How Malaysia’s digital economy has proven to be a source of resilience for the economy

 

This post was done in partnership with Google Malaysia.

As nations around the world continue to combat the effects of the COVID-19 pandemic, one thing remains certain – the acceleration of digital adoption is here to stay. In Malaysia, the digital economy is expected to balloon by three times, reaching a total gross merchandise value (GMV) of RM125 billion in 2025.

Flight to digital: There is a massive increase in Malaysian consumers turning to digital services for the first time According to the recent e-Conomy SEA 2020 Report published by Google, Temasek, and Bain & Company, more than one in three Malaysians used digital services for the first time ever in 2020. Among these new users, up to 92% said they would continue using digital services post-pandemic.

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This sudden increase in digital adoption was spurred by the lockdowns known as the Movement Control Order as consumers turned to the internet to access essential services.

Despite restricted mobility, the internet provided users with uninterrupted access to entertainment, work collaboration tools, educational tools, and various other necessities such as groceries and food delivery platforms. This increase in digitalisation also saw an accelerated shift away from cash to digital payments.

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In relation to this, Surina Shukri, chief executive officer at MDEC, said: “Malaysians are now looking at ways to begin and advance their digital journey as opposed to the year 2020 where many were still considering the relevance of initiating this move. The onset of COVID-19 has pushed for quicker adoption of digital in their business model, especially among the start-ups.”

Resilience in times of crisis: Malaysia recorded the highest eCommerce growth in SEA

Despite a steep 59% decline in travel, Malaysians showed resilience as the digitisation movement resulted in a massive 87% growth in Malaysia’s eCommerce industry. Food delivery service and categories such as education, entertainment, and online media, also saw a jump.

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Towards the end of 2020, there were clear signs of a recovery in domestic tourism, though uneven. Hotels and holiday rentals saw a strong recovery, with staycations hitting a fives-times spike as lockdowns eased due to pent-up travel needs. Unfortunately, these recovery efforts may see a significant hit as stricter lockdowns were imposed due to the sudden jump in cases that occurred in January this year.

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Further growth potential: Digital talent continues to be the largest enabler

In the 2019 e-Conomy report, internet access, funding, consumer trust, payments, logistics, and talent were identified as key barriers to growth. A majority of these aspects have seen significant progress in 2020, except digital talent, which despite being a critical enabler in this technology reliant period, remains a key hurdle in Malaysia.

Suzanne Ling, co-founder of PichaEats, said: “Digital adoption will accelerate even faster than in 2020, and virtual conferences, events, concerts, experiences will be the new growth drivers for all businesses. Based on this alone, developing digital talent will be more crucial than ever and it is important that Malaysians equip themselves with the latest digital knowledge in order to stay relevant.”

What’s ahead for Malaysia

Without a doubt, technology and the internet economy has impacted all aspects of our lives over the past several years, and will continue to be a key driver of social progress in Malaysia.

Last year alone, technology helped more than 135 million school goers in Malaysia fill the learning gap with home-based learning; providing an alternative source of entertainment for many; connecting loved ones; powering work-from-home movements in the “new normal”; digitising businesses in helping them reach new customers; as well as sustaining both the food and retail industry.

In regards to future trends and what digitisation may bring, Sean Goh, managing director of Grab Malaysia, said: “There is one potentially unexpected shift we see and that is Malaysians will become more equal as human beings and in opportunities.

While Gokhan Ogut, CEO of Maxis, said: “The introduction of 5G will enable future technologies in ways that we have not even dreamed of due to its capability in bringing higher bandwidth, faster speeds and low latency. The limitless possibilities from the 5G network can be leveraged upon in various technologies from AR/VR and the internet of things, across industries such as agriculture and manufacturing, contributing significantly to the national GDP.”

Discover more insights from top industry leaders as they discuss the factors and influence behind Malaysia’s imminent transformation into a thriving digital economy in the Google Breakfast Series: Peering into Malaysia’s Digital Future

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Download the full e-Conomy SEA 2020 report here.