What does the influx of global tech companies in MY mean for ad agencies?

Malaysia is increasingly proving to be a delectable location for global companies to set up shop. We have seen this from PR firms turning to Malaysia because of its thriving economic performance as well as the inflow of FDI. Shifting the gears from the media world to the tech world, we have seen Amazon Web Services (AWS) planning a RM25.5 billion investment into Malaysia by 2037. The launch of this infrastructure region aims to give developers, start-ups, entrepreneurs, enterprises, the government and who have you, a greater choice for running their applications and serving end users from data centres located in Malaysia.

This being the largest international technology investment to date in Malaysia, according to PM Anwar Ibrahim, is no small feat. It is telling of Malaysia’s fertility in the sector and is a positive indicator of the trajectory of more global companies taking interest in the country.

Not only AWS, but also companies such as Tesla also received the green light to establish a head office in Malaysia. With Tesla’s presence in the country, Malaysia is expected to see the growth of better paying job opportunities for workers in the Battery Electric Vehicles (BEV) segment. Malaysia’s pro-trade, pro-investment and pro-industry stance clearly seems to be paying off. The Ministry of International Trade & Industry (MITTI) aims encourage FDI with enhanced efforts to improve the ease of doing business in the country.

In a conversation with A+M, Saurabh Chandrashekhar, managing director at EssenceMediaCom said that Malaysia has immense untapped potential to be a larger regional hub, especially for the tech industry.

Chandrashekhar went on to add that while Malaysia is a hub for many companies already, this move to Malaysia by AWS and Tesla is sure to be a wake up call for many others to do the same and expanding their hub capabilities in the country. “This also demonstrates a clear commitment by Malaysia to embrace transformation, not just for business but also within specific functions such as digital,” he explained.

Currently, the country’s GDP was the highest it has been in nearly 20 years and with the import of global companies, it is only bound to get higher, added on Bala Pomaleh, CEO of Mediabrands Malaysia. With the greater transfer of skills, Pomaleh is positive that the local workforce stands to benefit from this. However, he also provides the caveat that the success of these ventures depends heavily on several factors such as the availability of skilled talent, local market competitiveness, and the government's policies and support for the technology industry.

“Therefore, it's important for the government, trade bodies and local businesses to work cohesively to create an environment that is progressive and conducive to the growth of Malaysia’s technology industry,” he added.

What does this mean for the advertising world?

Agencies thrive on the confidence of consumer demand. Global giants such as AWS and Tesla’s decision to set up shop in Malaysian is surely founded on solid due diligence, and is bound to have influence amongst many others and encourage healthy competition.

Lee Poh Li, managing director at RAPP,  is positive of the impact of these imports on her agency. Competition, according to her, helps those looking to the future and taking risks. She said:

This allows growth, which is a positive sign for everyone.

Along with the rise in competition, Pomaleh believes that Malaysia will witness a rise in scalability, flexibility and security assurances which might help attract more start-ups and investors to join the fast-evolving digital transformation. However, when it comes to advertisers, Pomaleh shared that advertisers typically adopt a "wait and see" attitude, and are generally conservative with their spending.

“It is a chicken and egg situation as they need to invest further on cloud capabilities and upgrade their IT and data capabilities in order to grow. This will help modernise their insights and analytics capabilities which will help them to improve customer experiences and innovate on services,” he added.

Chandrashekhar on the other hand is optimistic about the benefits advertisers get to reap. He believes that the sophistication of technology and its expanding reach makes connecting with consumers a more engaging and opens up possibilities. “It allows us to think of newer ways to  bring value to our clients, whether by enriching our core offering or by expanding into newer service offerings,” he explained.

PR Agencies also setting up feeling optimistic about Malaysia's technological capabilities. For one, the current economy is the fastest-growing rate of the Malaysian economy in over 20 years at 8.7% and the technology sector following suit at nearly 10%, which Maureen Tseng, managing director of Hoffman Agency said were the reasons for more companies are looking to invest in Malaysia. 

Areas to watch out for

To sum it up, the sentiments around these companies setting up shop in Malaysia are largely positive. But with some caveats exist. Lee and Chandrashekhar believe the outlook to be rather positive owing to their faith in clients to continue spending. “Consumers spending would mean that clients should spend as well to keep the upward trend going. It is a win-win situation for all,” Lee explained.

Chandrashekhar is of the opinion that SEA economies on a whole are projected to be on a path of growth. In Malaysia this can also be attributed to China re-opening its borders, facilitating more investment initiatives. Additionally, the government’s contributions to the areas of boosting digital penetration, tourism, providing support for SMEs will in turn boost consumption and spur marketing and advertising investments.

“The integration of technology into advertising is making media like out-of-home and TV accessible, bringing immense possibilities to unleash creativity and make media investments more effective. We are in a defining period for our industry with nothing but excitement and optimism,” he added.

Pomaleh on the other hand believes that the ad ecosystem is largely cautious. While recognising that there are big opportunities for them to capitalise on, advertisers need to think bigger and more innovatively to affect positive growth. He said:

Our knowledge on using data advantageously has improved tremendously, and advertisers need to consider doing more enhanced analytics and to improve conversions.

Though wary, Pomaleh does believe the future is bright for Malaysia. “Having access to world-class infrastructure and advanced technologies will certainly unlock more opportunities in our space, and we are upbeat to be a part of this future,” he said.

Related articles: 
Why Malaysia is proving to be a hotbed for PR agencies
Amazon Web Services plans RM 25.5bn investment into MY by 2037
Tesla gets the green light to establish head office in MY