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ICT drives socioeconomic inclusion nationwide

Article - September 10, 2014
ICT is flourishing with global players like Telekom Malaysia and Axiata providing economy changing results and life-changing technology.
Kabilah Abd Hassan is a seaweed farmer in Sabah, in the eastern part of Malaysia. She has been farming the turquoise sea near her village all her life, ever since she inherited the business from her grandfather. But sales declined over the years, and she found herself in a predicament, barely able to feed her family.

Until one day, her daughter was given access to a computer through a special program implemented by the Malaysian Communications and Multimedia Commission (MCMC), the public agency in charge of regulation and policymaking in the information and communications technology (ICT) sector.

Launched in 2010, the program consists in distributing one million netbooks to secondary and university students, as well as low-income families, in order to boost internet usage.

“My daughter learned how to use the internet and made a website to promote our seaweed business,” she says. “Since then, orders have been pouring in and we now have clients in Peninsular Malaysia as well as in Japan and China.” Her business is now thriving: “We used to make about RM450 (£83.40) a month; now we make RM 20,000 (£3,700),” she adds.

Ms Kabilah’s story is heralded by the MCMC as an example of the bounties brought by the development of ICT. “Our effort to boost ICT and increase internet access produce social ‘upliftment’,” says MCMC Chairman, Dato’ Mohd Sharil Tarmizi.

“Nobody is left behind,” he adds. “We are seeing the results of the investments we’ve been making for more than 20 years in order to build a knowledge-based economy. Now, even though we are a middle-income nation, we have a very high level of social media use. There are approximately 18 million people on Facebook and over 4 million on Twitter. These figures are very impressive considering our population of 28 million and the fact that household broadband penetration is still only 68 percent.”

Dato’ Sri Jamaludin Ibrahim, President & CEO of AxiataDato’ Sri Zamzamzairani Bin Mohd Isa, Group CEO of TM
The ICT sector contributes 12 percent to the national GDP and has become “the strategic enabler and key driver of the Economic Transformation Programme (ETP),” according to the national trade promotion agency, MATRADE. Spending in Malaysia’s IT sector is expected to grow 11 percent this year to reach RM67.9 billion, according to Gartner’s Worldwide IT Spending Forecast. However, the market is uneven: ICT penetration is high in the sophisticated metropolitan area around Kuala Lumpur, but other regions lag behind.

One of the main priorities of the government is to bridge the gap between urban and rural areas. Authorities plan to deploy 1,000 telecommunication transmission towers over the next three years to improve coverage. And undersea cables are set to be laid in order to improve access in the regions of Sabah and Sarawak.

The creation of the Multimedia Super Corridor (MSC) in 1996 was the basis for the growth of ICT and technology-based industries. But Malaysia is now keen to move up the industry value chain from its traditional role of manufacturer and exporter of ICT products to that of “provider and exporter of ICT services, making significant inroads to overseas markets,” according to MATRADE. “The role of ICT has also been expanded from being merely vertical to encompass the horizontal – cutting across all spheres of the national economy and quality of life.”

“ICT has been growing at an average of 10 percent over the past five years,” says Tan Sri Dato’ Sri Zamzamzairani Bin Mohd Isa, CEO of Telekom Malaysia (TM). “The sector is worth $18 billion and we are looking at almost doubling that figure to reach $31 billion by 2017. It is a fast-growing path and the current infrastructure helps us fuel the growth of the ICT sector. Connectivity is no longer an issue,” he adds.

TM’s boss points out that the company’s pre-tax profits grew by 21.8 percent in the first quarter of 2014, compared with the same period in 2013, at RM279.6 million, and that this increase is “driven by internet, multimedia and data.”

“Indeed, 67 percent of our revenue mix comes from the non-voice unit, and this is very good news because it is the high-growth part of our business,” says Mr Zamzamzairani.

In 2012, the government launched the Digital Malaysia Masterplan in order to transform the country into a fully developed digital economy by 2020. Increasing internet penetration and broadband are key elements of the plan. According to Business Monitor International (Malaysia Information Technology Report Q1 2013), internet penetration stands at 56.4 percent, and broadband penetration is expected to increase to 22.9 percent in 2016, from 20.9 percent in 2012. The total broadband market is forecast to reach £663 million in annual revenue by 2015, with fiber-to-the-home (FTTH), fixed wireless access (FWA) and metro Ethernet.

CEO of leading mobile operator Celcom Axiata Berhad, Dato’ Sri Jamaludin Ibrahim, says, “Malaysia has the potential to become a regional hub thanks to the investments made by the government in terms of financial and ecosystem support, such as the MaGIC initiative and many others.”

He adds that already “the growth of the mobile market has been spectacular, with more than 40 million subscribers in early 2013, a penetration rate of 140 percent.” In line with the ambition of the Malaysian government, the Axiata group, one of the largest telecoms operators in Asia with over 240 million customers, aims at “advancing Asia by piecing together the best throughout the region in connectivity, technology and talent”.