and benefits war when you are sitting in front of a prospect, and impossible when you are not.
And in a competitive world, this is the challenge faced by ASEAN companies. There are of course notable exceptions; AirAsia always had a great story, represented by its famous tag-line, “Now Anyone Can Fly”.
Nadiem Makarim, Founder & CEO of GoJEK ,is a powerful storyteller and is propelling the company into an Indonesian logistics and payment superstar.
Grab is following suit. The ASEAN market will be an open one, which means local SMEs need to start thinking about how they are going to compete, not just within the region but against global players.
For SMEs and technology companies the writing is not the wall. Learn to compete, or face extension. This is why the storytelling skill is critical, and, for me, an area where local companies have not mastered the battle of the mind that needs to be fought.
Let’s take a look at a couple of extraordinary storytellers from the technology world.
Steve Jobs attention to detail in presenting Apple product is legendary.
In the movie Jobs, you can see the time and effort that goes into his presentation – it’s not a matter of running through the few slides with a narrative. What he says, how he says it, where he stands, sits, how he unveils the product functionality is all carefully crafted within an overarching story so that he captivates, entertains and most importantly speaks to each and everyone in a personal way that touches our emotional core.
Why does he do this? Is it his passion, obsession with detail? Perhaps. But I think he truly understands how important stories are to the human psyche. And by casting the story correctly, he is opening the door for his sales and marketing people to follow up with the features and benefits pitch. That’s the art of strategic story-telling.
Simon Sinek, in his most watched video on the “The Golden Circle” says that by answering the why question you can reach into the limbic system, or the “emotional brain,” which we know from biology is buried within the cerebrum and is possibly the oldest part of our brain.
This part of the brain doesn’t control language, reasoning, coordination, etc., which are controlled by the cerebrum, but because it is the repository of emotions and memories it can drive actions more effectively than rational thought. Jobs and others have perhaps intuitively understood this and used stories to set their companies apart from the pack.
Elon Musk, a man I truly admire and respect, entrepreneur and leader extraordinaire is another example of a great strategic story-teller. He announced the Tesla Roadster in 2004, using the chassis and engineering strength of Lotus Engineering and delivered the first unit four years later.
The cars that were on the market were sold on their features and performance. Potential buyers were told about; zero-emissions, luggage space, range per charge, etc.
When presenting his electric car, Musk talked about it being “cool, great design and acceleration. It was a simple but powerful message targeted at the limbic system. Tesla’s Model-S became the bestselling electric vehicle in the US in 2016 and 2017.
To end on an important point: Why is storytelling so important to local technology companies? I’ve already talked about the competitive environment these companies face. Instead of pushing more and more information out, we need to learn the art of storytelling. The emotional engagement that I mentioned earlier is vital to business performance.
Technology today has democratised and has deepened our connectivity and our reach to our customers, competitors, and just about every single person on planet earth: So let us share the stories of our business propositions, and tell the stories of our entrepreneurship journey globally.
Malaysian companies can stand tall with other global players: we need to tell our compelling stories!
by Gopi Ganesalingam, MDEC’s Vice President of Enterprise Development.
In tandem with these changing times of rapid digital disruption and transformation, even language is becoming more disrupted.
One of the debates gaining momentum during networking sessions at events in ASEAN, especially in leadership circles, is a certain confusion surrounding the meaning of the terms —“digitisation” and “digitalisation.”
The two terms are often mixed together in informal conversations especially in leadership circles, and vaguely connect to the rising tide of digital transformation across all areas of life. To the digital natives – especially the “born-digital” startup community, the distinctions may not appear to be relevant. However, business leaders in the “brick and mortar” world need clearer definitions for their planning procedures.
So, let’s try to clarify what the emerging distinctions in the business community are.
Gartner has presented the definition that “digitisation” is about converting analog to digital content. In short: “Digitisation is the process of changing from analog to digital form.” A simple example is converting an analog music piece – vinyl record to a digital file. Or to convert “brick and mortar” to “click and mortar.”
Digitalisation and Transformation
And then Gartner moved to suggest that “digitalisation” is when you use digital technologies to change a business model and provide new revenue and value-producing opportunities; it is the process of moving to a digital business. Examples of this include converting and automating manufacturing processes under the control of digital technologies: this may be illustrated by automating what were previously manual workflows in producing new products.
Analyst firm Deloitte adopts a similar approach, suggesting that digitisation means ‘Doing digital’ while digitalisation means ‘Being digital’. So, it is not simply a matter of digitising the touch points, it’s also about transforming your traditional organisation into to a digital organisation, essentially making your company digital at the core.
Putting it in a populist terms, digitisation is when Star Trek’s teleportation device (pardon the Star Trek reference; I’m a Star Wars fan, truth-be-told), changes your body into digits whereas digitalisation is about transforming the whole process and business of teleportation with the latest technological strategies.
Therefore, I suggest that digitalisation is essentially rooted in the holistic process of transformation across different sectors and different areas of our lives. The potential for change is suggested by this journey of digitalisation.
When we adopt these clarified definitions, we will be able to communicate more efficiently about the potential for change in our vision, in our planning and in our achievement. Our conversations about digital transformation are rooted in the fertile ground of digitalisation.
A few words to finish: Malaysia Digital Economy Corporation (MDEC) is focused on building a digital future – Digital Malaysia – in a holistic manner, one which unlocks significant economic, environmental, and social values. The four strategy pillars of digitalisation we are using to achieve transformation are: to drive investments; build local tech champions; catalyse digital innovation ecosystems; and enable more digital inclusivity.
“Digitisation” is the process of changing from analog to digital form.” A simple example is converting an analog music piece – vinyl record to a digital file. Or to convert “brick and mortar” to “click and mortar.”
“Digitalisation” is a broader, more strategic word to embrace the holistic process of transformation across different sectors and different areas of our lives: digitalisation is when you use digital technologies to change a business model and provide new revenue and value-producing opportunities.
Datuk Yasmin Mahmood is the CEO of Malaysia Digital Economy Corporation.
The only thing that’s constant in life and business is change. And change is best exemplified in the Information, Communications and Technology (ICT) industry which is constantly evolving for the better, with newer innovations to improve lives, and enable businesses to run more efficiently and productively.
Having been at Malaysia Digital Economy Corporation (MDEC) for more than three years thus far, after having spent my previous chapter at multinational companies such as Microsoft, Dell and HP; I have witnessed first-hand the power and magnitude of digital transformation that pave the way for the Fourth Industrial Revolution.
I have always thought of innovation as being the intersection between invention and insight. And with innovation comes transformation that transcends government, business and society for the better.
However, there is one aspect of transformation that is equally important. And that’s cultural transformation which, done correctly, brings positive benefits and significant changes within a company.
Allow me to share the MDEC example.
MDEC’s mission is to champion Malaysia’s Digital Economy, and for this to happen, it must be rooted in our core values and we must hold ourselves accountable to the highest standard of integrity.
Visitors to the Malaysia Digital Economy Corporation (MDEC) headquarters in Cyberjaya would inevitably see a statement of our core values on the ground floor. They are:
We serve the nation, and are here to help bring meaningful impact to our country. And we do so with utmost integrity, sincerity and accountability.
We are go-getters, and do things with passion, courage, agility and resilience.
We are forward-thinkers, and constantly look towards the future, anticipate change, are not afraid to challenge the status-quo and connect the dots to maximise impact.
We are collaborators, meaning we are approachable and respectful, and we believe in the power of partnerships and teamwork.
We have fun… are adventurous, creative and we inject “Wow (!) into everything that we do.
As CEO of MDEC, I am very proud of these values and the MDEC team – because I see my MDEC team bringing them to life on a daily basis.
These core values represent “our true north”, because they are what makes the MDEC team a highly impactful and highly collaborative one. Evidence of this is how the Digital Economy contributed some 18.2% to Malaysia’s GDP in 2015 and is expected to further increase in the years ahead.
However, corporate cultural transformation can be challenging.
At times, the MDEC leadership team and I have had to make some tough decisions to ensure that these core values and integrity continue to be at the heart of everything we do.
We have had to transform processes and to make them more transparent – and be seen as transparent.
I admire and respect MDEC Chairman Tan Sri Sidek Hassan’s position on “Zero Tolerance” or “ZeTo” on corruption.
It is a position MDEC as a company can relate to: MDEC has Zero Tolerance for any form of corruption.
Let me give you an example: Through our audit process in 2016, we uncovered issues concerning Foreign Knowledge Workers (FKW) Approval Process and Governance. This goes against the grain of what MDEC stands steadfastly for.
As a result, under the purview of the Board Audit Committee, we undertook an extensive audit and process transformation to drive transparency. This included:
Engaging credible third-party consultants to undertake the Business Process Reengineering and an extensive forensic audit to validate issues that had been uncovered.
The approval process was redesigned to make it a ‘committee-based’ approval system. Most of the changes came into effect in mid-2017. Since then, we continue to further fine tune and make improvements in the best interest of transparency.
Issues that may have been discovered during this exercise would have been notified and reported to the relevant authorities.
Embarking on this clean-up exercise was no easy task. It required commitment, patience and most of all, courage – especially in the face of many obstacles and people who were against this positive change for a more transparent and fair process.
As one of the leading organisations in the nation, MDEC is also pursuing the Corruption-Free (also known as “IBR”) pledge with MACC. What this means is that MACC will have direct access to us and our people, myself included.
It pleases me to say that, when we announced this process, the MDEC Senior Leadership Team volunteered to be the first to go through this audit and to be checked. It’s very heartening because it shows that core values and integrity are not just corporate statements, but that the team is leading by example even if such a process may be perceived to be inconvenient and tedious.
Another initiative that MDEC is implementing is developing our very own Code of Ethics and Business Conduct.
While such processes may be time-consuming and tedious, it is our commitment to our core values and integrity that would ensure MDEC continues serving Malaysia and helping our country realise our digital potential to its fullest. Failure to see through such commitment would mean that we have let down the country.
At the end of the day, though, integrity is what defines us as people and as professionals.
Yes, change is constant and transformation is important – but what’s equally or more important is integrity and the core values within us all to always do the right thing.
While most nations focus on socio-economic development, ecosystem growths, marketplace transformation and other ‘real world’ agendas, there other critical factors that must be brought into play.
Let’s consider these the following milestones, which are powered by the twin drivers – creativity and digital technology:
Malaysia is now a multimedia powerhouse, which is producing highly sought-after digital content
Malaysian talents are now being sourced for various digital and technology related industries
Malaysia has become a defining example of a rapidly-accelerating digital economy
Now, that the first arc of the story has been achieved, Malaysia is switching up through the gears and increasing its pace of development. The creative content industry – is rapidly growing into a lucrative and financially stable sector.
What is the backstory to this positive position?
Well, to answer that, let’s look at how things were like 10 years ago.
One of the original goals for the Malaysia Digital Economy Corporation (MDEC) was the daunting task of producing an expansive animated world with Saladin: the Animated Series. Conceptualised in 2004, it was an ambitious, long-sighted project that was filled with passionate and talented people who wanted to see the Malaysia recognized. This project brought together private businesses, government facilitation, and an international co-production. That feat alone is remarkable and the ensuing internationally critical and commercial success surpassed all expectations.
Of course, a more fundamental aspect emerged and took root. What started off as an initiative to kick-start the 3D animation industry for Malaysia, became the source of inspiration to create and grow an industry, which focused purely on creative pursuits – powered by advanced technology and innovations.
Those involved with Saladin strongly believe that Malaysia has the potential to lead the creative sector and grow into a regional powerhouse. That same fervent hope saw that this marketplace could transform into a critical economic driver. Productive weeks turned into fruitful months, and later into years of empowerment for this space.
Conduit of Growth
With help from MDEC, the creative content industry has started to crystallise, and to take definite shape. . The goal has always been about establishing Malaysia as a regional Creative Hub: one that nurtures both the talent and industry to serve regional and global needs. Nearly 15 years later, opportunities are multiplying, from as far afield as France, Europe, UK, as well as from key Asian markets – all currently working with talents and businesses in Malaysia.
To-date, there are about 11,000 professionals in the Malaysia’s creative content and technology industry. Most of these are providing in-depth coverage within key creative segments, such as animation, games, visual effects & new media, multimedia assets for apps, and content-enabled delivery platforms. Companies in this space exporting RM1.2 billion in 2016 alone, making it the fastest growing technology marketplace in the last three years.
Deep diving into any of the industry sub-segments will bring up some surprising insights. Take the animation sector, as an example. The statistics alone are mind-boggling – market revenues for animation and related efforts have reached 187.7 million in 2016, translating to an estimated 11.2% boost from 2014 to 2016. Equally as impressive is the games market. From a consumption standpoint, research shows a US$587 million revenue forecast in 2017, adhering to a year-on-year growth rate of 16.3%. In terms of market size, there are 14 million Malaysian gamers, 7.8 million of these are paying customers. Take this data into account alone suggests that one out of every two Malaysians are gamers and voracious consumers of quality digital content and services related to these immersive materials.
The creative content and technology industry is today a fast growing, influential, and high potential sector – one that has been experiencing exponential growth in the last few years. Knowing this, Malaysia is keen on further accelerating the creative development segment and the massive pool of talents keen to delve into this new marketplace. This includes building new digital technologies, growing the ecosystem, and ensuring that its effects are translated to give value beyond the digital space.
Of course, like all progressive efforts, there are certain drivers, which are critical to these aspirations. The important ones – such as talent development and retention, up-skilling roles, and widening public awareness and acceptance – are the most empowering factors for the creative industry. Attracting support from influencers on talent – such as family, school, and the environment – is equally significant.
All these performance scaling and industry growths offer much more than continuous revenue streams. Beyond the more obvious outcomes, the creative content sector has helped Malaysia to take the lead in various initiatives. One of the first initiatives MDEC introduced to empower talents was the Intellectual Property Creative Challenge (IPCC). A platform like IPCC – now become a must-go-to event for potential creatives – has opened another door into animation and videogames development. IPCC has helped some people go on to create multiple industry milestones.
Another step includes establishing the Malaysia Animation and Creative Content Centre (MAC3), an incubation and accelerator initiative, to give the creative development sector another boost, and inspire similar services to open their doors. The latest of these efforts is the public-private sector initiative between MDEC and UOA with industry partners in launching the LEVEL UP Inc. – the premier games incubator. With one of the partners, Media Prima Digital, Malaysia now has a proper privately-led digital games publisher that is willing to fund and develop digital games that have commercialisation potential. This includes merchandising efforts and scaling to regional markets.
This move allows MDEC to leverage the tremendous potential Malaysia has to offer as an investment location as well as offer a talent supply line for the creative content industry. There is a need to provide support for local content development efforts and so feed further growth of the ecosystem. This is important for digital games development: this, among others, is the primary reason such spaces are essential.
Malaysia is no longer taking baby steps; it has now grown into a champion for the creative content industry. While there is much more to be done, there is no doubt that things are now in place and moving in the right direction. It is now a matter of building more pace within the content ecosystem and matching this to the speed of growth of other engines of innovation and economic development in Malaysia.
Personally, I believe that it will take more than the separate capabilities of the private and public sectors or relevant players to further revolutionise the creative industry segment. Multiple collaborations, which not only cross-over verticals but also geographical boundaries, will become the primary play-book for all within the content development space.
To end, we are like the crew of the Starship Enterprise, boldly going where no one has really gone before. The only thing that is keeping us alive and moving forward is the team effort that we as Malaysia is putting out there. Everyone plays a part and our job in MDEC is to make sure the Warp Drive is fully operational.
Changing with the times is now an absolute necessity
Business transformation has always been about doing more to improve processes at all levels and engaging a broad swath of factors. This, oftentimes, will take technological advancements into account as they are used to start or spur major changes for the positive livelihood of all.
Just look at how the personal computer, and later on the mobile phone along with the smartphone after, disrupted their respective industries and made it better for everyone.
Road to Digital Development
When Malaysia established a true and proper technology regulator 20 years ago, it had multiple objectives to achieve. Chief among them is the ultimate aim of updating the country into a technological powerhouse. Its role is so crucial that it had been designated as the innovation trailblazer that all must follow. Fast forward to 2017 – having gone far to close the digital divide – the Malaysia Digital Economy Corporation (MDEC) continues the drive the innovation and technology empowerment agendas.
Previously known as the Multimedia Development Corporation, the recently rebranded regulator has raised the ante in bringing Malaysian businesses to the global stage. While it originally started out as an effort to create and grow a tech ecosystem that thrives on innovation, it soon became an acceleration platform that is fully focused on propelling Malaysia into becoming a driving force for the digital economy.
This can be seen in the initiatives that MDEC has introduced over the last year such as Malaysia Digital Hubs and Malaysia Tech Entrepreneur Programme (MTEP). There are even other collaborative efforts that contribute to the progress of the digital economy. Among the big achievements are the re-domiciling of a global talent development brands and attracting venture builders who are keen to use Malaysia as a regional staging ground.
As Malaysians become more technologically savvy and this nation transforms itself into a critical driver for innovation and digital economy, it is only a matter of addressing what it is lacking now to enable its full immersion with innovation. This also includes boosting process improvements and efficiencies at all levels. Current statistics show that most Malaysians have an aptitude for the digital realm, like how most who are on Facebook have 60% more friends than the global average or Uber registering 160,000 drivers in the Malaysian towns it is operating in since it started up.
The Big Push
Going by these statistics alone, Malaysians are more than ready to join the digital era.
While businesses are in the know, there are still many – comprising mainly the small and medium-sized ones – that do not understand how critical it is to ready themselves for the 4th Industrial Revolution. They need to learn and adapt quickly so they can embrace this transformative shift.
Technology, long before it became mainstream, has always been seen as an add-on component that introduces enhancements meant for improving processes. That mindset, which always focused on optimisation, must change. Current progress clearly indicates that more needs to be done to encourage the growth of the digital era. In making the switch, most focuses should be directed fully on tackling key issues that have plagued the drive for innovation all these years.
In fact, being able to take on current and oncoming disruptions is the end-goal for businesses as they move to be more accepting and understanding on the need for becoming more technology savvy.
Immediate Changes Needed
In this era of disruption and constant marketplace transformation, businesses and industry leaders have to take the lead and be the change agents. They are the ones who will augment the way companies interact, communicate, and understand the potency for digital transformation. When properly implemented, improvements will occur at almost all levels.
Current advancements seen to-date for Malaysia are a mixed bag of potential results as large enterprises are slow on the up-take. Thankfully, most are already considering plans for digital transformation with those operating at smaller scales being quicker to adapt and plan for deployment.
Undoubtedly, being able to unlock the true value from this next-gen economy model is far from being fully exploited. This factor nicely ties into the necessary paradigm shifts needed to introduce and accelerate the expansion of the digital era. This includes public policy changes playing a key role along with how companies understanding and being quick to realise that they cannot fall back on archaic practices and old school thinking.
Things must change, clearly.
Both factors, and needing to act on them, have to be primary focuses for Malaysian companies if they are to keep up and remain globally relevant. If done right, they can reap the maximum benefits from updating themselves and reading their processes for the digital age.
Datuk Yasmin Mahmood, Chief Executive Officer,
Malaysia Digital Economy Corporation (MDEC)
We are delighted that Budget 2018 is focused on accelerating growth and enhancing the wellbeing of the rakyat as well as in further enhancing Digital Malaysia. The Digital Economy continues to be a key driver of growth, contributing some 18.2% of Malaysia’s GDP this year, and expected to exceed the projected target of 20% earlier than 2020.
Just last Friday (20 October 2017), Prime Minister Dato’ Sri Najib Tun Razak hosted the 29th Implementation Council Meeting (“ICM”) and emphasised on the importance of the Digital Economy, and how it can become the new engine of growth for Malaysia. At ICM, Prime Minister Najib also announced a new stream of initiatives to boost nationwide digital transformation, and details of these initiatives – both new and existing – were unveiled at today’s Budget 2018 announcement.
Digital inclusivity and generating income for the rakyat
The RM100 million allocation for the eRezeki and eUsahawan programmes would ensure that the Digital Economy continues to be inclusive for the well-being of the rakyat, and in particular the B40 and M40 groups.
With both programmes going into their third year, we estimate that 150,000 rakyat would be trained in 2018; resulting in 341,745 rakyat participating in both programmes with an estimated total income and revenue of RM544 million according to calculations.
We are also pleased to note that digital inclusivity has also been extended to a new flagship initiative called eLadang to encourage farmers to leverage the latest smart farming technologies (such as IoT [Internet-of-Things] and BDA [Big Data Anaytics]) to improve yield and pendapatan.
Talent Development for the Future of Work
A total of RM250 million has been allocated for future education of the National Transformation 2050 (TN50) generation, and would be used to develop Science, Technology, Engineering and Mathematics (STEM) centres and improve Computer Science modules, including for Coding programmes. From the RM250million, RM190million is allocated for two thousand classes to be transformed into Smart Classrooms for 21st Century learning to increase creative and innovative learning.
MDEC is pleased with this allocation as this would ensure Malaysia’s students have exposure to the #mydigitalmaker education initiative launched last year.
This is a joint public-private-academia initiative with the aim of transforming the youth community from being users of digital innovation to producers or digital innovators. This includes skills such as coding, app development, robotics, embedded programming and creative technology; all of which will ultimately help to strengthen problem-solving and creativity amongst our future generation.
Our forecast reveals that we need one million digital workers, such as coders, application developers and software engineers, by 2025. With the continuous emphasis on talent development for the future of work, this is indeed encouraging for Malaysia to continue nurturing our bright young talent.
Nurturing Malaysia’s startup ecosystem
It was also announced that the Malaysian Government will assist startups by introducing a slew of initiatives to encourage venture capital activities. The Prime Minister announced that investors from major institutions will allocate RM1 billion for venture capital investments in selected sectors.
These initiatives include income tax exemption being widened to include management fees and performance fees, as well as a reduction in minimum investment limit in a venture company from 70% to 50% from 2018 to 2022. Companies or individuals investing in venture capital companies will be given a tax deduction equivalent to the amount of their investments, which will be limited to a maximum of RM20 million ringgit per year, just as income tax exemptions equivalent to the amount of investments by angel investors in venture companies will be extended until 31 December 2020.
This is a visionary stance by the Malaysian Government as the start-up ecosystem is the job creators of the future. We introduced two highly successful initiatives last year, the first being the Malaysia Digital Hub initiative that supports start-ups and communities while creating greater opportunities for them to connect to the ASEAN and global digital ecosystem; and secondly, the Malaysia Tech Entrepreneur Programme (MTEP) – an initiative by the Malaysian Government that aims to attract global technopreneurs and help them to realise their fullest potential out of Malaysia and to scale their businesses regionally and globally.
Fortifying the Fourth Industrial Revolution and Digital Economy
The Malaysian Government would also be providing grants worth RM245 million under the Domestic Investment Strategic Fund to upgrade Smart Manufacturing services. This move is aimed at supporting investment and business activities under the Industrial Revolution 4.0.
In addition, the Futurise Centre in Cyberjaya will be upgraded as a one-stop centre for corporate companies and universities to develop product prototypes as well as to boost innovation. The government will also extend incentive periods for Fast Capital Allowance by 200 per cent on automation appliances for assessment year of 2018 until 2020, while incentives for the manufacturing and services sector for Fast Capital Allowance by 200 per cent will also be given. For information communication technology appliances, capital allowances – including computer software expenditure – can be claimed from assessment year of 2018 until 2020.
These moves stem from the reality today that, in a hyper-connected world, it is becoming abundantly clear that artificial intelligence (or “AI”) is the defining force of the Fourth Industrial Revolution. AI is the natural progression from data analytics, and as such, Malaysia should start looking at developing a National AI Framework. This will then be an expansion of the National BDA (Big Data Analytics) Framework. AI is the “game changer” for the Fourth Industrial Revolution.
Digital Free Trade Zone (DFTZ)
DFTZ is proving to be a massive game changer for Malaysia which will see Malaysia’s SMEs doubling exports, and establish Malaysia as a regional trans-shipment hub for e-commerce logistics while creating 60,000 jobs by 2025.
I am happy to say that the DFTZ will “Go Live” on 3 November and 1,900 export-ready SMEs will be flagged off to begin their export journey. This is an encouraging number of SMEs as our previous target was 1,500 SMEs.
For the first time, the world will see a physical and virtual zones with additional online and digital services to facilitate cross border eCommerce and invigorate internet based-innovation.
Why it is necessary for the current era of disruption
The IT industry has been in a state of flux over the last 12 months thanks primarily to disruptive technologies of all sorts appearing and rocking the status quo for many industries. This has become so extensive that it is imperative for all to identify current or upcoming trends that have the potential to influence the marketplace. Businesses need to be able to learn and adapt, or be left behind.
Future-proofing, of course, is critical here.
Consider the likes of iflix, Grab, AirBnB, Amazon, and other on-demand services that have appeared over the last five years. While their goal is to provide an entirely new level of service that is unprecedented for all, they have challenged the norm and forced many industries as a whole to face change. Mainstay players must now figure out how they can take on these fast-accelerating upstarts.
In fact, disruption – now a buzzword among innovators – has become a true force to be reckoned with as it has become a major wake-up call for businesses that are complacent or appear to be laggards.
As the world struggles to embrace change that the digital age heralds at a never-seen-before rapid pace, it is clear that there is a revolution taking place right now with technology taking centre stage. Technology has, and still is, changing all the rules and propagating the fact of how disruption is now the new norm.
Once this understanding gains more traction among businesses, the next step is to consider future-proofing for the variable factors that these disruptive forces might bring to the table.
Let’s start with how disruptions affect businesses.
As consumers change according to trends, businesses must be ready for a never-ending game of evolution and be quick to absorb, understand, and adapt to rapid transformative processes. If they don’t, there is no chance for them to ever catch up. This applies to all industry sectors as disruption is not discriminative and will have a knock-on effect among inter-related verticals.
Disruption is an inevitable process that, by how it progressed over the last few years, has now become nigh unstoppable. In fact, the premise that it appears to focus in limited sectors is false as many business leaders have pointed to digital transformation as one of the major factors feeding the continual growth of many socio-economies.
The way forward is for all to embrace the idea of being disruptive or disrupted, rather than fearing it.
Future-proofing covers a broad stroke of processes that mostly rely on engaging the digital native. That one aspect alone is a necessity as it will enable businesses to be more aware and highly relatable to the ever-changing landscape that on-going and soon-to-come disruptions have brought about.
Having such engagements in mind will give rise to interest or, perhaps, instantly spur many towards transforming how they operate to make it more technologically inclusive and be fully prepared for the oncoming wave of disruptions.
This is, essentially, a crucial factor for businesses to keep in mind as they study and figure out what is needed for future-proofing.
Understanding the digital native certainly goes above and beyond deploying new technologies and enhancing how the workforce operates. In fact, the two inter-linked functions would only work when more start to understand and embrace the need to become digitally enabled, not just from a business perspective but in how they go about their daily activities as well.
With the Fourth Industrial Revolution now in full-swing, companies can no longer second guess themselves as newer innovations continue to show up and consistently shake-up the existing state of affairs. Industrial trends like Big Data Analytics, Internet of Things, Virtual and Augmented Reality, Mobility, and eCommerce have already broken the proverbial glass ceiling as they move to digitise the world. Seeing as these five empower the digital economy, it further reinforces the notion that they should not be under-estimated or disregarded.
Businesses must be immersed with any one, or all, of these influential factors to ensure their technology offerings are future-proof and able to take on these seismic shifts that the world is now experiencing.
The world had not been ready for the likes of Uber, AirBnb, and Alibaba. Even home-grown disruptors like Tripda and Hermo have started making in-roads for the ride-sharing and facial care spaces, further proving that industrial competitors are not the ones who will start any shake-ups. The use of advanced technologies will be vital to this and, thus, it is only appropriate that businesses step up their efforts to spur digital transformation from within at all levels.
MDEC is driving the digital economy in Malaysia
In Malaysia itself, as a core path towards the development of a high-income knowledge-based economy, Malaysia Digital Economy Corporation (MDEC) has acted as the driving factor pushing for a fully connected digital economy.
SMEs, which have long been the backbone of Malaysia’s economy will continue to play a strong part and are deemed by MDEC to be agile enough to compete effectively in this disruptive landscape. The rise in e-Commerce activity over the past few years has been significant, and MDEC expects SME exports to strongly push towards the 2020 goal of 30%.
Whatever it may be, the truth is that versatility is king today and will be in the future.