IDC calls on Malaysian government to forge public-private partnerships

• Local enterprises lack maturity and are still focussed on hardware
• Government should build digital infrastructure to retain startups as they grow

AT A media briefing on Aug 14, International Data Corporation (IDC) Asean called upon the new Malaysian government to forge public-private collaborations in a bid to achieve Vision 2020 or 2025.

“A joint effort between the public and private sector will create the foundation to increase gross domestic product (GDP), foreign investment, technological experience and expertise in the country,” said Sudev Bangah (pic), managing director of IDC Asean.

Vision 2020 is a comprehensive target inclusive of strong economics and development of a mature society set by the current and former Malaysian Prime Minister Dr Mahathir Mohamad, in 1991. Although focus on this target has waned over the years, it has received renewed focus since Mahathir’s re-election as the country’s premier.

In order to achieve that vision, Sudev says the fundamental core of Malaysian enterprises when it comes to the adoption of ICT must be fixed. “We see enterprises still struggling to change their thinking in terms of using a third party data centre to host applications. They rather build their applications internally.”

IDC predicts that Malaysia’s IT spending at the end of 2018 will be close to US$10 billion. Although there is a lot of excitement surrounding cloud solutions, the Internet of Things (IoT) and artificial intelligence in the Malaysian market, Bangah said, “The fact that so much money is poured into hardware is scary.”

He added that the preference of local enterprises to build their applications internally stems from insecurity and trust issues.

“We sometimes question why enterprises are still buying servers and hardware. It comes down to uncertainty of whether or not there are capable service providers.”

However, this poses a significant opportunity cost for Malaysia. “As a result of this, a huge amount of cloud revenue is being ported out to Singapore where all the major cloud data centres are hosted.”

It is not only this loss of a revenue base that the Malaysian government needs to address, but also the lack of digital infrastructure for startups to scale.

IDC’s Asia Pacific research director of IoT and telco, Randy Roberts said, “Once startups reach a certain size, they require more connectivity and digital infrastructure which Singapore has.

“How do we keep these companies in Malaysia? The government has a big role to play in building up the infrastructure so companies don’t move to Singapore,” he adds.

In terms of broadband connectivity, Roberts commended the Malaysian government on the Mandatory Standard Access Pricing (MSAP) aimed at reducing broadband prices and increasing speed. However, he believes that the speed and size of bandwidth should be the second priority.

Since 30% of Malaysia’s population in East Malaysia is still not connected, Roberts believes, “first priority should be broadband access coverage so that more people can contribute to the digital economy.”

With all these issues highlighted, Sudev stresses the need for an ecosystem change to drive growth. “We are calling for the Malaysian government to create partnerships between the public and private sector to make things happen.”

According to Roberts, some public-private partnerships worth emulating are in Singapore, New Zealand and South Korea.

“The government in these countries have worked with the private sector to build up the cloud infrastructure and make it available for private companies to offer cloud-based services.

Digital transformation really means moving to software because it allows for scalability and flexibility. Malaysia, at the moment, is still focussed on hardware,” said Roberts.

Related Stories:

Right to internet access to drive digital economy, GDP: IDC

Despite late entry, GrabPay to cash in on mobile wallets

IDC Malaysia opens nominations for the 2nd IDC Digital Transformation Awards

For more technology news and the latest updates, follow us on Facebook, Twitter or LinkedIn