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| Source: Malaysia Economic Report. Information and Communication Index. |
The subsector recorded growth of 8.3% in the first half of 2017 (January-June 2016: 8.6%). The communication segment remained as the major contributor to growth, growing at 9.3% (January-June 2016: 9.8%) following aggressive promotional activities by telecommunication companies and introduction of new telephone models. Meanwhile, the information segment grew 5.7% (January - June 2016: 3.6%) and computer services rose 6.4% (January-June 2016: 7%).
The figures were released in conjunction with the announcement of Malaysia's 2018 Budget. Delivered by YAB Dato' Sri Mohd Najib Tun Haji Abdul Razak, PM and Minister of Finance of Malaysia, Budget 2018 is themed Prospering An Inclusive Economy, Balancing Between Worldly And Hereafter, For The Wellbeing Of Rakyat, Towards TN50 Aspiration. Transformasi Nasional 2050 or TN50 is Malaysia's national transformation strategy between 2020 and 2050 to become one of the top 20 countries in the world, introduced in the Budget last year, and the rakyat refers to the ordinary people of Malaysia.
PM Najib shared that Malaysia aims to:
- Become a high-income advanced economy in 2020;
- Record RM2 trillion of economy and trade value by 2025;
- Benefit from its fourth industrial revolution initiative IR 4.0 by 2030;
- Have a more competitive workforce with nearly zero defects by 2040; and
- Rank among the top 20 advanced countries in the world
The government will continue to focus on infrastructure and socioeconomic development, especially for industries related to petroleum, logistics, aerospace, rail, robotics and automation, and export-oriented industries.
The 2018 Budget, which will be active over an election year, has something for everyone. Some of the projects announced include:
- RM170 million to upgrade ICT equipment for public safety purposes. This includes upgrading the Royal Malaysia Police's (PDRM's) 1PDRMnet system. Another RM100 million will be used to upgrade its communication systems.
- RM1 billion through Malaysia Communications and Multimedia Commission (MCMC) to develop communication infrastructures and broadband facilities in Sabah and Sarawak;
- RM672 million for electricity supply in rural areas, including RM620 million for Sabah and Sarawak, benefitting 10,000 rural homes.
- RM5 billion under the Green Technology Financing Scheme to promote investment in green technology industry;
- The government will also promote a cashless society and economy through effective employment of foreign workers. The migration from signature-based payment cards to more secure PIN-based payments was enforced from 1 July 2017. Beginning 2018, Bank Negara Malaysia will monitor salary payment through local bank accounts for foreign workers, excluding domestic helpers.
Skills acquisition for a future world
RM250 million is allocated for educational projects, including:
- A new science, technology, engineering and mathematics (STEM) centre to develop the latest learning methods to train STEM specialist teachers. The centre will leverage existing facilities at teachers training institutes in collaboration with the Academy of Science Malaysia;
Enhanced computer science modules including a coding programme in primary and secondary school curriculums, which currently exist in form one to three, the lower secondary classes, where students are typically aged 13 to 15;
Allocate a sum of RM190 million to upgrade 2,000 classes into 21st Century Smart Classrooms to enhance creative-based learning and innovative thinking.
Encouraging venture capital funding
The government supports venture capital activities:
- RM1 billion from major institutional investors for investment in venture capital in main selected sectors will be coordinated by the Securities Commission (SC);
- Income tax exemption will now include management and performance fees received by venture capital management companies, effective from year of assessment 2018 to 2022;
- A proposed cut in the minimum investment in venture companies from 70% to 50%, effective for the years of assessment 2018 to 2022;
- Companies or individuals investing in venture capital companies will enjoy tax deductions equivalent to the amount of the investment made in the venture companies, limited to a maximum of RM20 million annually; and
- Income tax exemption incentives are now extended to 31 December 2020 for angel investors, limited to the amount invested in venture companies.
National Blue Ocean Shift (NBOS)
PM Najib said NBOS will be implemented at a faster pace, at a low cost with high impact. The NBOS uses Blue Ocean Strategy techniques to accelerate change.
For 2018, RM300 million is earmarked to implement NBOS programmes, including construction of new UTCs, a Blue Ocean Entrepreneur Township, a mobile community transformation centre (CTC), entrepreneurship programmes, a Global Entrepreneurship Community as well as inclusive and vibrant social entrepreneurs. CTCs bring information and services as well as entrepreneurial opportunities to locals where no transformation centres currently exist.
Fourth industrial revolution
- The government will implement the Malaysia Digital Policy, under which matching grants worth RM245 million will be given under the Domestic Investment Strategic Fund to upgrade smart manufacturing facilities.
- There will also be a centre in Cyberjaya, Selangor to be revamped as a one-stop centre for corporate companies and universities to develop prototype products and elevate innovation.
More tax incentives are now available:
- An extended incentive period on the accelerated capital allowance of 200% on automation equipment from year of assessment 2018 to year of assessment 2020;
An extended incentive period for the accelerated capital allowance of 200% for manufacturing and manufacturing-related services sectors; and
A capital allowance for ICT equipment, which includes spending on computer software development, is claimable for the period of four years beginning year of assessment 2018 to 2020, including for SMEs.
Digital Free Trade Zone
Malaysia will be the first in the world outside China to establish a Digital Free Trade Zone (DFTZ) that comprises an e-Fulfilment Hub, Satellite Services Hub and e-Service Platform to stimulate growth in electronic trade, PM Najib said. The DFTZ, announced 22 March 2017, will transform KLIA as the regional gateway, and encouraged development in the e-wallet market in Malaysia. Ant Financial Services Group, the operator of Alipay, has collaborated with Touch 'n Go to transform the payment landscape.
The first phase of the DFTZ aims for 1,500 SMEs to participate in the digital economy and is expected to attract RM700 million worth of investment and create 2,500 job opportunities. In conjunction with this move, the government will:
- Provide RM83.5 million to construct infrastructure for the first phase of DFTZ in Aeropolis, at the Kuala Lumpur International Airport (KLIA); and
- Increase the minimum value for imports from RM500 to RM800 to establish Malaysia as a regional e-commerce hub.
To maintain an ecosystem conducive to innovation the government will also expand the regulatory sandbox approach to facilitate companies to test new ideas and business models.
Income-generating opportunities in a digital world
- RM100 million to expand eRezeki, eUsahawan and the eLadang Programmes under the Malaysia Digital Economy Corporation (MDEC). The eRezeki initiative helps individuals become part of the online workforce; eUsahawan exposes Malaysian youth and micro entrepreneurs to digital entrepreneurship; while eLadang is a new programme around smart agriculture; and
- In line with IR 4.0, all registered taxi drivers who wish to shift to work for e-hailing companies can draw on a grant amounting to RM5,000 towards the purchase of a new car.
When it comes to capital market measures, the Digital Investment Management Framework, introduced by the Securities Commission of Malaysia in May 2017, sets out licensing and conduct requirements for offering automated discretionary portfolio management services to investors (robo-advisor services). Requirements include:
- Technology capabilities in place including identification of a competent person within the company who has sufficient understanding of the risks and rules of the algorithm applied;
- A risk management framework that is sufficiently robust to manage risks associated with the offering of automated discretionary portfolio management services including cyber security resilience;
- The outcomes produced by the algorithm are consistent with the digital investment manager’s strategy; and
- Written policies are in place to monitor and regularly test the algorithm employed.
Datuk Yasmin Mahmood, CEO, MDEC commented in a blog post, "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."
Datuk Yasmin added that the RM100 million allocation for the eRezeki and eUsahawan programmes will 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," she said in the MDEC blog.
"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 [the Internet of Things] and BDA [big data anaytics]) to improve yield and pendapatan (income)."
MDEC is also pleased with initiatives around education of the TN50 generation, as "this would ensure Malaysia’s students have exposure to the #mydigitalmaker education initiative launched last year."
Datuk Yasmin explained that #mydigitalmaker 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," she said.
"Our forecast reveals that we need 1 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."
Datuk Yasmin also commented on the measures to encourage more venture capital activities. "This is a visionary stance by the Malaysian government as the startup 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 startups 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," she said.
Malaysia Digital Hub supports tech and digital co-working spaces, their startups and communities with support from the government. Growing startups, global tech companies, accelerators as well as talent builders and investors are targeted with incentives such as coaching and mentorship, access to funding, and freedom of ownership for foreign companies.
The MTEP is focused on attracting gifted and ambitious individuals from all over the world, and helping them to kickstart their startups in Malaysia. Under the MTEP, both new and established entrepreneurs can apply to set up a startup in Malaysia, with the application process to take up to 21 days.
With regards to initiatives around IR 4.0 and the digital economy such as smart manufacturing she said: "These moves stem from the reality today that, in a hyperconnected 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," she said.
Datuk Yasmin also called the new digital free trade zone a game changer. "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 transshipment hub for e-commerce logistics while creating 60,000 jobs by 2025," she said.
"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 e-commerce and invigorate internet based-innovation."
Explore:
Read the text of the 2018 Budget speech
Hashtags: #Bajet, #Bajet2018
*Datuk Yasmin is referring to the fiscal rather than the calendar year. Both initiatives were introduced in April 2017, the previous fiscal year.
Datuk Yasmin added that the RM100 million allocation for the eRezeki and eUsahawan programmes will 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," she said in the MDEC blog.
"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 [the Internet of Things] and BDA [big data anaytics]) to improve yield and pendapatan (income)."
MDEC is also pleased with initiatives around education of the TN50 generation, as "this would ensure Malaysia’s students have exposure to the #mydigitalmaker education initiative launched last year."
Datuk Yasmin explained that #mydigitalmaker 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," she said.
"Our forecast reveals that we need 1 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."
Datuk Yasmin also commented on the measures to encourage more venture capital activities. "This is a visionary stance by the Malaysian government as the startup 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 startups 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," she said.
Malaysia Digital Hub supports tech and digital co-working spaces, their startups and communities with support from the government. Growing startups, global tech companies, accelerators as well as talent builders and investors are targeted with incentives such as coaching and mentorship, access to funding, and freedom of ownership for foreign companies.
The MTEP is focused on attracting gifted and ambitious individuals from all over the world, and helping them to kickstart their startups in Malaysia. Under the MTEP, both new and established entrepreneurs can apply to set up a startup in Malaysia, with the application process to take up to 21 days.
With regards to initiatives around IR 4.0 and the digital economy such as smart manufacturing she said: "These moves stem from the reality today that, in a hyperconnected 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," she said.
Datuk Yasmin also called the new digital free trade zone a game changer. "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 transshipment hub for e-commerce logistics while creating 60,000 jobs by 2025," she said.
"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 e-commerce and invigorate internet based-innovation."
Explore:
Read the text of the 2018 Budget speech
Hashtags: #Bajet, #Bajet2018
*Datuk Yasmin is referring to the fiscal rather than the calendar year. Both initiatives were introduced in April 2017, the previous fiscal year.
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