RMK-12: Keep up the momentum on digital infrastructure investment

The advantages of a low-touch economy in areas such as surveillance and tracking, payments and manufacturing of digital products attract a new breed of entrepreneurs. Businesses not only need to be agile, but also have the foresight to overcome challenges and seize opportunities in the growing environment of disruptive technologies and innovation.

Many companies are still unsure how or where to start. It is good that the government has been proactive in driving the nation’s digitalisation agenda. The government must keep up with the various initiatives and incentives to assist businesses in making the switch towards digitalisation. The 2015 automation capital allowance for manufacturing companies, the national digital blueprint, the Industry4WRD policy under MITI and other related plans should be vigorously implemented under the 12th Plan.

The importance of strategic cooperation and public-private collaborations is undeniable as we pursue digitalisation. Malaysia’s Lighthouse Project under MIDA which highlight those industry players that have taken smart manufacturing technology from the pilot stage to large-scale integration stage should continue to receive support.

These companies may be examples to others looking to apply technologies such as artificial intelligence, additive manufacturing and advanced analytics. Through the Lighthouse programme, a shared learning journey platform is created that will help manufacturers in Malaysia benefit from the positive outcome of Industry 4.0.

More local companies should be integrated into the wider value chain operations network of MNCs. This will drive Malaysia’s industries towards innovation and operational efficiency, benefiting Malaysia’s production ecosystem. Currently, only 32% of Small and Medium Enterprises (SMEs) in the country have embraced digitalisation.

The plan is to digitalise all SMEs by 2024. The digitisation of all SMEs makes sense considering that they contributed RM521.7 billion of the nation’s gross domestic product (GDP) and provided 5.7 million jobs to 70% of Malaysia’s workforce, according to a recent statement by the Malaysia-China Chamber of Commerce (MCCC).

Five key potential areas stand to benefit from digitalisation. These include smart mobility in sustainable Cities; Energy Management through smart grid, advanced metering; Smart factory; Efficient logistics for e Commerce, Retail business transformation. Inclusive planning and careful execution are needed for the country to thrive in a global digital economy.

The digital transformation of a nation can be described as a journey. There is a path to take, a destination to reach and unique needs to be met along the way. Malaysia has started the process of integrating digital technologies into all areas of its economy. The momentum must continue unabated. The aim is for Malaysia to be the Heart of Digital ASEAN, where Malaysia will serve as a regional digital powerhouse launching global champions to lead the Fourth Industrial Revolution (Industry 4.0). Any form of digital divide must be avoided. The next step should pivot on a people-focused, value-based Industry 4.0. The government must not compromise on the promise to make the internet and broadband a third utility, accessible to all. Only then can the nation truly harness the benefits of digitalisation.

This article is written by

Professor Dato Dr Ahmad Ibrahim

Tan Sri Omar Centre for Policy Studies

UCSI University