Pikom: Malaysia Risks Falling Behind Indonesia, Vietnam

• Digitization needs to quickly happen, otherwise ‘we will have lost out’
• New PIKOM think tank, Future Digital, about taking future into own hands

Malaysia runs the risk of falling behind neighbours in the region if the country doesn't pick up the pace of digitization, warned outgoing Pikom chairman, Ganesh Kumar Bangah (pic), in his final media briefing as chairman on Tuesday in Selangor, Malaysia. "It is very important for us to be adopting technology faster than our neighbouring countries to ensure that we remain competitive," he said. "Our competitor today is not Singapore. Our competitor today is Indonesia, our competitor today is Vietnam." Pikom is the Nasional ICT Association of Malaysia.

In order to step up, Ganesh said there needs to be improvements in how government grants are disbursed, as well as announcing a think-tank to be chaired by him, made up of key industry players and academicians, to help advise the government in formulating and implementing policies in order to ensure Malaysia does not fall behind.

"If we don't move as fast as our competitors, if our government doesn't provide the right incentives as it did over the last 15-20 years, we will have lost out," he said, not mincing his words.

Already, Ganesh is seeing the signs of the neighbouring economies waking from their slumber. "I just came back from Hanoi, the kind of technology they are using there I think is amazing," he shared, citing overtures made by the likes of Samsung and Apple that are looking for new places to put factories outside of China. "If we do not adopt technology, and we don't have the right talent that's able to use this technology, guess what? We will not be as attractive a foreign direct investment destination as these countries."

But whether we keep attracting FDI or not, what’s for sure is that more competition is coming to Malaysia. "Indonesia represents a US$60 billion (RM240.4 billion) market next to our borders," he continued, referring to e-commerce opportunities. "Either we go there, or they will come to us."

SMEs aware but do not yet understand

The good news today is that even SMEs understand the importance. "They realize they need to digitize," said Ganesh. "It was different when I first started in this industry, in the year 2000, when we went to SMEs and asked them to sell online, they were extremely sceptical – ‘sure got people buy or not?’," he recalled. "Today it is very different."

But what it means to digitize is a different proposition. "Our SMEs out there really don't know anything. They don't know what is Big Data, they don't know what is Industry 4.0."

In fact, this enthusiasm to transform, coupled with a lack of understanding about what it means, creates issues of its own. Ganesh shared that two weeks after this year's budget announcement of digitalisation incentives by the government, SMEs began to receive brochures offering grants. However, when Pikom contacted the relevant agencies, they found out not only were the brochures not genuine, the actual programmes are not even up and running yet.

"That's where the industry role comes in," he said. "Because otherwise, if we are not there to advise, forms will be filled, money will be paid - and grants not disbursed."

Need for application-based grants linked to outcomes

On the one hand, Ganesh lauded the government's ambitions. "We're very happy to see that our nasional budget had a big focus on digital," he said, specifically on the transformation of SMEs.

But on the other hand, he felt there could be improvements on how the monies are disbursed. For example, in the previous budget, Bank Pembangunan had RM3 billion to offer, and each company could receive up to RM20 million. "Which SME or which startup will borrow RM20 million to implement IR 4.0?" Ganesh protested. "This was a big issue that we brought up over the last six to nine months."

Rather, he pressed for grants to be in the form of "application-based incentives", rather than simple financial aid.

"We need to identify applications that will help SMEs in sub-sectors and then provide the funding for those applications,"" he said, adding they should be more outcome-based and include measures on the impact on productivity. "Grants should not be just given to ‘grant-preneurs’," he urged. 

"We are blessed in Malaysia that the government allocates so much money to our industry," he said. "But somehow, after 20 years of the Multimedia Super Corridor (MSC), we still haven't really gotten there."

Future Digital, a new Pikom Think Tank

Ganesh feels it’s vital that local industry have a say when determining policies and initiatives. "Today we're listening to the Alibabas of the world, the experts," he observed. "(But) if we listen to them, we're opening our doors to the foreign experts to come in. So we (also) need to have our own industry experts to advise both our government and our industry."

Hence, the rationale for Future Digital, a Pikom think tank chaired by Ganesh, and populated by seasoned tech leaders such as Yasmin Mahmood, Dr Dzarharudin Mansor, Dr Halimah Badioze Zaman, and Dr Mohd Azziman Shariffadeen.

Stressing that it will be neutral and independent, Ganesh explained that Future Digital will be a focal point for policy research and advocacy, to increase awareness on industry issues, and to influence policy and development.

But the bigger message here is that Ganesh wants to make it clear that the industry is keen to take its future into its own hands. "This industry is not just about skills because skills change," he said.  "What ensures that we will still remain competitive is our attitude."