China-ASEAN Digital Economy Cooperation: Malaysia’s Win-Win Story
The year 2020 is a year that will be remembered as the most surreal year in modern history, due to the unprecedented Covid-19 global pandemic. While the coronavirus crisis is wreaking socio-economic havoc around the world, it has its silver linings. Governments and businesses are putting digitalization at the forefront of their efforts to survive Covid-19, creating opportunities for more international collaborations.
The Association of South East Asian Nations (ASEAN), has long been touted as the new frontier of the Internet economy. Already the world’s third largest population and fifth largest economy, ASEAN is a key market for investors looking for growth and expansion to remain resilient.
According to a recent study by Facebook and Bain & Company, 70% of consumers in ASEAN will go digital, five years ahead of previous forecast, with higher spending power and increased preference for contactless transactions amidst physical distancing efforts as key drivers. Malaysia leads the region, where 83% of its population are already digital consumers, the highest in ASEAN.
Malaysia has emerged to be a more attractive location for business continuity, amidst lockdown pressures necessitated to dampen the spread of Covid-19. For many companies that made Malaysia their regional/global business services hub, the transition from business-as-usual to remote working arrangement that happened almost overnight, was a smooth experience, enabling them to continue operations with minimal disruptions. This is largely due to the country’s reliable and affordable digital connectivity and infrastructure, as well as the agility and digital-savviness of its talent with a prevalent culture of working from home.
The Malaysian government also has ramped up efforts to drive digital adoption among businesses, especially micro, small and medium enterprises (MSMEs), and its citizens, through various economic stimulus and recovery plan. Malaysia Digital Economy Corporation (MDEC), tasked to lead Malaysia’s digital economy forward, is playing a critical role to accelerate the growth of the nation’s digital economy post-Covid19.
For example, 100 Go Digital is an initiative to rally brick-and-mortar enterprises to move towards digitalization by providing in-depth assistance for them to start their digital journey. The Smart Automation Grant is a matching grant under the PENJANA short-term economic recovery plan for services companies to kickstart automation of their business processes. ePENJANA is an initiative to enhance consumer spending and drive e-wallet adoption, impacting 15 million Malaysians.
Enhancing Digital Talent
The accelerated digitalization and the stability as a location for business services has created more digital jobs in Malaysia, outpacing the growth pre-Covid19 times. The demand for digital talent has spurred MDEC to launch the #myDigitalWorkforce movement, an initiative to marshal local talent to upskill/reskill themselves with digital skillsets and grab digital job opportunities, in collaboration with the private sector and academia.
The Global Online Workforce (GLOW) is a national program to train and provide free training for Malaysians affected by Covid-19 to compete for global freelancing opportunities and earn high income through digital work platforms.
Malaysia’s young, multilingual, multicultural, agile, and digitally-savvy talent pool makes the country stand out as a location of choice for foreign direct investments.
Malaysia on the Digital Silk Road
Malaysia, strategically located at the centre of ASEAN alongside the Maritime Silk Road, has always been a major trading gateway between the West and the East since antiquity. Today, Malaysia continues to play a vital role in the Digital Silk Road, well-poised to be the heart of Digital ASEAN. Collectively, ASEAN’s digital economy is expected to increase from 1.3% of GDP in 2015 to 8.5% by 2025.
A rising number of Chinese tech giants and digital enterprises are leveraging the ASEAN opportunities for win-win cooperation. Market leaders such as Alibaba, China Mobile, ChinData and Beyondsoft, are expanding into this region, making Malaysia their technology and digital services operations hub.
Malaysia is also home to a thriving pool of fast-growing tech companies with regional and global footprint, spanning sectors such as cloud, big data, artificial intelligence, internet of things, e-commerce, cybersecurity and drone technology, making them invaluable partners for Chinese investors who are looking for opportunities outside of China.
For example, Aemulus Corporation, a leading provider of R&D and design services for the Automotive Test Equipment (ATE) industry, has setup a joint venture with China’s Tangren Microtelligence. Last year, Feitian Technologies acquired a stake in digital security solutions provider, SecureMetric, to form strategic partnership for the ASEAN market. Tencent has selected homegrown technology group, Green Packet, to be its local partner for the AI-enabled cloud computing solutions. Just recently, Huawei and Serba Dinamik, Malaysia’s international engineering services provider, have teamed up to bring 5G, Cloud and AI solutions to develop digital industry and smart campuses in Malaysia.
The growing wave of collaboration between Chinese and Malaysian digital enterprises is a prime testament to Malaysia’s strength in Digital Economy ecosystem, which prioritises greater growth, innovation, and shared prosperity.
Malaysia: Your Digital Home
The year 2020 is also the year of China-ASEAN Digital Economy Cooperation. ASEAN became China’s largest trading partner in the first quarter of 2020, overtaking the European Union.
The commitment of member countries to sign the Regional Comprehensive Economic Partnership (RCEP), a free trade agreement between ASEAN and China, Japan, South Korea, Australia and New Zealand, expected to be the world’s largest FTA, will further cement the region’s attractiveness for foreign investors keen to enter the ASEAN market.
As the specialist Investment Promotion Agency for Malaysia’s digital economy, MDEC is well-versed in facilitating and easing the entry of companies into Malaysia, supporting growth and expansion at all stages and as a springboard into ASEAN. Please reach out to MDEC (www.mdec.my) and learn how to get started on this process.
MDEC welcomes you to make Malaysia your digital home.
The author is the Vice President of Investment Development at Malaysia Digital Economy Corporation. He oversees the investment attraction to client development and supporting Malaysian digital services companies to go global.