Malaysian ICT Sectoral Outlook: Trends, Challenges and Prospects

___________________________________________________________________________ 2012/CTI2/MAG/DIA/004 Malaysian ICT Sectoral Outlook: Trends, Challenges...
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2012/CTI2/MAG/DIA/004

Malaysian ICT Sectoral Outlook: Trends, Challenges and Prospects Submitted by: National ICT Association of Malaysia

Information Technology Agreement Dialogue Singapore 29 March 2012

MALAYSIAN ICT SECTORAL OUTLOOK: Trends , Challenges and Prospects

Shaifubahrim Saleh President The National ICT Association of Malaysia INFORMATION TECHNOLOGY AGREEMENT (ITA) DIALOGUE APEC MARKET ACCESS GROUP (MAG) 2 Marina Bay Sands Exhibition and Convention Centre, Singapore 29 March 2012 PE PER P PERSATUAN ER ER RSAT SA S SAT AT A TU UAN UA AN IIN AN INDUSTRI NDU DU DUS US ST TRI TR RI K RI KO KOMPUTER OMPU MP M PU P UTER TER TE ER DAN DA DAN MULTIMEDIA MU UL ULT LT L TIME IM IMEDIA IM ME EDI DIA DIA IA MALAYSIA MALA MA LAY L A AY YSI SIA S IA IA ASSOCIATION ASS AS A SS S SO SOCI OC OCI CI C CIATI IATI AT A TI T TION ION ON OF OF THE THE TH HE COMPUTER COMPU CO MP M MPUTER PU P U UTER TE T TER ER ER AND AND AN ND MULTIMEDIA MULT MULT UL U ULTIME LTIME LT IME IM MEDIA DIA DI IA INDUSTRY INDUS IN DU D US U USTRY STRY TR T RY R Y MALAYSIA MALAY MALAY MA LA LA LAYSIA AY YS SIA SI IIA A

Membership : 1986-2011

PIKOM Annual Events

Formed in 1986 Commands 80 % of ICT industry PIKOM @26

Wisma PIKOM : 2012 International Affiliations

PIKOM in Brief: Voice of ICT Industry in Malaysia PERSATUAN INDUSTRI KOMPUTER DAN MULTIMEDIA MALAYSIA ASSOCIATION OF THE COMPUTER AND MULTIMEDIA INDUSTRY MALAYSIA

Population : 28.3 millio million on Total Fertility Rate (TFR) : 2 .2 ((b (below beellow ow replacement rep ep pla la ace cceme eme ment nt llevel) evel ev el ) 2.2 Per err C Ca Capita apita income : USD7,760 (RM (RM25,866) (RM25,866 RM M25,86 M 5,86 66 6) Pr rre e-cccrrisis GDP growth e : 5.7 % (2006-2008) (200 06 0 6-2 6 20 2 008 8)) 8 Pre-crisis Revised GDP Growth : 2.0% 0% % (2009-2010) ((200 09 0 9-2 9 20 2 010 0 0) t po World Competitiveness : 10 0th p position osition ositio Unemployment rate Consumer Price Index Literacy

6 % ((l(low ow o w unemployment uneemp plo oym ymeen nt ) : 3.6 : 2.8 % (l((lo (low lo ow w iinflation) nffla ati t io on n) :9 93.1% % (high ((h hiig gh literacy lite lilite tera racy cy )

QUALITY Q UALITY P POPULATION OPULATION THROUGH T HROUGH ICT ICT ¾R Researc Research ch c h ¾D Developmen en ntt n Development ¾ IIn nnovation n Innovation

¾K Knowledge workerr ¾Knowledge ¾ ¾K Kn nowledge Econom Economy my m y Society ¾K Knowledge Societ tty y Innovative Economy ¾ IIn nnovative Econom nom my m ¾D Digital Econom my Economy

About Malaysia PERSATUAN INDUSTRI KOMPUTER DAN MULTIMEDIA MALAYSIA ASSOCIATION OF THE COMPUTER AND MULTIMEDIA INDUSTRY MALAYSIA

2010 GNI per capita:

GNI Per Capita (USD$)

1970

2009

Korea

260

21,530

2009 Household Income:

Malaysia

380

6,760

RM4,025 (USD 1,183)

By 2020 GNI per capita

RM26,420 (USD8,256)

1995 GNI per capita:

RM5406

1980 GNI per capita:

RM1820

1995 Household Income:

2020 Target:

RM2020

USD21,834

RM692

USD14,818

Until late 70’s

Info-structure (ICT), science, R&D, knowledge capital, innovation skills, XY Generations, entrepreneurship and globalization Infrastructure, Capital, Factory, Technical Skills and Semi-skilled Workforce

LOW INCOME – FACTOR DRIVEN ECONOMY

USD12,139 Developed Economy Benchmark:

1980 Household Income:

Land, labour and low skills

10th MP (2011-2015)

Until mid 90’s

MIDDLE INCOME – INVESTMENT DRIVEN ECONOMY

HIGH INCOME – INNOVATION DRIVEN ECONOMY Source: DOSM /10th Plan /PIKOM

New Economy Model Proposition: Higher Value Adding / Higher Income Nation PERSATUAN INDUSTRI KOMPUTER DAN MULTIMEDIA MALAYSIA ASSOCIATION OF THE COMPUTER AND MULTIMEDIA INDUSTRY MALAYSIA

New Transformation Policy

FDI Driven Growth Periods Next Economic Major Thrust: Endogenous Growth through New Transformation Policy PERSATUAN INDUSTRI KOMPUTER DAN MULTIMEDIA MALAYSIA ASSOCIATION OF THE COMPUTER AND MULTIMEDIA INDUSTRY MALAYSIA

1 Malaysia

ETP

GTP

DTP

One Malaysia

Economic Transformation Programme

Government Transformation Programme

Digital Transformation Programme

Preservation and enhancement of unity in diversity

New Economy Model: A High Income, Inclusive & Sustainable Nation

Effective delivery of Government Services

Accelerate the Development of Digital Economy; Improve Quality of life

People First and Performance Now

131 Entry Point Projects; 60 Business Opportunities; 8 Strategic Reform Initiatives (SRI)

6 National Key Result Areas (NKRA)

25 Entry Point Projects; 28 business opportunities;

Tenth Malaysia Plan (10MP : 2011-2015) / Eleventh Malaysia Plan (11MP: 2016-2020)

National Transformation Policy Strategies PERSATUAN INDUSTRI KOMPUTER DAN MULTIMEDIA MALAYSIA ASSOCIATION OF THE COMPUTER AND MULTIMEDIA INDUSTRY MALAYSIA

Rural Transformation Programme (RTP)

Political Transformation Programme (PTP)

VISION2020

An Overview: ICT Policy Strategies in Malaysia PERSATUAN INDUSTRI KOMPUTER DAN MULTIMEDIA MALAYSIA ASSOCIATION OF THE COMPUTER AND MULTIMEDIA INDUSTRY MALAYSIA

Contribution of ICT GDP mainly comes from private consumption of ICT Products PERSATUAN INDUSTRI KOMPUTER DAN MULTIMEDIA MALAYSIA ASSOCIATION OF THE COMPUTER AND MULTIMEDIA INDUSTRY MALAYSIA

KNOWLEDGE BASE ECONOMY

2011 IDE

1994 MSC

KNOWLEDGE WORK FORCE

1970 E&E

INDUSTRIAL ECONOMY

ICT ERA

INDUSTRIAL WORK FORCE

INFLEXION PHASE

ITA Played a Crucial Role in the Transformation of Malaysian ICT Sector PERSATUAN INDUSTRI KOMPUTER DAN MULTIMEDIA MALAYSIA ASSOCIATION OF THE COMPUTER AND MULTIMEDIA INDUSTRY MALAYSIA

Selected tax structure

Malaysian Experience

¾Generally : 10%-30% import tax and 10% sales tax.

Structural Changes in ICT Sector

¾Electrical circuit boards, integrated circuits and integrated circuit boards dutiable at 30% import tax and 10% sales tax. ¾ICs 10% sales tax only. For use in PCs, no duties chargeable. ¾Except CD ROMs which are for computer use, video CDs and other CDs are charged 10% sales tax. ¾Computer cables are dutiable at 30% import tax and 10% sales tax. Modems require an approved permit from Telecom Malaysia.

Expanded trade volume

ITA Impacts

New jobs created New ICT industries emerged Demands for new ICT products and services emerged

Fosters new R&D in ICT sector

ITA Benefits to Malaysia PERSATUAN INDUSTRI KOMPUTER DAN MULTIMEDIA MALAYSIA ASSOCIATION OF THE COMPUTER AND MULTIMEDIA INDUSTRY MALAYSIA

Year 2000

Year 2010

Trend # 1: Structural changes in ICT Sector PERSATUAN INDUSTRI KOMPUTER DAN MULTIMEDIA MALAYSIA ASSOCIATION OF THE COMPUTER AND MULTIMEDIA INDUSTRY MALAYSIA

Trend # 2: ICT Trade grew during industrial era , now declining PERSATUAN INDUSTRI KOMPUTER DAN MULTIMEDIA MALAYSIA ASSOCIATION OF THE COMPUTER AND MULTIMEDIA INDUSTRY MALAYSIA

600.0

563.5 550.0

529.6

497.7 500.0

Average annual growth rate of ICT workforce 6.4%

467.8

450.0

439.7

413.2 400.0

388.4 365.0

350.0 2005

2006

2007

2008

2009

2010

2011

2012

Trend # 3: Share of Computer Professionals are increasing in the ICT workforce PERSATUAN INDUSTRI KOMPUTER DAN MULTIMEDIA MALAYSIA ASSOCIATION OF THE COMPUTER AND MULTIMEDIA INDUSTRY MALAYSIA

120,000

108,255 95,375

100,000

Number Employed

62,010 60,000

84,311

75,062

80,000

67,629

56,049 56,220

58,208

40,000

20,000

Number Employed in ICT Sector

2000

2001

2002

2003

2004

2005

2006

2007

2008

56,049

56,220

58,208

62,010

67,629

75,062

84,311

95,375

108,255

Trend # 4: 3 out of 4 ICT Graduates employed in ICT User Industries PERSATUAN INDUSTRI KOMPUTER DAN MULTIMEDIA MALAYSIA ASSOCIATION OF THE COMPUTER AND MULTIMEDIA INDUSTRY MALAYSIA

Trend # 5: Professional workforce at 13% poised to expand PERSATUAN INDUSTRI KOMPUTER DAN MULTIMEDIA MALAYSIA ASSOCIATION OF THE COMPUTER AND MULTIMEDIA INDUSTRY MALAYSIA

Digital contents can be created or captured or manipulated in various devices

Digital processes requiring shorter frame of time, cost effective and ease handling

Digital storage requires less physical storage, ease of storage and retrieval and longer shelf-life

Digital distribution easily done, cost effective, globally sharable and targeted mass

Trend # 6: New ICT Products are emerging in line with IDE PERSATUAN INDUSTRI KOMPUTER DAN MULTIMEDIA MALAYSIA ASSOCIATION OF THE COMPUTER AND MULTIMEDIA INDUSTRY MALAYSIA

121.3%

27.2%

Trend # 7: Shifts in mobile communication sector towards cellular products PERSATUAN INDUSTRI KOMPUTER DAN MULTIMEDIA MALAYSIA ASSOCIATION OF THE COMPUTER AND MULTIMEDIA INDUSTRY MALAYSIA

Trend # 8: Demand for Internet digital media products growing PERSATUAN INDUSTRI KOMPUTER DAN MULTIMEDIA MALAYSIA ASSOCIATION OF THE COMPUTER AND MULTIMEDIA INDUSTRY MALAYSIA

Trend # 9: Significant Expansion in e-Government Services PERSATUAN INDUSTRI KOMPUTER DAN MULTIMEDIA MALAYSIA ASSOCIATION OF THE COMPUTER AND MULTIMEDIA INDUSTRY MALAYSIA

Nanotechnology

MEMS Technology

Semantic Technology

Grid Computing

Wireless Technology

Biotechnology

Convergence : 4G

ICT Road Map

Cyber security Cyber Laws Open Source

Trend # 10: R&D micro-electronics sector poised to introduce new ICT products and services in the market PERSATUAN INDUSTRI KOMPUTER DAN MULTIMEDIA MALAYSIA ASSOCIATION OF THE COMPUTER AND MULTIMEDIA INDUSTRY MALAYSIA

Key Challenge # 1: Supply of quality ICT graduates declining PERSATUAN INDUSTRI KOMPUTER DAN MULTIMEDIA MALAYSIA ASSOCIATION OF THE COMPUTER AND MULTIMEDIA INDUSTRY MALAYSIA

Key Challenge 2 # ICT Remuneration still low PERSATUAN INDUSTRI KOMPUTER DAN MULTIMEDIA MALAYSIA ASSOCIATION OF THE COMPUTER AND MULTIMEDIA INDUSTRY MALAYSIA

Key Challenge 4 # Highly skewed broadband provision PERSATUAN INDUSTRI KOMPUTER DAN MULTIMEDIA MALAYSIA ASSOCIATION OF THE COMPUTER AND MULTIMEDIA INDUSTRY MALAYSIA

SSouth o Korea Ja Japan

QUALITY LEADERS

BROADBAND LEADERS

Latvia Sw wed e Sweden

Bulgaria

BQS (Scaled)

Romania Lithuania

Finland

Ne N Netherlands Hong Kong Ho H

Portugal Germany Czech Republic Tunisia Thailand Costa Rica Brazil Ukraine

South Africa India

Belgium

Denmark

USA

Hungary Poland

Russia F.

ud Arabia biaa Saudi

Estonia eece Greece

Switzerland Singapore Luxemburg Lu

UK

Ireland Ire d

Slovenia Malta M

Turkey Israel Mexico

Pakistan

Nigeria

Norway N y

France

Chile

Ghana

Cyprus C

Argentina

Indonesia

China Malaysia Peru Colombia Vietnam Jordan Algeria Morocco Egypt

LOW PENETRATION / QUALITY

Kenya

Angola

IIceland ce

Slovakia

Spain

Australia

New Zealand Italy Austria

United Arab Emirates U Bahrain B Canada Taiwan

PENETRATION LEADERS

Philippines

Household Penetration Challenge # 4: Lack global competitive edge in broadband leadership PERSATUAN INDUSTRI KOMPUTER DAN MULTIMEDIA MALAYSIA ASSOCIATION OF THE COMPUTER AND MULTIMEDIA INDUSTRY MALAYSIA

A number of parameters are in place in order for the nation to move up not through infrastructure alone but also through building human capital and harnessing the demands of YZ technology savvy generation

Challenge #5 : Meeting ICT demands of YZ technology savvy generation generation PERSATUAN INDUSTRI KOMPUTER DAN MULTIMEDIA MALAYSIA ASSOCIATION OF THE COMPUTER AND MULTIMEDIA INDUSTRY MALAYSIA

1. To increase ICT contribution to 17% by 2020; 2. To increase the contribution of ICT Services in trade; 3. To nurture high value adding research, development and innovation activities in ICT segments in micro-electronics, nanotechnology, MEMS, bio-informatics, cyber security, cloud computing and mobile commerce; 4. To increase scope and coverage of broadband ubiquity; 5. To expand the scope and coverage of pervasive computing in all spheres of life; 6. To create competent workforce; 7. To create competent and vibrant ICT industry; 8. To create adequate top-notch ICT jobs; 9. To promote green ICT across all sectors of economy; 10. To be globally competitive

Top 10 Aspirations for Malaysia as a member in Information Technology Agreement PERSATUAN INDUSTRI KOMPUTER DAN MULTIMEDIA MALAYSIA ASSOCIATION OF THE COMPUTER AND MULTIMEDIA INDUSTRY MALAYSIA

PERSATUAN INDUSTRI KOMPUTER DAN MULTIMEDIA MALAYSIA ASSOCIATION OF THE COMPUTER AND MULTIMEDIA INDUSTRY MALAYSIA

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