Week in Review: Convergence accelerates between Old and Digital Economy

By Karamjit Singh October 29, 2016

Tight integration between physical assets and digital key for developers
Malaysia budget speech signals desire to quicken transition to Digital Economy

THIS week threw up some high profile examples of the convergence between the Old Economy and New. In one of our stories we had Lim Ming Yan, president and group CEO of CapitaLand Limited, a Singapore based real estate developer, hailing the collaboration his company just signed with Grab, the Malaysian-founded Singapore headquartered ride hailing unicorn, as an example of the blurring lines between what is online and offline. “Our properties are social spaces where people and communities flourish,” he said going on to describe Grab’s mobility solutions as being “very much the venous systems [the vein system in the body] that connect people with one another and the built environment.”

Forward thinking property developers have realized that broadband access to their developments has become a hygiene factor, not a differentiator. It is tighter integration between their physical assets with various digital services and products that will allow them to emerge winners in their markets.

This high profile CapitalLand-Grab collaboration will likely be the catalyst for more such tie-ups in the coming year between the two worlds they each represent – the Old Economy and the Digital Economy with companies in the Old Economy beginning to realise that they can leverage on Digital Economy companies to help them adapt and remain relevant.

And if you recall, last month I wrote about another property developer, the Malaysian based Aspen Group, and how they signed a deal with Telekom Malaysia Bhd (TM) which calls for both sides to change their traditional business model of vendor-customer which is capex led, to a long term opex approach with a software as a service (SaaS) model.

Of course, being the incumbent telco in Malaysia with 4.3 million fixed line customers, TM is an Old Economy company but one that has spent the last decade making the transition to a Digital Economy company with its “Malaysia’s Convergence Champion” slogan.

It is also the leading broadband service provider in the country and at a press conference this week, its Group CEO, Zamzamzairani Mohd Isa shared that it would eventually be moving to a usage based business model for its home broadband customers. With average household data usage at 150GB per month, it’s not hard to see why TM would want to move to that model with a two to three year time frame given for the change in its business model.

I don’t think consumers will be happy when that happens but Zam, at the TM chief is called, is betting that by then, consumers will not be talking about connectivity or speeds, “those will be a given”, he says. “It’s all going to be about the experience.” I agree but I think we consumers will expect fast connectivity, a great user experience – at low prices.

But the TM press conference was not called to talk about its changing business model. Rather it was to talk about speed and prices – in response to the Oct 20 Budget 2017 announcement that the Malaysian government expects fixed broadband service providers to offer better value to consumers.

Addressing the consumer broadband market was but one aspect of a budget announcement that had the Digital Economy as the centerpiece of Malaysia’s aspirations to becoming a developed economy and prosperous nation. Malaysia in fact, coined its digital aspirations Digital Malaysia, back in 2011, with the details of the initiative reported by DNA in 2012. And while various initiatives have been execution stage since 2012, through Budget 2017, the government is making clear its intentions to accelerate the convergence of its Old Economy into the Digital Economy.

Previous Instalments:
Week in Review: MatahariMall gets its wings, Be Lazee sees its clipped