ICT industry stays resilient, growth momentum to continue

The Malaysian information and communications technology (ICT) industry has shown resilience so far this year and its growth momentum is projected to continue driven by the intensification of digitisation processes.

This is amid dampening factors such as the Goods and Services Tax implementation and the depreciation of the ringgit which had impacted sales by up to 30 percent last year.

The National ICT Association of Malaysia (Pikom) chairman, Chin Chee Seong, said aside from the prevalent technological trends of Cloud Computing, Big Data and Internet of Things (IoT), the industry had seen rapid growth in e-commerce as a key factor to go forward.

"This is a big development especially with the rise of cross-border transactions which are set to grow with the implementation of the ASEAN Economic Community and globalisation," he told Bernama.

For example, iPay88 Sdn Bhd, a subsidiary of NTT Data Group, has recently collaborated with PayPal to ease cross-border trading and payment for iPay88's existing base of close to 10,000 local e-Merchants.

Chin said e-commerce together with financial technology were fast emerging as growth drivers and provide plenty of opportunities for local ICT players to leverage on.

By 2018, he said Pikom aspired to increase e-commerce revenue over e-commerce spending in order to make Malaysia a net exporter, targeting RM109.1 billion in revenue versus RM104.0 billion spending.

In 2013, Malaysia's e-commerce revenue was at RM59.1 billion while spending totalled RM91.3 billion, which was the tipping point with revenue gradually increasing year by year.

For this year, it is expected to record RM80.9 billion in revenue and RM95.6 billion in spending.

"Among six ASEAN countries, Malaysia ranks third (US$1.5 billion) behind Indonesia (US$2.2 billion) and Singapore (US$1.9 billion) in terms of market size for e-commerce (B2C e-Commerce), followed by the Philippines (US$1.2 billion), Thailand and Vietnam with US$1.1 billion each, respectively.

"And even though online shopping in Malaysia has a relatively higher penetration (about 67 percent online users out of the total population) than other countries in ASEAN, it is still highly attractive with plenty of room to grow," said Chin.

Despite various external challenges, he said Pikom remained cautiously optimistic that the industry would grow by 12-14 percent this year, as there was a clear growth path for the sector.

"It is now a matter of ensuring that we stay on this path and maintain our trajectory. We are also optimistic that the industry will continue to grow strongly in the next five years," he said.

He said growth would derive from several areas, particularly, ICT security, Cloud Computing and miniaturisation of devices followed by provision of mobile broadband, platform, infrastructure and software as a service, increasing digitisation processes and convergence of process, content and people.

Chin said domestic demand continued to drive the industries for ICT services, mainly coming from various corridor projects – Economic Transformation Programme and Government Transformation Programme, and capital intensive infrastructure projects.

On top of that, the ICT services sub-sectors such as computer services, online publishing, programming and broadcasting are also poised to record another double-digit growth estimated at 14.8 percent (RM81.4 billion) this year.

The share of ICT services to the nation's gross domestic product is also expected to increase from 3.3 percent in 2000 to 6.9 percent in 2016.

However, the ICT hardware manufacturing sub-sector will continue its downward trend.

Pikom hopes that more industry players will embrace and capitalise on the key growth trends of using new technologies as they would need to serve multiple markets.

This also includes the need to secure reach across borders, international strategic alliances and partnerships and global customers via e-commerce.

"As the Chair of the Asian-Oceanian Computing Industry Organisation ASEAN Economic Community Digital Taskforce, we are in a good position to assist Malaysian companies to realise these aspirations, provided they are willing to make the paradigm shift in tandem with global developments," Chin added.