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Can Budget 2017 make Malaysia the next big digital hub?

While last year, the Malaysia budget looked to focus mostly on creating quality content, this year the focus has been largely on digital – and rightly so. Over the past year, brands across Malaysia have been embracing the digital platforms and now, going forward, Malaysia is set to introduce the world’s first digital free trade zone and digital hubs.

This is according the nation’s Budget 2017 proposals announced last Friday.

While there isn’t much detail yet on the digital free trade zone, many industry experts told A+M they lauded the move spearheaded by the Malaysia Digital Economy Corporation (MDEC). Serm Teck Choon, president of Malaysian Digital Association (MDA) said, with increasingly more Malaysians buying things online, this initiative will surely help in boosting up the whole e-commerce sector.

“Whether you are large corporations looking to start your e-commerce initiative, or an SME which is leveraging on digital, or even a consumer who wants to buy cheaper products online – you should benefit from the incentives including tax exemptions, especially if this digital free trade zone works similarly to other free trade zones in the real world,” he said.

Serm who also serves as the country head of CtrlShift Malaysia, also said since the Internet is a borderless world, the country should also have a road map in terms of fostering closer collaborations with the rest of the region.He  added:

Being a member of Southeast Asian countries, how Malaysia leverages on this idea and works with other member countries to tackle the 600 millions population in SEA, is definitely crucial.

“We should not ‘wait and see’. We should start to think about it, plan it and ultimately execute it with a long-term goal,” he added.

Echoing his views on the matter was Tervinderjit (TJ) Singh, research vice president at Gartner, who said the allocation of RM162 million to the MDEC to encourage development in the e-commerce ecosystem, and RM200 million to stimulate startups, reinforces the government’s consistent commitment to support digital activities. These budget allocations will provide the country with the infrastructure and services that will help to form the pillars in establishing digital businesses.

He added that the move is in line with the Gartner’s predictions that by 2025, every industry will be transformed by digital business. He added, “Malaysia is on the right track to become a fully digitised Internet economy.”

Jagdev Singh, tax leader at PwC Malaysia said the concept of a digital free zone sounded “exciting” and hopefully, would be a game changer for the country. He explained that the (existing) MSC initiative certainly propelled Malaysia forward into the technology space, and it was time the nation had another catalyst to make it an attractive destination as a digital hub.

Cisco Malaysia’s managing director, Albert Chai, added that the setting up more locations as “Malaysia digital hub” will provide startups, innovators and technopreneurs with a platform to collaborate with like-minded digital organisations. This will create an ecosystem that will continuously bring fresh and disruptive ideas to the market, and accelerate the creation of new products and services. However, he added, Malaysia must also deal with another building block in its digitisation journey – cybersecurity.

Chai stressed that cybersecurity is  growing concern of more sophisticated threats that would possibly hinder the adoption of innovative technologies in Malaysia.

Cybersecurity can no longer be an afterthought for businesses and companies. It needs to be regarded as a pre-requisite in order to capture the US$24 trillion (RM100 trillion) potential value enabled by digitisation.

According to Chai, effective cybersecurity strategies alone will have the potential to fuel an estimated US$5.3 trillion (RM22.55 trillion) in value in the private sector globally over the next decade. A third of this estimated value, US$1.7 trillion (RM7.1 trillion) will stem from the protection of intellectual property and the avoidance of data breach costs.

However talent is an issue. To unlock the value from all these initiatives, Chai said Malaysia needs the right talent.

“The introduction of a new pass category ‘Foreign Knowledge Tech Entrepreneurs’, is an encouraging measure as it will help us build a digital ready workforce swiftly, allowing our country to establish another critical foundation for a digitised Malaysia,” he said.

Meeting customer expectations in the digital era

Nick Lim, vice president of ASEAN and greater China at CA Technologies raised another point – that the application economy has significantly raised customer expectations and is bringing disruption to every industry. That also means that companies can no longer continue with their status quo in order to own the customer experience.

This is especially true in the digital era when businesses today are increasingly using software to innovate, differentiate their services and respond to customers’ needs in a highly demanding and fast-paced environment with greater agility and efficiency.

“To succeed and leapfrog their competitions in this digital era, it is imperative for businesses to integrate software into all aspects of their operations and embrace digital transformation,” Lim said, adding that the latest digital budget proposals are expected to bode well for Malaysia’s digital transformation agenda.

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