The industry reacts: How will Budget 2018 change Malaysia’s IT industry?

AvantiKumar | Nov. 2, 2017
Budget 2018 Special includes leaders from MDEC, IDC, PIKOM, MaGIC, Gartner, Accenture, DHL Express, AJ Pharma, OutSystems, Trend Micro, 3M, iMoney, Cisco, CA Technologies, Microsoft, Lazada, 11Street, and Canvas Instructure.

Budget 2018 (Storyblocks)

Credit: Storyblocks

 

  Local ICT industry leaders have generally welcomed Budget 2018 proposals by Malaysia's Prime Minister Datuk Seri Najib Razak on Friday 27 October 2017.

The Budget 2018 allocation of RM280.25 billion is an increase of RM19.45 billion over the 2017 budget allocation of RM260.8 billion, said the prime minister who is also the finance minister.

Najib said the Budget has eight core thrusts with one of the objectives being to increase Malaysia's income per capita to RM42,777 by 2018. "During the first half of 2017, the economy recorded a sterling growth of 5.7 percent. The World Bank has revised upwards Malaysia's GDP forecast from 4.9 to 5.2 percent for 2017 and commended the country's economic performance for its laudable policies."

"In addition, the Government forecasts the Malaysian economy to record an annual growth between 5.2 and 5.7 percent in 2017, higher than the March estimates ranging between 4.3 and 4.8 percent," he added.

Just recently, the prime minister announced a slew of new initiatives to boost nationwide digital transformation following the 29th Malaysia Implementation Council meeting (ICM) and confirmed ICT increasing importance as an engine of growth for Malaysia's economy.

Several proposals in Budget 2018 continue to move the digitisation agenda up to an even higher gear as the nation makes strides towards becoming a digital, developed economy status by the year 2020.

Compared with last year's proposals, some early analyst comments see Budget 2018 as expansionary but one still underpinned with financial rigour.
 
Computerworld Malaysia asked industry leaders to share their views on the digital aspects of the proposals and what these mean for Digital Malaysia.

Industry reactions

Here are some edited digital industry leadership insights offered to Computerworld Malaysia. These comments in the current version of this article, presented in random order, come from MDEC, IDC, PIKOM, MaGIC, Gartner, Accenture, DHL Express, AJ Pharma, Trend Micro,3M, iMoney, Cisco, Microsoft, CA Technologies, Microsoft, Lazada, 11Street, OutSystems, and Canvas Instructure. This article was updated 2 November 2017.

Datuk Yasmin Mahmood - MDEC CEO

In the vanguard of driving Digital Malaysia is national ICT agency Malaysia Digital Economy Corporation (MDEC). Datuk Yasmin Mahmood (pic above), who is MDEC's Chief Executive Officer, sounded the industry's welcome note:  "We are delighted that Budget 2018 is focused on accelerating growth and enhancing the wellbeing of the rakyat [people] as well as in further enhancing Digital Malaysia. The Digital Economy continues to be a key driver of growth, contributing some 18.2 percent of Malaysia's GDP [Gross Domestic Product] this year, and expected to exceed the projected target of 20 percent earlier than 2020."

Speaking of the digital inclusivity measures, Yasmin said, "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, adding 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 (Internet-of-Things) and BDA (Big Data Analytics) - to improve yield and pendapatan [income].  

The critical challenge of develop the right talent to underpin digitisation also received support, Yasmin said, pointing out that: "A total of RM250 million has been allocated for future education of the National Transformation 2050 (TN50) generation, and would be used to develop Science, Technology, Engineering and Mathematics (STEM) centres and improve Computer Science modules, including for Coding programmes. 

"From the RM250 million, RM190 million is allocated for two thousand classes to be transformed into Smart Classrooms for 21st Century learning to increase creative and innovative learning," she said.

"Our forecast reveals that we need one million digital workers, such as coders, application developers and software engineers, by 2025," Yasmin explained. The strategy of joint public-private-academia collaboration is continuing to encourage the youth community from being users of digital innovation to producers or digital innovators.

Malaysia's startup ecosystem has also been boosted with a stream of incentives, Yasmin said.

"Investors from major institutions will allocate RM1 billion for venture capital investments in selected sectors," she said.  "These initiatives include income tax exemption being widened to include management fees and performance fees, as well as a reduction in minimum investment limit in a venture company from 70 percent to 50 percent from 2018 to 2022."

Companies or individuals investing in venture capital companies will be given a tax deduction equivalent to the amount of their investments, which will be limited to a maximum of RM20 million ringgit per year, just as income tax exemptions equivalent to the amount of investments by angel investors in venture companies will be extended until 31 December 2020.

"This is a visionary stance by the Malaysian Government as the startup ecosystem is the job creators of the future," she said.

"We introduced two highly successful initiatives last year, the first being the Malaysia Digital Hub initiative that supports start-ups 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," Yasmin said.

To further boost research agency MIMOS' Industry 4.0 moves earlier, the government will also be providing grants worth RM245 million under the Domestic Investment Strategic Fund to upgrade Smart Manufacturing services. "This move is aimed at supporting investment and business activities under the Industrial Revolution 4.0," she explained.

"In addition, the Futurise Centre in Cyberjaya will be upgraded as a one-stop centre for corporate companies and universities to develop product prototypes as well as to boost innovation," Yasmin announced. 

"The government will also extend incentive periods for Fast Capital Allowance by 200 per cent on automation appliances for assessment year of 2018 until 2020, while incentives for the manufacturing and services sector for Fast Capital Allowance by 200 per cent will also be given. For information communication technology appliances, capital allowances - including computer software expenditure - can be claimed from assessment year of 2018 until 2020," she said.

"These moves stem from the reality today that, in a hyper-connected world, it is becoming abundantly clear that artificial intelligence (AI) is the defining force of the Fourth Industrial Revolution," she said.

"AI is the natural progression from data analytics, and as such, Malaysia should start looking at developing a National AI Framework," Yasmin continued. "This will then be an expansion of the National BDA (Big Data Analytics) Framework. AI is the 'game changer' for the Fourth Industrial Revolution."

Speaking of the Digital Free Trade Zone (DFTZ), Yasmin revealed that "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 trans-shipment hub for e-commerce logistics while creating 60,000 jobs by 2025." [Also see -Malaysia's DFTZ wins international award, 25 government agencies boost eCommerce 'explosion']

"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," she added. (See -Malaysia’s IT sector pushes global envelope, wins WCIT awards)

"For the first time, the world will see a physical and virtual zones with additional online and digital services to facilitate cross border eCommerce and invigorate internet based-innovation," Yasmin said.

Sudev Bangah (2017) IDC

Research firm IDC (International Data Corporation)’s Asean Managing Director Sudev Bangah (pic above)  expressed much of the enthusiasm of DX leaders when he told Computerworld Malaysia that the proposals "were  not as ‘digitally heavy’ as we hoped it to be, but there were very interesting notes to take away. We welcome that areas such as robotics, automation and aerospace are listed within thrust 1 of the Budget - as this emphasises Malaysia’s movement towards a higher value and digitally driven economy, one that is focused on future-proofing itself within sophisticated industries.”

“Areas of focus in eUsahawan, for example, also have become a critical aspect of shaping a new industry for the younger generation of Malaysians, and this will have an obvious impact into the SME space," Bangah said.
 
How does IDC expect the industry to be changed by the new wave of Budget proposals? “The digital projects announced this year by the Government seemed much focused on a few themes: Industry 4.0 and the future development of industries in Robotics and Automation, as well as Aerospace; the DFTZ and the positioning of Malaysia as a fulfilment hub; and upskilling and encouraging SMEs/entrepreneurs in being part of this ecosystem."
 
“While the Budget cannot be seen as an overall ‘win’ for the mass digital industry per se, however, the focus on these few themes  will form the backbone of the evolution of Malaysia’s Digital Economy, and will become the core focus areas for Malaysia in the coming years," Bangah said.

“In addition, we are glad that fundamental issues such as connectivity to rural areas have not been ignored, as the fundamentals represent an important part of elevating Malaysia towards a more connected society, one that can take advantage of  digital initiatives,” he continued.
 
So what more needs to be done to help digitisation and Digital Malaysia? “Overall, it was a balanced initiative, with adequate attention paid to areas that required a boost. The allocation for DFTZ was expected to be a heavy focus, and what we especially enjoyed was the initiative around the ‘futurise centre in Cyberjaya’ that will encourage companies to focus R&D and the development of prototypes.""
 
Bangah shared a call to arms message for industry. “Focus, focus, focus. We understand that the government intends these initiatives to go beyond ‘one-off’ actions - they are meant to encourage sustainable projects for the nation to move faster towards becoming a digital economy. Ultimately, it is up to the private sector and SMEs to play their role in evolving themselves towards being part of the digital economy." [See - Digital Malaysia: Astro, Grab and Alliance Bank score digital transformation awards from IDC]

"To be candid, there’s not a great deal yet that we can talk about when it comes to the private sector driving their own digital initiatives," he continued. "While we are starting to see this in spots, there seems to be too ‘wait and see’ attitude from certain segments looking to policies favouring their interests. To move forward on the transformational evolution curve, policies and sectors need to be increasingly aligned to achieve a greater level of motivation: this can only lead to brilliant things for the country.”

Chin Chee Seong (CS Chin)_PIKOM Chairman 2016-2017

The National ICT Association of Malaysia (PIKOM) Chairman Chin Chee Seong (pic above) said  Budget’s focus on Transformasi Nasional 2050 (TN50) will have a positive impact on the ICT industry. Also, the announcement that Malaysia is to host for second time the World Congress on IT (WCIT) in 2020 is welcome.

Complementing the prime minister’s announcement that the economy is expected to grow by 5.2 percent in 2017, Chin zeroed in on the following business initiatives:
• RM200 million allocation to Malaysian Investment Development Authority (MIDA) for high impact projects;
• RM2 billion fund for Industrial Revolution (IR) 4.0 with 70 percent government guarantee;
• RM200 million for training for SME Corp;
• RM150 million for export including the Market Development Grant (MDG);
• Startup funds for VCs including RM1 billion fund.
 
“PIKOM is also pleased to note that the government has placed more emphasis on human capital development in 2018 especially on coding in schools,” he continued. “In addition to STEM education, there is an allocation of RM250 million for teachers’ training and RM190 million to upgrade 2,000 classes into ‘21st century smart classrooms’ in order to enhance creative-based learning and innovative thinking."

“We also welcome Capital Allowances for ICT equipment, which will include spending on software development, claimable for a period of four years as this will boost the companies’ productivity and reduce the cost of operation," said Chin, adding that other incentives that will benefit the ICT industry include:
 
• RM1 billion for Sabah and Sarawak for broadband infrastructure;
• ICT projects in PDRM of RM170 million and RM100 million for communications systems;
• RM 100 mil allocation for e-rezeki, e-usahawan and e-ladang;
• Industry 4.0 and Digital Economy – RM245 million for smart manufacturing;
• Cyberjaya Futurise Centre to be strengthened;
• DFTZ focus on 1500 SMEs and RM83.5 million funding and de minimis increased to RM800;
• Boost startups with setting up of regulatory sandboxes.
 
“However,  PIKOM had hoped that there would be measures to drop the cost of broadband services as well as GST exemptions on ICT products and services which were not announced in Budget 2018," he added.

Tervinderjit Singh, Vice President, Gartner Research

Tervinderjit (TJ) Singh (pic above), Research Vice President at analyst firm Gartner, also zeroed in on Industry 4.0.

"Malaysia, like the rest of the world, is on the brink of the fourth industrial revolution and digital economy era. With the announcements made in the Malaysia Budget 2018, we see an increased emphasis on preparing the nation to become a fully-developed digital economy through targeted initiatives such as the Malaysian Digital Policy," said Singh. "The upgrading of smart manufacturing facilities and Futurise Centre in Cyberjaya reflect the government's sustained commitment to invest and support the industry as it continues progressing to the next level."  

Singh went on to eCommerce as an important element in digitisation. "The RM83.5 million allocation to further develop the first 'Digital Free Trade Zone', which is expected to attract RM700 million in investments and creating 2,500 jobs also puts the nation in good stead. These investments will go into strengthening the nation's infrastructure and raising import values to push Malaysia into becoming the region's primary e-commerce hub.  

"Gartner is forecasting a 6 percent growth in technology spending for 2018, putting Malaysia ahead of most Asia Pacific countries. With the initiatives announced in Budget 2018, Gartner is confident that Malaysia is on the right track towards become a fully digitised nation," he added.

Ashran - MaGIC

Ashran Dato’ Ghazi (pic above), Chief Executive Officer of Cyberjaya-based Malaysian Global Innovation & Creativity Centre (MaGIC) noted that, “With the Budget 2018, the Government has clearly demonstrated the importance of social innovation, aligning Malaysia with the many governments around the world promoting equitable and sustainable economic growth. Social innovation, and platforms such as MaGIC’s IDEA or IMPACT, makes it possible for entrepreneurs or aspiring entrepreneurs to do well and build a sustainable business while also doing well." (See - How the Malaysian government is using MaGIC to boost a 'people-centric economy’)
 
“As MaGIC’s goal is to build an ecosystem of entrepreneurs with creative skills and the capability to innovate, we are therefore encouraged by the government’s pledge to create a conducive ecosystem to reap the benefits of innovation, especially from local start-up ideas,” Ashran continued.

“Malaysia has so many aspiring entrepreneurs who need nurturing, guidance, mentoring, and financing and as we work to build greater collaboration between these and the corporate sector we welcome the government’s pledge to facilitate the testing of innovative ideas and new business models through a regulatory sandbox across all industries,” he said. “This aligns with the Corporate Entrepreneurship Responsibility (CER) platform MaGIC launched earlier this year, which today already has 46 partners on board working with entrepreneurs to address real problems in their business."

Ashran added, “It’s once again great to see such support for entrepreneurship development in this year’s budget, and as we count down towards this year’s inaugural Global Entrepreneurship Community Summit 2017 on 12th and 13th December, we are encouraged to see that the government continues to remain committed to developing Malaysian capabilities in this space, and helping to raise them onto a global stage."

Azwan_Baharuddin_-_Accenture

Meanwhile, Azwan Baharuddin (pic above) Malaysia Country Managing Director for IT consulting firm Accenture believes: "The 2018 Budget tabled by our Prime Minister maintains Malaysia's TN50 momentum to become a top 20 nation in the world. We view the various reinforcements of innovation as a positive catalyst for corporate Malaysia to accelerate its digital transformation journey and elevate Malaysia's Digital Performance Index score."

 "Establishing and strengthening cutting-edge programmes such as the Futurise Centre will help foster the development and delivery of disruptive innovation that will put Malaysian companies at a cutting-edge advantage," said Azwan, adding that the company is increasing its focus on guiding local companies rotate to the digital economy using emerging technologies such as robotics, AI, Big Data and cloud capabilities.

"The steps taken to accelerate innovation is in line with the findings in a recent study we conducted - Digital Performance Index (DPI) - where we analysed 28 top Malaysian companies across various industries on their implementation of digital technologies," he said.

Albert Chai - Managing Director for Cisco Malaysia

Cisco Malaysia's Managing Director, Albert Chai (pic above) said Malaysia's Budget 2018 was another step in the right direction for the nation's digital journey. "The rise of the fourth Industrial revolution (Industry 4.0) is definitely upon us. Malaysian manufacturers will be better positioned to capitalise on the upcoming opportunities brought upon by digitisation. In its nascent stage, the combination of tax reliefs and grant allocation Smart Manufacturing facilities will incentivise more manufacturers to adopt new technologies such as automation, Big Data Analytics and robotics."

"Digital innovation will shape the next wave of economic development in this country," said Chai. "But at the heart of this transformation is the people. I am particularly excited about the various measures aimed at developing a workforce that is future-ready. Of particular interest is the RM250 million allocation to educate the National Transformation 2050 (TN50) generation which encompasses the setting up of Science, Technology, Engineering and Mathematics (STEM) centres and improving Computer Science modules, including Coding programmes."

"At the same time, SMEs should not be left behind by the wave of progress. We laud the government's measure, through Digital Free Trade Zone, to ensure the participation of 1,500 SMEs in the digital economy," he said. "Given that the economy is largely made up of SMEs, our progress towards becoming a digital economy will be hampered if they lag behind. There's never been a better time to fast track Malaysia's digital economy."

Nick Lim, Vice President, ASEAN and Greater China, CA Technologies

Nick Lim (pic above) Vice President, ASEAN and Greater China, CA Technologies, also commented on Malaysia's moves to become a key player in The Fourth Industrial Revolution. "The digital economy has raised customers' expectations and brought disruption to every industry. Businesses today are realizing the need to deliver exceptional experience by responding to their customers' needs with greater agility and speed."

"Software needs to be at the core of every organisation's DNA as it enables them to transform digitally and take full advantage of mobile, the Internet of Things (IOT), artificial intelligence (AI), big data and other technologies," said Lim. "It is crucial for companies to integrate software into all aspects of their operations. This will require agility across the business, and a mind-set shift in how businesses use technology and build software to deliver unique value to their customers."
 
"As more Malaysian businesses move to online and digital platforms, the exposure to security vulnerabilities will increase," he said. "We believe that the targeted business and digital incentives under the Budget 2018 will further accelerate the economic growth for Malaysia and drive the nation forward, in line with the 'Transformasi Nasional,' or TN50 National Transformation framework which envisions the country as a fully developed nation status by 2050."

K Raman, MD, Microsoft Malaysia

K Raman (pic above), Managing Director, Microsoft Malaysia, said the Budget has taken a multi-pronged approach to creating and enabling an inclusive society. "This rakyat-centric Budget outlines initiatives to leverage the opportunities presented by the Fourth Industrial Revolution and the digital economy, underscoring its contribution to the country's GDP. Along with the recent announcement of 'Cloud First' strategy, and creation of a National Artificial Intelligence (Al) Framework, these are steps in the right direction to bolster the country's strategic ICT thrust."

"A key touch point of the 2018 Budget is fortifying the Digital Economy, and implementation of the Malaysia Digital Policy will pave the way to strengthen it further," said Raman. "This is a very exciting time for Malaysia, as a growing digital economy needs a strong support structure and ecosystem to thrive. As businesses in Malaysia look for better and faster ways to leverage on the fourth industrial revolution and transform themselves, modern technologies such as cloud computing have a crucial role to play."

"The budget also pays attention to upgrade of ICT equipment and communications systems, which would be crucial for a strong digital infrastructure for our businesses," he noted. "Additionally, rebate on purchase of ICT equipment and software development will lower the barrier to entry for adoption of digital technology among SMEs and corporates, especially as we continue to advance digital workforce as a national agenda."

Raman also welcomed the future proofing aspects of the economy through empowering education, skill and talent development in the country, with an allocation of RM61.6 billion. The creation of TVET (Technical and Vocational Training) Malaysia and grants towards the TVET Masterplan are a step in this direction." 

Selvam Ramaraj - Executive Director, AJ Pharma Holding

Selvam Ramaraj (pic above), who is a member of the Board and Executive Director of AJ Pharma Holding, a healthcare investment holding company in Malaysia, welcomed the investments in healthcare and technology as "the best way to drive our aspiration of providing access to affordable and quality healthcare for all. Investments to spur the medical tourism industry that also incentivise industry players to obtain quality accreditation and certification from authorised bodies will cement the credibility of our healthcare service providers, and establish medical tourism as a significant revenue contributor for the nation."

"Furthermore, the government's allocation of RM27 billion towards quality public healthcare services will spur the nation's progress towards a better, more efficient and equitable universal healthcare system," Ramaraj continued. "The comprehensive focus on enhancing medical supplies, upgrading medical facilities and infrastructure across the country, investing in the latest medical equipment, boosting healthcare service delivery and creating a medical aid fund for underserved communities are positive steps in revitalising our public healthcare sector. Beyond medical interventions, we laud the government's allocation of RM30 million for the Healthy Community Nation Empowerment fund."

"Furthermore, we are pleased with the government's allocations such as RM50 million for haemodialysis assistance and RM10 million for the treatment of rare diseases as this will encourage the industry to sustain and pursue further investments," he said.

Param Nair - 3M Malaysia MD

Parameswaran Nair (pic above), Managing Director of 3M Malaysia (pic above), a company especially focused on infrastructure development in the country, believes the Malaysian government's acknowledgement that Malaysia must advance its economy as we enter into the fourth industrial revolution is critical. "Through the inculcation of knowledge, high skills, expertise, creativity and innovation. The RM46 billion allocated for the nation's development will set the path for the Sixth Thrust to gear Malaysia for the new industrial revolution and digital economy, and as such we hope that the Malaysian government will work more closely with the private sector to identify the most effective means of achieving such growth.

"In addition, the demand for innovative technologies will also allow Malaysian manufacturers and businesses to move to higher bands of their respective industries. At the same time, the growth of Malaysia's middle-income segment will further strengthen the demand for high quality consumer products," said Nair. "As an advanced developing nation which retains one of ASEAN's leading economies, Malaysia continues to be a key growth market for 3M."

Troy Martin [hi res] - Vice President, APAC for Canvas, Instructure

Troy Martin (pic above), Vice President, APAC for Canvas, Instructure, the SaaS (software as a service) specialist, agreed with the government that this year's Budget is "the Mother of all Budgets," one that complements the nation's 11th Malaysia Plan with TN50 (Transformasi Nasional 2050) to become one of the top global 20 nations in economic development, social advancement and innovation. "The Budget sets the stage for Malaysia to continue its aspirations of a knowledge-based, high-income nation by 2020, to one of the world's top 20 performing nations by 2050. We laud the government's practical allocation especially in the areas of advancing education standards through Science, Technology, Engineering, and Mathematics (STEM), spurred by its TN50 aspirations. We look forward to a vibrant and dynamic education ecosystem, with technology as its catalyst," said Troy Martin, Vice President, APAC for Canvas, Instructure."

"2018's Budget saw an increase of over RM19 billion from last year, bringing this year's allocation to RM280.25. Accordingly, this year's allocation for education increased from RM52.4 billion to RM61.6 billion, twice as high as the Asean average. A further RM250 million was allocated for TN50 education purposes, which include:-

Hans-Peter Ressel - CEO of Lazada Malaysia

eCommerce's growth has been called 'explosive' this year. Hans-Peter Ressel (pic above), Chief Executive Officer, Lazada Malaysia, was one of the first eCommerce players to offer comments to Computerworld Malaysia. Naturally, Ressel applauded "the government's continuous efforts in improving Malaysia's eCommerce industry, especially with the allocation of RM 83.5 million ringgit for the first phase of the Digital Free Trade Zone (DFTZ) at KLIA. This is expected to further spur the growth of local Small and Medium Enterprises (SMEs) and attract investments worth up to RM 700 million."

He also pointed out Lazada's role in helping local SMEs grow. "We are committed in supporting our local SMEs and helping them build their eCommerce businesses. Through our #EveryoneCanSell programme, sellers will enjoy full access to eCommerce training, easier business registration, enhanced internet connectivity with online tools and solutions, as well as financial support through loan financing and exclusive merchant accounts. We hope to boost SMEs' capabilities when they capitalise on #EveryoneCanSell's holistic digital ecosystem, so they remain competitive online."

Budget 2018 not only underlines eCommerce as a primary driver towards Malaysia becoming a fully developed digital economy, but also digitalise the country as a whole in preparation for the coming Fourth Industrial Revolution," he said.

Chuljin Yoon, Chief Operating Officer, 11street

Chuljin Yoon (pic above), Chief Operations Officer of eCommerce platform 11street agreed with these sentiments. "The Budget is designed to shaping the future of Malaysia's economy, and comes at a time when the country's economy continuing to strengthen.  Furthermore, the development of the Digital Free Trade Zone (DFTZ) hub in KLIA will  help Malaysia edge closer to its digital economy vision, while improve the livelihood of Malaysians through growing job and entrepreneurship opportunities, and reduction of income tax for the M40 category."
 
"Together with the proposed tax and other incentives, Malaysia should grow into a regional eCommerce hub, SMEs and eCommerce will continue to play a vital role achieving the digital economy vision of contributing 20 percent to GDP in 2020," said Yoon. "One key observation is the investment into DFTZ that will drive the participation of 1,500 SMEs into digital economy, and attract investments of up to RM700 million, therefore creating an additional 2,500 jobs. Furthermore, other initiatives are in place to help drive the adoption of e-commerce among SMEs, such as the recent DesaMall project by the Ministry of Rural and Regional Development (Malaysia) in partnership with 11street, providing entrepreneurs a comprehensive e-commerce training development programme to upskill themselves. This programme includes skillset, packaging and promotion trainings, along with platform site support and services - a move we believe will drive greater revenue to local and rural entrepreneurs within the domestic market and international exports."

These comments in particular point Malaysia being geared up for accelerated growth especially in the eCommerce sector. Global brands are increasingly seeking opportunities to explore and expand their offerings within the local online space - signalling a healthy growing consumer spending power and market demand.

Matteo Sutto - iPrice

Continuing the conversation about the new boosts for local eCommerce, Matteo Sutto (pic above), Senior Vice President of Growth for eCommerce metasearch firm iPrice Group, said: "These are exciting times for players in the eCommerce space as the Malaysian government has included the digital economy in the TN50 Industrial Revolution plan. Tracing the successes of more developed eCommerce in countries such as Taiwan and Singapore, Malaysia's digital sector is at the brink of accelerated growth and we believe the investments announced at Budget 2018 would be a key catalyst to maximise the full potential of the futuristic economy. We welcome the government's investment of RM83.5 million to develop Southeast Asia's first Digital Free Trade Zone (DFTZ) and logistical support for eCommerce. This is in line with the plans stated in the National eCommerce Strategic Roadmap and we're excited to see further improvements in last-mile delivery network that would make online purchases much more satisfactory for consumers."

 Sutto also welcomed the efforts to exempt taxes imposed on funds raised by venture capital companies for startups in Malaysia. "In the past six years, the top 10 eCommerce in Malaysia have raised RM14 billion in funds to develop their online platform. With this we hope to see further influx of funds for eCommerce startups in Malaysia to make available a greater number of products and services for consumers in the country and across Southeast Asia."

He also singled out the government's investment in East Malaysia to improve communications infrastructure. "Our recent research on East Malaysian online shoppers showed that shoppers in the East spent 75 percent more time searching for products online and are 10% more likely to shop using a desktop as compared to the West. This was because consumers found it easier to shop via desktop as it provided a more stable internet connection. We hope the government's allocation of RM1 billion to improve its telecommunications infrastructure will provide better broadband mobile internet connections to spur further online shoppers from the East." 

Christopher Ong - Managing Director, DHL Express Malaysia and Brunei

In the logistics space, Christopher Ong (pic above), Managing Director, DHL Express Malaysia & Brunei, spoke of digitisation trends in the sector and that the Budget proposals "have introduced a series of exciting initiatives that will definitely bring further growth to Malaysia's economy. We are encouraged by the RM83.5 million allocated in the budget for the first phase of the Digital Free Trade Zone (DFTZ) that is expected to further boost the growth of local SMEs."

"Logistics is one of the most important aspects to help companies scale internationally and our commitment in continuously providing this support remains steadfast," said Ong. "We believe that Budget 2018 is a good step forward in increasing the opportunities for local businesses and gives way for the logistics industry to contribute in preparation for the coming Fourth Industrial Revolution."

Goh Chee Hoh, Managing Director, Trend Micro Malaysia

Goh Chee Hoh (pic above), Managing Director, of digital security solutions company Trend Micro Malaysia, also said the proposed allocations and amendments "underline how Malaysia remains on the right track, and taking another step forward towards becoming a fully-developed digital economy. The measures to strengthen Malaysia's commitment to the Digital Free Trade Zone (DFTZ) will further invigorate the country's eCommerce industry and enable local businesses to capitalize on the opportunities from the internet economy and cross-border activities.  This is also in line with Trend Micro's continuous investment of resources and efforts in supporting this digital transformation growth in Malaysia."

"With more Malaysian businesses making the shift to online and digital platforms, their exposure to vulnerabilities remain omnipresent. There is exponentially more data generated and shared across the ecosystem between partners, customers and the organisation," said Goh. "Balancing the opportunities of potential market growth while keeping security issues in check becomes more important than ever. Businesses and the public alike must continue to be aware of the evolving security threats, especially in light of an increase in worldwide ransomware attacks."

Mark Weaser - OutSystems

Mark Weaser (pic above), Vice President, OutSystems Asia Pacific, sees the budget as a progressive one. “Particularly, the initiative concerning talent development for the future of work. The technology sector has always faced challenges with attracting the right talent, as many people gravitate towards sectors perceived to be more rewarding and exciting like finance. However, the investment made to transform 2000 classes into smart classrooms to increase creative and innovative learning, and also foster digital production and innovation will help to produce skilled technology talent needed to support a digital economy."

“The proposals will help to entice much-needed talent into the technology sector, and ensure that there are enough technological specialists to support Malaysia's Digital Economy,” he said. “Innovative technologies such as the Internet of Things and Analytics will help with driving automation.”

“These technologies will take on prosaic tasks such as data collection and interpretation, while allowing employees to focus on more pressing tasks, such as critical decision making,” he explained. “The initiative that allows computer software expenditure to be claimed back would encourage organisations to spend on new innovations that can help to boost productivity and drive growth."
 
What would be on his wish list for the future? “As the demand for products and services increase, even with an influx of talent, IT departments will be stretched thin. Businesses should consider investing in tools that help with the more granular aspects of their jobs, such as pattern finding, number crunching or basic coding. Having machines or software that can take on these granular tasks that would otherwise eat into valuable time, would free up IT departments to take on more high-level tasks, like critical decision making or developing more tailored, personalised products and services for customers. This would bring about improvements in productivity and in turn, drive growth and contribute to the overall digitalisation of the economy."

“Digital transformation is not just the remit of an organisation's IT department, but it is the responsibility of the entire organisation,” he summarised. “Business users with no technological knowledge should also be part of an organisation’s digital transformation efforts. There are platforms and tools that organisations can invest in that not only reduce the workload of IT departments and free up resources to take on other critical tasks, but also empower business users with resources to meet business demands more efficiently. An organisation that is holistic in its approach towards digital transformation will be well equipped to contribute towards Malaysia's Digital Economy."

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The first version of this feature was published on 28 October 2017. The latest edition of this article lives at Computerworld Malaysia.