ICT/E-Commerce in Malaysia

The Institute of Strategic and International Studies (ISIS)
Technology, Innovation,
Environment and Sustainability
SEMINAR
17 July 2007

Transformation: an act, process, or instance of transforming or being transformed

Malaysia in Transition
Engine of growth for the K-Economy

Malaysia as
exporter of
technology

Source : National Economic Action Council, Malaysia

Malaysia in Transition
Engine of growth for the K-Economy

Potential per capita GDP (real 1992 US$) Malaysia as
exporter of
15,000 MSC technology
strategy

Enhance domestic
productivity

10,000

IT-based
value creation

5,000
No action (original
industrial approach)
Source : National Economic Action Council, Malaysia

1992 1996 2000 2004 2008 2012 2016 2020

MSC Malaysia: Vision
The MSC is about changing the way we live and work
… this special area will be a global test-bed for:
„ the new roles of government;
„ new cyber laws and guarantees;
„ G2B and B2B collaborations;
„ new broadcasting;
„ education;
„ delivery of healthcare; and
„ new technologies …

Government’s Policy Statement at Launch of MSC, 1 August 1996

MSC Malaysia: Mission

 To realize Malaysia as a global
hub and preferred location for
ICT, Multimedia and Services for
Innovation and Operations

 To realize the next engine of
growth in support of Malaysia’s
Vision 2020

MSC Malaysia: Spearheading Transformation

Slide 7 [ DAY 2: 18 May, 2007 - Friday ]

MSC Malaysia’s Contribution to Realising the National Mission
FIVE (5) THRUST AREAS OF 9TH MALAYSIAN PLAN (2006 ‟ 2010)
Facilitating ICT based New Growth Areas:
 Creative Multimedia Content Industry
 Shared Services Outsourcing

 MSC Malaysia Flagship
Applications  MSC Malaysia: Nurturing Human
Capital for K-based Economy

 MSC Malaysia National Rollout will
create K-based Infrastructure  MSC Malaysia National Rollout and Flagship
Applications will help reduce the income gap and
the digital divide


MSC Malaysia: Reaching out to the People
Quality education
 88 smart schools to serve as benchmark for schools
nationwide.
 “Quality Education for All” through Education
Development Blueprint
(2006-2010)
 Smart School Qualification Standards adopted for quality
assurance

Better healthcare delivery
 38 hospitals providing Teleconsultation Healthcare
services nationwide

 1000 professionals trained on Online Healthcare
courses


MSC Malaysia: Reaching out to the People
MyKad significantly improves governance, transparency and government services
delivery
 Greatly enhances National Security
 No cloning of chip based ID

 Zero fraud in payment transactions

 Convenience for citizens enhanced
 Reduced queues e.g. Immigration points
 Reduced processing time for passport renewal
 150,000 Points-of-Usage

 Access to multiple applications:
 9 On-Card and 29 Off-Card to date

 “ONE COMMON PLATFORM” more than 300 integrated

Government Service Centre (GSC)


MSC Malaysia: Enhancing Government Services Delivery

Positive Impact of EG Applications
 myGovernment (myServices) portal offers more than 400
online services and 19 SMS services
 E-Procurement transaction value grew in 2006:
RM 2 billion worth of contracts
 Electronic Labour Exchange captured 120,000 job applicants,
436,000 vacancies and
17,000 job placement


MSC Malaysia: Nurturing Human Capital for K-based Economy

 MDeC K-Workers Development Programs including stop-gap measures on
going. Will train 30,000 Malaysians in High-Value Industry Skills
 Long Term measures e.g. Universities curriculum changes will produce
100,000 graduates to meet investors needs

MDeC working with investors to rapidly scale to global standards, human
capital in high value niche areas.
e.g. Infosys (Software Engineers)
Rocket Fish (Creative Multimedia)
Altera (Hardware Design)

K-Worker Demand-Supply matching system being developed

Structured Government-Industry Engagement Process Established


The MSC Malaysia – Global Test-Bed
KLCC
PETALING JAYA
SHAH ALAM

LAND-PORT
KLANG
ED ER AL HI

PELABUHAN
KLANG

COUNTRY
HEIGHTS

L
KAJANG

SEAPORT
SEMENYIH

TELOK
DATAPORT
Putrajaya
PANGLIMA
GARANG

PULAU INDAH
Cyberjaya AIRPORT CITY
BERANANG

A
AY
PULAU CAREY
BANDAR SALAK
TELOK TINGGI BANDAR BARU
BANTING
DATOK NILAI

AIRPORT KLIA
Sepang F1
SEREMBAN
SEPANG

PORT DICKSON

PORT Dickson

MSC Malaysia – Roll-Out
MSC Malaysia Cybercity Status: MSC Malaysia Cybercenter Status :
„ Physical location and environment to catalyse and support
growth of ICT and ICT-enabled industries nodes for development of ICT and ICT-enabled clusters
„ Nuclei to bridge digital divide and extend ICT benefits to the
community
„ Platform to cultivate a performance culture in service delivery

Kulim

Penang
KL SENTRAL

Perak Pahang
KLCC UPM-MTDC
National MSC
Hub
N. Sembilan
MITC
Melaka

TECH PARK CYBERJAYA Johor

Strategic Advantage of MSC Malaysia
Raise Your Productivity

• High Quality Skills
STRUCTURAL
STRENGTHS

• Low Cost of Doing Business

• Strong Economic Environment
YAB Datuk Seri Abdullah

• Freedom to Move Key Factors Ahmad Badawi,
Prime Minister

- People, Ideas, Capital, Equipment
MSC MALAYSIA

• Zero Corporate Tax Regime
INCENTIVES

• Lowest Cost World-Class Infra.
• One Stop Agency
YB Dato' Dr. Jamaludin Jarjis

• Customised Incentives
Science, Technology and
Innovation Minister

Strategic Advantage of MSC Malaysia
Raise Your Productivity
 87% speak English
 50,000 educated overseas every
PEOPLE year
 5.5% wage inflation, 5% attrition
STRUCTURAL STRENGTHS

 Low cost of high value workers
 Low infrastructure costs
 No hidden costs
COST  Low start-up costs
 Low inflation rates
ENVIRONMENT  Stable popular government
 No natural disasters
 Robust economy
 Excellent cost of living vs. quality of
life

MSC Malaysia Incentives
The Government of Malaysia commits the following 10 Bill of Guarantees (BoG) to
MSC Malaysia Status Companies:
1. Provide a world-class physical and 6. Become a regional leader in intellectual
information infrastructure property protection and cyberlaws
2. Allow unrestricted employment of knowledge 7. Ensure no censorship of Internet
MSC MALAYSIA INCENTIVES

workers
8. Provide globally competitive telecoms tariffs
3. Ensure freedom of ownership
9. Tender key MSC infrastructure contracts to
4. Allow freedom of sourcing capital globally for leading companies willing to use MSC as their
MSC infrastructure and freedom of borrowing regional hub
funds
10.
5. Provide competitive financial incentives
including no corporate tax or an investment
tax allowance for up to ten years and no
duties on the import of multimedia equipment

Driving Malaysia’s IT Initiative

MDeC is the organization that is mandated by the Govt. of
Malaysia to drive the realization of the National IT initiative
‟ the MSC Malaysia

We move the country towards the
K-Economy and help Malaysia achieve Vision 2020

10 Year old government company that is under the purview
of the Ministry of Science, Technology & Innovation

Services provided by MDeC

MDeC (Multimedia Development Corporation) is the one-stop agency mandated with the
implementation of MSC Malaysia

Financial Technical
Facilitation Assistance Assistance
(Immigration, Foreign KWs,
Business Advisory etc) (R&D grants, certification
(SADC, CADC, VRC)
subsidies and incentives)

Market Access Capability Human Capital
& Biz Dev. Improvement Development
(Foreign Trade Missions,
(R&D grants, certification (Knowledge-worker
Business Matchmaking,
subsidies and incentives) Development Institute)
Demand-Supply Matching)

MSC Malaysia Flagship Applications : Catalyst

MSC Malaysia Industry Clusters : Focus
Focus on developing 5 business clusters crucial for the development of the ICT industry

Mobility
embedded
Software-
Hardware

Application Software

MSC Malaysia Status Companies as of July 2007
Total Approved MSC Status companies
2000 Malaysian Owned (51% and above
1,859
Foreign Owned (51% and above
1800 50-50 Joint Venture 1728

1600
1,421 1,383
1400
Number of Companies

1285
1,163
1200
1,033
973
1000
812 825
800
666
621
600
543
429 410 401 428
349
400 300 276 281 307
248
197 181 198
200 94 107 112 144
47 84 39 42 48
443 7 9 13 21 26 31
6
0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Current

Operational
Cluster Awarded* **
Mobility,
Application Software Embedded
Software & Creative
(AS) 792 681 Hardware, 312, Multimedia, 147,
21% 10%
Mobility, Embedded
IHLs and SSO, 106, 7%
Software & Hardware Incubators, 76,
(MeSH) 404 312 5%

SSO 127 106
Creative Multimedia 200 147
IBB 254 164 Application
Software, 681,
IHLs & Incubators 82 76 IBB, 164, 11% 46%

GRAND TOTAL 1,859 1,486

MSC Malaysia Status Companies
by Technology Cluster: Operational
as of July 2007

MSC Malaysia Strong Performer (MSP)
as of Feb 14th, 2007
Companies Year of Approval
Redtone Telecommunications Sdn Bhd 1996
IFCA MSC Bhd (Software Online Sdn.Bhd) 1998
Computer Infobase System Berhad 2000
Airocom Technology Berhad 2000
Green Packet Berhad 2001
Tricubes Computers Sdn Bhd 2002
Actinium Network Sdn Bhd 2002
SCAN Associates Berhad 2002
Inventec Multimedia Corporation (M) Sdn Bhd 2004
JCY International Sdn Bhd 2005
Silver Ant Sdn Bhd 2006
MCSB E-Commerce Sdn Bhd 2006
iCIMB Sdn Bhd 2006

MSC Malaysia: Sharing Our Experiences with the World

 First of its kind
in the region
 Representation  MSC Malaysia: ICT Global Hub In Smart Card &
from 32 e-Passport (44 Participating Countries)
countries
 Already Secured more than RM 70 mil export


MSC Malaysia: Rapidly Growing Exports Across Global Market

15% 20%

10% 30%

25%

Over 300 MSC Malaysia status firms exporting to All Major Markets


MSC Malaysia Impact (KPIs)

MSC Status Companies (As of 17 Feb. 2007) 1,734

Jobs Created (Impact 2005 – Sept. 2006) 33,851 HVJs

Revenue (Impact 2005 – Sept. 2006) US$2.69 bil

Export (Impact 2005 – Sept. 2006) US$700 mil

R&D Expenditure (Impact 2005 – Sept. 2006) US$151 mil

IP/Patents registered (Impact 2005 – Sept. 2006) 1,072

MSC companies listed on MESDAQ 44

Implications: Hollowing out of Businesses
Physical Economy Digital Economy Multiple Sources
‘Marketplace’ ‘Marketspace’

Product Multi Products
Customisation

INFOmediaries:
e.g. Malaysian Portals, Search Engines, Communities
intermediaries Gateways, Call/Service Centers

$$$
Information Fulfillment

Malaysian Foreign/Malaysian
Consumers Consumers

Malaysia Internet &
E-Commerce Development
Malaysia Internet Users Versus Population, 2004 ‟ 2005 (Million)
2004-2005
Year 2004 2005 (est)
Growth
Internet Users 11.6 14.0 20.7%
Malaysia Population 25.50 26.0 2.0%
% of Internet Users/Total 45.5% 53.9%
Population in Malaysia
Source: IDC 2005
Malaysia E-Commerce Spending, 2004 ‟ 2005 (US$M)
2004-2005
Year 2004 2005 (est)
Growth
B2C E-Commerce 1,345.8 1,946.3 44.6%
B2B E-Commerce 4,099.7 7,698.0 87.8%
Total E-Commerce Spending 5,445.5 9,644.3
Source: IDC 2005

Internet Buyers
– 414,631 (9.3 % from Internet users)

Online Purchases in Malaysia by Products
– Airline tickets – 43.8%
– Books – 15.6%
– Music – 6.8%

THE IDEAL ENVIRONMENT

Internet Based Business
B Q T
I D M R U R
A U
I P I A A L S
N C S R N I &
N T I
O P T K D T
E N
O N R R E Y S
E D T
V T O I T I
P R E
A E T B D S R
R V
T N E U A E O I E F
I T C T C N D C R A
O T I C T U E V C
N I O E I C S I E
S C S
O N S T T
N S Y E
S

GOOD BANDWIDTH
EFFICIENT AND TRUSTED PAYMENT SYSTEMS
FULFILMENT SYSTEMS AND LOGISTICS
USER FRIENDLY, AFFORDABLE ACCESS DEVICES & INTERFACES
STABLE AND SUPPORTIVE INSTITUTIONAL ENVIRONMENT

Internet Based Business Cluster:
Definition/Qualifying Activities

 Utilise the world wide web as its main
platform of operation such as its
marketing, web hosting and/including
e-commerce transactions
 Application service providers,
e-commerce service providers; web-
based trading platforms.
 E-Government based service providers

Internet Based Business Cluster:
Breakdown by Focus Areas
 Construction
 Consulting
120  CRM/ERP
 E-Commerce/Web Development
 E-Government
100
100  E-Stockbroking
 eTax
 Financial Services
80  Healthcare
 Logistic
 Online Portal HR
60
 R&D and Training
 SCADA
 Transport - Ticketing
40
 Travel
 Wireless/Mobile/SMS Services

20
12 11 10
7
5 5 4 4 3 2 1 1 1
0
value chain e- e-marketing value chain virtual info search e- online entertainment e-payment e-auction e-shop finance
integrator marketplace svc pro community brokerage engine procurement recruitment

Some of Internet Based Business
Cluster Companies in MSC …
Cari Internet Sdn. Bhd. MAL
www.cari.com.my L
“Malaysian- Specific Search Engine”

NetBuilder Sdn Bhd
www.netbuilder.com.my
“E-Commerce Online Mall Solutions ”

MyMix Sdn Bhd “Online Music Downloading
www.mymixstation.com Through Kiosk and Internet”

Webture Sdn Bhd “Online Community and
www.webture.net Cross Industry Integrated Web Solutions ”

Cluster Companies in MSC .. cont’d (1)

Excard Corporation Sdn Bhd
www.excard.com.my “Malaysia Full ‟ Service Printing via
Internet”

MCSB E-Commerce Sdn Bhd
www.manex.com.my “Malaysian Automotive Network Exchange”

Alpine Innovation Sdn Bhd “Integrated ERP Solutions
www.alpine.com.my via ASP Model”

Holiday City Sdn Bhd “Online Hotel Accommodation Reservation Services
www.holidaycity.com ”

Cluster Companies in MSC .. cont’d (2)
Netwhizz Sdn Bhd “Malaysian Food Information and Traceability ”
www.m-fit.info

PC3 Technology Sdn Bhd
www.hargaruntuh.com “Online Shopping for IT technology Products and
Accessories ”

asiaEP Berhad “Malaysia Business to Business (B2B) E-
www.asiaep.com Marketplace”

Dagang Net Commerce Sdn Bhd
www.dagangnet.com
“E-Trade Facilitation Services”

IBB Companies: International/Joint Venture
48 IBB companies
SHAREHOLDING BY COUNTRIES/REGIONS

Cayman Islands

16th World Congress on Information Technology
May 18 – 22 2008 KUALA LUMPUR

Thank you
suhaimi@mdec.com.my

ICT/E-Commerce in Malaysia

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