Stronger Public Private Partnership Required to Drive Industry 4.0 in Malaysia

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IDC believes that the 2019 Malaysia National Budget recently announced by Lim Guan Eng, the Finance Minister of Malaysia was an important incremental step in achieving Malaysia’s vision to become a fully connected digital economy. The recent budget focused on the Industry 4.0 blueprint, titled “Industry4WRD”, which aims to make Malaysia the prime destination for high-tech industries in the region. The government plays a central role in the successful implementation of a robust Industry 4.0 strategy by creating clear policies and priorities to support the private sector. Initiatives like Industry4WRD focus the energy and creativity of the private sector around a common mission to create an era in which AI, robotics, 3D printing, and IoT will take center stage and lead to digital transformation in Malaysia. IDC believes that direct support for Public-Private Partnerships (PPP) is necessary to focus Malaysia’s resources and boost the economic growth of the country.

The Malaysian government is continuing to adopt the necessary policy changes and budget priorities to strengthen the economic foundation for digital transformation and technology investments. For example, on November 7th, Malaysian Technology Development Corporation (MTDC) Sdn Bhd invited small and medium enterprises (SMEs) to embrace the fourth industrial revolution with the launch of the Centre of 9 Pillars (Co9P) initiative. This centre creates a physical location for ecosystem partners to interact for the development and incubation of solutions based on nine technology pillars including; Big Data Analytics, Autonomous Robots, Simulation & Augmented Reality, Horizontal & Vertical Integration, Internet of Things (IoT), Cybersecurity, Cloud, Additive Manufacturing and Supply Chain. IDC forecasts the size of the Big Data/Analytics investment in Malaysia will be $US670 million in 2019 led by the Banking industry while spend on IoT will be US$2.2 billion with the largest investment going into Manufacturing (2018 Big Data Spending Guide, 2018 IoT Spending Guide).

For almost a decade, IDC has been chronicling the emergence and evolution of the 3rd Platform of technology; the drive into Cloud, Mobility, Social and Big Data/Analytics technologies. The adoption of these technologies has accelerated as enterprises commit to the 3rd Platform and undergo Digital Transformation (DX) on a massive scale. Malaysia’s digital economy is in the early stages of creating an infrastructure with key core technologies (cloud, big data/analytics, artificial intelligence [AI], mobility, social business, robotics, internet of things [IoT], and 3D printing) for better public services and an economic boost. Rapid advances in cloud computing, connected devices, mobile, social media and data analytics are contributing to the growth of SMEs in Malaysia. SMEs constitute 98.5% of the total businesses and will spend US$2.7 billion on new technologies in 2019, according to IDC’s 2018 Small and Medium Business Spending Guide.

“The growth of digital economies is becoming an ever more impactful part of the global economy. The transition to a digital economy is a key driver of growth and development because it can provide a boost to the country’s productivity across all sectors and it creates an attractive environment for new investments from outside Malaysia. As the fourth industrial revolution becomes a key driver of the digital economy, entrepreneurs and SMEs need to assess fundamental aspects of their business, including what products and services they sell, how they deliver them to the market, the new skillsets required and how they need to organize to support their operations. Now is the time to take advantage of the new policies of the government and partner to accelerate new digital businesses,” said Randy Roberts, Research director IoT and telco, IDC Asia Pacific.

IDC strongly supports the new government’s plan to launch the National Fibre Connectivity Plan in 2019. This plan aims to develop broadband infrastructure to achieve a target of 30 Mbps speed per customer in rural and remote areas of the country within 5 years. This plan follows the implementation of the Mandatory Standard Access Pricing (MSAP) announcement from MCMC earlier this year that has successfully lowered broadband prices in order to connect more citizens to the digital economy.

“The high cost of a broadband connection in Malaysia has been one of the reasons small enterprises have delayed moving their business online. Government policies that improve the affordability, access and speed of broadband connectivity will increase the adoption of digital services and show the readiness of the economy to support digital initiatives” said Randy Roberts, Research Director IoT and Telco, IDC Asia Pacific.

IDC has documented examples of successful Public-Private Partnerships in the region, including Indonesia and Singapore, where the combination of public policy and entrepreneurship is driving the digital economy including smart city and mobile commerce services. In order to ensure the success of the digital initiatives in Malaysia, the government needs to consistently communicate the country’s digital priorities. The private sector should then follow with investment and development of resources in those areas, including development of key skillsets in the workforce to retain local talent.

About IDC

IDC is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. IDC helps IT professionals, business executives, and the investment community make fact-based decisions on technology purchases and business strategy. More than 1,100 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries. For more than 50 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, the world's leading technology media, research, and events company.