Bbk malaysia industry report ict 2013 by Switzerland Global Enterprise

Industry Report Malaysia

ICT SECTOR

OFFICIAL PROGRAMME

ICTSECTOR MALAYSIA This report describes the main aspects of the ICT sector in Malaysia including eGovernment, Cloud Computing, ICT security, multimedia, and mobile communications. All information in this report is drawn from credible secondary sources, and even, what was conveyed directly by experts in the field is included with corroboration from recognised, reliable sources. The objective is to layout for the reader the scope of the ICT landscape and the existing business opportunities. The Malaysian ICT industry and the nation as a whole are determined meet the 2020 deadline for attaining developed nation status. This is the impetus for their aggressive surge forwards to catch up with the other Asian countries like Hong Kong, Japan, Singapore, South Korea and Taiwan. ICT has become the enabling element in virtually every sector of the Malaysian economy and life in the overall development and growth. With all the barriers in place, mostly self-imposed, Malaysiaâ&#x20AC;&#x2122;s attainments are worthy of consideration and acknowledgement.

Language: English Number of pages: 37 Author: Acutance Sdn Bhd Other ICT Sector Report: Are you interested in other ICT Reports for other sectors and countries? Please find more Reports here: www.switzerlandge.com/reports

Contents

EXECUTIVE SUMMARY _________________________ 5

MARKET ACCESS ____________________ 26

8.1

suggested business models _______________ 26

8.2

msc status company____________________ 27

8.3

recent development ____________________ 27

8.4

marketing strategies ___________________ 28

8.5

trade shows & Events ___________________ 28

8.6

risk factors __________________________ 29

MARKET OPPURTUNITIES _____________ 29

10.

RECOMMENDATIONS _________________ 34 APPENDIX ___________________________ 35

INTRODUCTION ________________________ 7

OVERVIEW ____________________________ 7

2.1

Country View _________________________ 7

2.2

ICT Historical Overview _________________ 8

2.3

Current Status ________________________ 10

THE MARKET 2013 AND BEYOND ________ 11

DETAILED VIEW _______________________ 12

4.1

EGovernment / ehealth __________________ 12

11.

4.2

IT Security / cyber security / access security ____ 15

APPENDIX A – MINISTRIES, GOVERNMENT

4.2.1

IT Security / Cyber Security _______________ 15

4.2.2

Access Security _______________________ 16

4.3

Cloud Computing ______________________ 16

4.4

Telecommunication / mobile carriers /

APPENDIX C ______________________________ 39

Applications _________________________ 18

APPENDIX D ______________________________ 40

4.4.1

The Communications Content And Infrastructure 18

APPENDIX E - A COMPARISON OF REVENUE

4.4.2

Cellular Phones _______________________ 21

DISTRIBUTION AMONGST THE DOMINANT

4.4.3

Smart Phone _________________________ 21

CARRIERS __________________________ 41

4.4.4

Tablets _____________________________ 21

APPENDIX F – Financial Data from PIKOM _________ 42

4.5

creative industry – games, content creation ____ 21

APPENDIX G – Economic Transformation Programme __ 44

FUTURE TRENDS ______________________ 22

5.1

Malaysian Specific trends _______________ 22

5.2

world trends ________________________ 22

PLAYERS IN THE MARKET ______________ 22

6.1

Players in egovernment / ehealth ___________23

6.2

Players in it Security ____________________23

6.3

Players in cloud computing ______________ 24

6.4

Players in mobile solutions ______________ 24

6.5

players in creative industries _____________ 24

SWOT ANALYSIS ______________________ 25

AGENCIES AND ASSOCIATIONS __________ 35 APPENDIX B - COMPONENTS OF MALAYSIA’S EXPORTS AND IMPORTS 2012 ___________ 37

List of tables

Table 1 Table 2 Table 3 Table 4

Proportion of ICT In Malaysia ___________________________________________________________ 11 Cloud Computing Highlights ___________________________________________________________ 16 Multinationals Operating In Malaysia _____________________________________________________ 23 ICT Events Malaysia _________________________________________________________________ 28

EXECUTIVE SUMMARY This report targets the suppliers of ICT hardware, software, and services from Switzerland. It describes the main aspects of the ICT sector in Malaysia including eGovernment, Cloud Computing, ICT security, multimedia, and mobile communications. All information in this report is drawn from credible secondary sources, and even, what was conveyed directly by experts in the field is included with corroboration from recognised, reliable sources. The objective is to layout for the reader the scope of the ICT landscape and the existing business opportunities. The Malaysian ICT industry and the nation as a whole are determined meet the 2020 deadline for attaining developed nation status. This is the impetus for their aggressive surge forwards to catch up with the other Asian countries like Hong Kong, Japan, Singapore, South Korea and Taiwan. ICT has become the enabling element in virtually every sector of the Malaysian economy and life in the overall development and growth. With all the barriers in place, mostly self-imposed, Malaysia’s attainments are worthy of consideration and acknowledgement. ICT Readiness - Malaysia is seriously well advanced in the use of ICT. It is ranked 30 th out of 144 countries in the Network Readiness Index of the Global Information Technology report 2013, one place down from 2012 but, despite this drop it is still the highest ranked developing Asian country after Hong Kong, Japan, Singapore, South Korea, and Taiwan. Broadband penetration in Malaysia stands at 66 per cent for 2012 according to the Ministry of Science Technology and Innovation- MOSTI, 1 and is expected to be 75 per cent by the year 2015. There are four mobile carriers and over a dozen Mobile Virtual Network Operators - MVNOs. Mobile phone penetration was at 137.7 per cent of the population according to Business Times report in May 20132, and there are over 41 million cell phones.

ICT Growth Readiness - Malaysia has a population of 29.7 million and is the 25th largest trading nation in the world for 2011 rankings with a GDP of USD 242 billion – year 20123, according to Malaysia’s Central Bank. The per capita income is currently at USD 9,974 (2012). The country plans to expand the per capita income to between USD 15,000 and 20,000 by the year 2020. Malaysia is cognisant of the pervasive use of ICT in all sectors, both public and private, and its importance in achieving the desired per capita income. To realise this, the Malaysian government has activated specific plans. These include the 10th Malaysia Plan, Economic Transformation Plans, a Master plan for ICT in the public sector, and Digital Malaysia.4 The Malaysian Government has set up MDeC, as the organization to assist foreign companies seeking to be established in Malaysia.5

http://nitc.mosti.gov.my/nitc_beta/index.php/ict-indicator/broadband-penetration-rates-by-state http://www.btimes.com.my/Current_News/BTIMES/articles/jrmilan/Article/ Bank Negara Annual Report 2012 http://www.bnm.gov.my/index.php?ch=en_press&pg=en_press_all&ac=2781&lang=en 4 http://www.epu.gov.my/en/tenth-malaysia-plan-10th-mp-, http://etp.pemandu.gov.my/, http://www.mampu.gov.my/pdf/flipbook/ISPplan2011/,http://nitc.mosti.gov.my/nitc_beta/index.php/key-ict-initiatives/digital-malaysia 5 http://www.mampu.gov.my/pdf/flipbook/ISPplan2011/,http://nitc.mosti.gov.my/nitc_beta/index.php/key-ict-initiatives/digital-malaysia 2 3

ICT SECTOR MALAYSIA

Projections â&#x20AC;&#x201C; The outlook for the ICT sector looks positive with PIKOM, The National ICT Association of Malaysia, forecasting ICT spending to be about USD 20 billion in 2013 and rising to USD 34 billion in the year 2017.6 See appendix F. Opportunities - The 10th Malaysia Plan describes twelve engines of growth that will require ICT investment. The Master plan for ICT describes the projects that must be fulfilled. Digital Malaysia is a programme responsible for the implementation of eight key ICT projects with the private sector support. These are projects that Swiss companies will do well to consider. Mobile telecommunications will see rapid growth, and, as such, the private sector must provide applications, especially mobile applications. In particular, for now, banks are seeking mobile banking applications. Cloud computing has taken off with the state of Malacca, and more such opportunities are expected to open up in the other states of Malaysia. ICT security, especially with mobile computing, is recognised as a vulnerable area needing attention. The government recognizes the creative industry as an export earner and is providing financial and non financial incentives for this sector. Malaysia has over 4000 ICT companies including the large multinationals such as Accenture, IBM, EDS, CSC and others. There are also several large Malaysian ICT companies that have ICT related revenues of USD 35 million and more. The ICT market is well served. However, the growing demand in Malaysia increases the capacity for more players, and this means that Swiss ICT companies will have the opportunity to compete with the established players. The governmentâ&#x20AC;&#x2122;s intentions are that the projects should be funded by a Private Financing Initiative (PFI), and this opens opportunities for companies that have access to funds. An initial SWOT analysis which addresses simple risk factors is included in this report. As each market is different, the desired market entry mechanism will be determined by the dynamic forces of the market itself. Market access mechanisms are described in Section 8 of this report. This paper shows that the Malaysian ICT sector is vibrant and growing, and with it the demand for goods and services that are the strengths of the Swiss ICT sector such as, eGovernment, Cloud Computing, ICT security, multimedia and mobile communications. These are the exact areas that are expanding rapidly now and although there are already many international players, the capacity driven by demand is ever expanding and is able to accommodate even more. This report also includes recommendations and details of potential projects in sections 9 and 10.

6http://www.pikom.org.my

ICT SECTOR MALAYSIA

1. INTRODUCTION This report describes the Information and Communication Technology (ICT) Sector in Malaysia. The focus is on the ICT market, and the following sectors are addressed here: 

eGovernment/eHealth



IT Security



Cloud computing



Mobile telephone applications



Multimedia, creative, gaming, and the video industry

2. OVERVIEW 2.1

COUNTRY VIEW

This report is for suppliers of ICT hardware, software, and services from Switzerland. The objective of this paper is to provide a description of the scope as well as an understanding of the market and to offer suggestions on penetrating the market. It also looks at the direction of the industry, and the general opportunities Swiss companies might want to take advantage of. Malaysia is centrally located within the Association of South-East Asian Nations (ASEAN). Malaysia is a federation with thirteen states, eleven in peninsular, or West Malaysia, and two on the Island of Borneo across the South China Sea in the East, and three federal territories. As a federation, the governance of the country is divided between the federal and the state governments. The country is a Parliamentary Democracy with a Constitutional Monarchy, and is politically stable. The country is approximately 330,000 square kilometres and is mostly covered with tropical flora and fauna. There are 29.7 million people in this country which is multi-ethnic, multi-cultural, and multi-religious, with Malays making up 50.04 %, Chinese 23.7 %, Indians 7.1 %, and other local ethnic groups and natives making up the rest of the population. The official religion of the country is Islam, with Muslims making up 60.4 % of the population. Malaysia is a middle income country with a multi-sector economy ranging from agriculture, manufacturing, oil and gas, and timber. It is one of largest producers of semi-conductors in the world, primarily through multinationals operating in Malaysia. Industries are generally capital intensive consisting of large, small, and medium industry clusters.

ICT SECTOR MALAYSIA

Malaysia is involved in international trade with total trade surpassing USD423 billion for 2012, and it is ranked 25th out 8

of 132 nations for the same year. Graphical information on Malaysia’s trade performance is presented in Appendix B, pages 35 & 36 of this report. The Malaysian government has launched an Economic Transformation Programme to increase the per – capita income to that of a developed nation by the year 2020. The GNI is expected to rise to USD 523 billion by 2020, and per capita 9

income to USD 15,000.00 . This requires an annual growth rate of 6 per cent. The Economic Transformation Programme, 2010 – 2015, mentions Twelve Growth Engines9, or National Key Economic Areas (NKEAs), namely 1.

Oil & Gas

Palm Oil and Related Products

Financial Services

Wholesale and Retail

Tourism

Information & Communications Technology

Education

Electrical & Electronics

Business Services

10. Private Healthcare 11. Agriculture 12. Greater Kuala Lumpur A summary of the growth engines is provided in appendix F on page 43. These growth engines will also provide an idea of where the ICT dollar will be spent.

2.2

ICT HISTORICAL OVERVIEW10

Information and Communications Technology – ICT – is more than just an essential sector in Malaysia’s economic development. From its inclusion by the Government in one of the strategies towards establishing an industrial-based economy followed by a knowledge-based economy, ICT has become the strategic enabler and the chief driver of the Government’s Economic Transformation Programmes for the nation. Building on the strong growth & extensive experience gained in electronics industry, Malaysia created the Multimedia Super Corridor in 1996 as the nucleus for the growth of ICT and technology-based industries. The MSC11 is the designated area for ICT development to receive government incentives; although ICT development, as such, is not limited to the MSC only.

http://www.matrade.gov.my/en/malaysia-exporters-section/190-trade-performance-2012/2708-malaysias-trade-performance-2012 Ministry of International Trade and Industry, Malaysia http://www.miti.gov.my/cms/documentstorage/com.tms.cms.document.Document_ede29cf0-c0a81573-68e668e6f65c8476/MWBpercent20Vol187.pdf 9 http://etp.pemandu.gov.my/ 10 http://www.matrade.gov.my/en/foriegn-buyers-section/70-industry-write-up--services/543-ict-industry-11 http://www.mscmalaysia.my/ for what MSC Malaysia stands for and means. 8

ICT SECTOR MALAYSIA

ICT is not just the industry which stands by itself, but it also complements and supports the development of other industry sectors. It is the enabler of development and increasingly critical to the government, private sector and the people of Malaysia. The role of ICT has also been expanded from being merely an industry by itself to that of a vital, enabling component of every aspect of the economy. The overseeing of the MSC and to ensure that it lives up to its promise of “Leadership in the Information Age” the Multimedia Development Corporation, commonly known by its acronym MDeC, was set up with its vision “To shape a world-leading environment, To attract and nurture leading-edge and world-class companies, To facilitate knowledge transfer and wealth creation, To build a well mandated, value-based, highly effective organisation”. MDeC is

a government owned entity called, Multimedia Development Corporation, or as it is known now, (MDeC). It

is a dynamic 'one-stop agency' focused on ensuring the success of MSC Malaysia and the companies operating in it. MDeC is incorporated under the Companies Act of Malaysia and is owned and funded by the Government. MDeC’s, role is to combine the entrepreneurial efficiency and effectiveness of a private company with the decision-making authority of a dynamic government agency. MDeC’s role is to inform the Malaysian Government on legislation and policies, develop MSC Malaysia-specific practises, and set breakthrough standards for multimedia operations. MDec promotes MSC Malaysia both locally and globally. It supports companies which are in the process of locating to Malaysia, as well as those that have already done so. MDeC is a champion facilitator and partner as it champions the merits of MSC Malaysia and facilitates the entry of companies into Malaysia, and partners with the Government and the private sector in realising both a vision and an opportunity. MDeC ensures that companies interested in entering MSC Malaysia have what they need to succeed. MDeC guarantees a 30-day turnaround for applications and will coach companies through the application process. As a performanceoriented, client-focused agency, MDeC will also assist in expediting permit and license approvals, and introduce companies to potential local partners and financiers. Companies wishing to participate in the Corridor need not look elsewhere. Applications begin and end here. MDeC stands ready to work with investors, foreign and local, big or small, to ensure that MSC Malaysia fulfils its promises. Visit the Success Stories section to see what existing MSC Malaysia companies have to say about it. MDeC is responsible for directing and overseeing Malaysia’s National ICT Initiatives. MDeC has the power and the authority to grant ICT companies what is called “MSC Status”. MSC status provides financial and organizational benefits such as tax windows; it facilitates the approval of work permits for investors and import of ICT employees from other countries such as India, Philippines, and Pakistan. Tax benefits include no payment of taxes for up to ten years. World class companies such as Nokia, Siemens, Oracle and Unisys are in the list of MSC status companies. Details of what makes an MSC Status company and the benefits it gets are provided in Section 8 of this report.

http://www.mdec.my/about.php

ICT SECTOR MALAYSIA

The MSC, since its setting up in 1996 as the government designated zone for information and communication technology (ICT) companies, attracted USD970 million in investments in 2012, an increase of 17 per cent from the year before. The 2397 companies under the MSC umbrella generated revenue worth USD11.17 billion in 2012 up 5.7 per cent from 2011. As a result of the activities of the MSC companies, 9700 new jobs were created in 2012 alone and a total of 128,850 jobs have been created since its establishment in 1996. MDeC is hopeful of raising the number to 160,000 by 2015. Source Business Times 22/5/2013 The government intends to increase the per capita income from US$9,974 to at least US$15,000 by the year 2020. This provides an indicative idea of the type of ICT investments that will need to be made and the type of ICT demands that will be made by its consumers.

2.3

CURRENT STATUS

Malaysia is well equipped in the application and use of ICT. The Global Information Technology Report 2012, an enclosure to the World Economic Forum states that Malaysia ranked 29th out of 142 countries in the level of Networked 13

Readiness Index (NRI). This ranking has slipped by one place to 30th in the 2013 report . The positioning is indicative of the intents of both the private and public sector spending in ICT now and the future. Hardware procurement is the first phase of ICT spending and has been adequately addressed. Refer to Appendix F for spending budgets. The major share of the spending will be in software and services. This is also indicative of the relatively high NRI ranking. The strategic direction of the government is to invest in enablers, and drivers to accelerate the Government Economic Transformation programme. (See below in Section 4.1)

The country is relatively well established in the application of ICT in various sectors. The ICT clients in Malaysia can be broadly defined into five categories. 

Public Sector, i.e. the government. They have guidelines on purchasing policies.



Government Linked Companies (GLCs). GLCs generally follow the same purchasing policies as the Public Sector.



Multinational Corporations. These are companies like Shell, Asea Brown Boveri etc. Generally the ICT procurement policies are defined by the Headquarters of that multinational company. For example, ABB would define its ICT procurement either in Sweden or Switzerland for the local operations in Malaysia.



Malaysian Corporations. These operate as independent operations with a relatively open procurement policy. However the majority of these companies have their own ICT subsidiary companies to support and supply their needs. These ICT subsidiaries source services and products from the marketplace.

http://www3.weforum.org/docs/WEF_GITR_Report_2013.pdf http://www.epu.gov.my/en/tenth-malaysia-plan-10th-mp-, http://etp.pemandu.gov.my/, http://www.mampu.gov.my/pdf/flipbook/ISPplan2011/, http://nitc.mosti.gov.my/nitc_beta/index.php/key-ict-initiatives/digital-malaysia 14

ICT SECTOR MALAYSIA

ď&#x201A;§

Small and Medium Enterprises (SME) the ICT spending per unit is small but as a group they are considerable. SMEs make up 97.3 per cent of the registered companies in Malaysia as stated in the 2011 Economic Census. The Census shows that there were 645,000 SMEs in the country in the 2011.

The government has indicated that SMEs should focus on ICT in their operations and is developing ICT policies and programmes for these SMEs. Refer to Section 4.3 and also Section 9. Please also refer to Section 8 on the market entry strategy for these five types of clients. Forecast budgets are described below in Section 3.

3. THE MARKET 2013 AND BEYOND The ICT market in Malaysia is estimated to be of the following proportions. As these are estimates, they do vary between each estimating authority. However, the figures show a remarkably clear indication of the potential of ICT in Malaysia. Table 1 Proportion of ICT In Malaysia

Item ICT Spending 2013

Estimate

Source

Up from $3 billion in 2012 to

Robert Ling, Research Manager, IDC Asia-Pacific

$3.33 billion in 2013, a growth of

in a press conference dated 6 December 2012

7.6 per cent

http://www.malaysiandigest.com/business/187041malaysias-ict-industry-to-cross-rm10-billion-spendingmark-by-next-year.html

Contribution to GDP

$ 14 billion

2011 -2015

Multimedia Development Corp (MDec) Annual Industry Report 2010-2011 http://www.mscmalaysia.my/sites/default/files/pdf/do wnloads/MSC_Malaysia_Annual_Industry_Report_20 10-2011.pdf

Predicted ICT

$ 23 billion in 2016, 6 per cent

IDC Asia-Pacific in a press conference dated 6

spending

CAGR (Compound Annual Growth

December 2012

Rate)

http://www.malaysiandigest.com/business/187041malaysias-ict-industry-to-cross-rm10-billion-spendingmark-by-next-year.html

Predicted ICT

Pikom. Pikom is the National ICT Association of

spending in

Malaysia. Their web page is

accordance with

http://www.pikom.org.my

http://www.statistics.gov.my/portal/index.php?option=com_content&id=1721&Itemid=111&lang=en

ICT SECTOR MALAYSIA

Refer to Appendix C

market segment Predicted ICT

Computer hardware sales:

Business Monitor International Dec 2012.

spending 2013

$2.7bn in 2012 to $2.9bn in 2013,

Business Monitor International is a market

+ 6 per cent in US dollar terms.

research company

Software sales: $876mn in 2012 to

http://store.businessmonitor.com/malaysia-

$952mn in 2013, +9 per cent in

information-technology-report.html

US dollar terms. IT services sales: $1.6bn in 2012 to $1.8bn in 2013, +9 per cent in US dollar terms. Statistics of Revenues

Refer Appendix C

MDeC Annual Report 2010-2011

Sales by ICT

http://www.mscmalaysia.my/sites/default/files/pdf/do

companies with MSC

wnloads/MSC_Malaysia_Annual_Industry_Report_20

Status

10-2011.pdf

The above is indicative of the market and its growth rates. All figures are in United States dollars.

4. DETAILED VIEW In this section, the public sector is given the most attention as it is the largest consumer of ICT technology.

4.1

EGOVERNMENT / EHEALTH

MAMPU stands for Malaysian Administrative, Modernisation and Management Planning Unit. This is a government agency that is directly under the Prime Minister. MAMPU is responsible for the modernisation and reformation of the public sector. This covers all aspects of the public sector including enabling technologies such as ICT.

MAMPU is responsible for setting the ICT Master Plan and Strategy for the country, and has developed an ICT Strategic Plan for the period 2011 â&#x20AC;&#x201C; 2015. The ICT Strategic Plan developed by MAMPU is summarised in this section. The plan provides an excellent sense of where the ICT spending will be over the next seven to eight years in the public sector, and is indicative of where Swiss companies may want to focus their spending with respect to eGovernment and eHealth.

The plan addresses many issues. Currently services are very much along a vertical sector within each government agency and shared services are minimal. The intentions are to:

http://www.mampu.gov.my/warga-mampu

http://www.mampu.gov.my/pdf/flipbook/ISPplan2011/

ICT SECTOR MALAYSIA



Have a citizen centric model of public services. This term is used to describe an ICT architecture that is focussed on convenience and friendliness to the citizen rather than the service provider.



Streamline the ICT architecture, consolidate ICT operations, and integrate inter agency collaboration and to rationalise the ICT governance structure. The plan targets a single window for the citizen rather than the multiple windows as of now. There is a planned shift to the horizontal sector. To achieve that shared services will be the standard in the future. Open data will be the norm and creates an opportunity for ICT companies to address public availability of information but with information security.



There will be a push for mobile applications



End – to – end online processes will require re-engineering of back-office functions and the integration of internal processes.

Factors affecting Swiss interests are as follows: a.

Malaysia aims to become a high income nation by the year 2020 with a per capita income ranging from USD 15,000 to USD 20,000. This is indicative of the kind of ICT applications and services the country shall require from now till 2020 to achieve its vision. Social media are collectively a significant factor, and there will be an expected increase in applications for smart phones and tablets.

Broadband penetration is expected to reach 75 per cent of the population by the year 2015. In the year 2011, broadband penetration was 55 per cent.

In the year 2010, 106 per cent of the population of 29 million owned mobile telephones.

A 2011 study shows that 35 per cent of government services were available online. 43 per cent of services with government agencies or government linked agencies were conducted online.

The analysis shows that knowledge management is relatively weak, and a bigger emphasis needs to be placed on knowledge management. A knowledge management hub is in the pipeline.

In the 10th Malaysia Plan, (2011 -2015) the targeted GDP growth is 6 per cent. Of this growth, services growth in real GDP terms has been set at 7.2 per cent for the national economy. This has a considerable impact on the type of ICT services that are required to support the services growth.

The ICT strategic plan will be addressing new media, namely IVR, the Web. WAP, SMS, News Media, Email, and unattended kiosks for interaction with the citizen.

The Strategic Plan has identified five programmes and 22 initiatives. These programmes and initiatives will be delivered by the private sector and may interest Swiss ICT companies. These programmes are identified below. Programme 1 – Enhance Service Delivery Develop and implement online services: myRakyat, myBusiness, myWorkforce and ePayment. The prefix ‘my’ stands for Malaysia and does not carry any technical meaning. MyRakyat is a concept for the management of the private citizen’s personal information. MyBusiness is a concept for the registration of businesses and complying with the regulatory requirements of the Companies Act. MyWorkforce is related to the Human Resources sector. In this programme the initiatives are; ICT SECTOR MALAYSIA



Establish and deploy Public Sector Digital Document Management System



Establish and deploy Transport Intelligence Systems



No-to-crime. Repository of information on crime. Establish and deploy knowledge based system.



Deployment of Government Regional Electronic Advancement Transformation (GREAT) Programme, to 5 Economic Development Regions. This is simply the provision of online integrated services for five zones that have been earmarked for economic development, like a technology park.

Programme 2 – Enhance Capacity and Capability 

Public Sector ICT Skills Framework: Establish ICT Skills Framework; Establish ICT skills repository and deploy ICT talent management system



Information Security Management (SMS), ICT Compliance Audit Programme to key agencies in the Public Sector



Enhance GCIO and CIO development programme



Public Sector ICT Specialist Programme ; Professional certification scheme



Reskilling, Redeployment and Replacement (3R) Programme for ICT shared services

Programme 3 - Enhance Performance Measurement Capability 

Public Sector Service Intelligence; Establish and deploy for real time intelligence capability



Performance Measurement Tool to be deployed to agencies as a means for measurement and evaluation of services delivered



Public sector ICT Compliance Self Assessment Tool to be implemented in agencies as a means for self assessment on ICT compliance

Programme 4 – Connected Government 

Citizen Registry System (CRS); Roll out to other agencies



Business Registry (myCoID); Roll out usage to other agencies



Registries; Development of Vehicle, Student and Health Registry



Public Sector Knowledge Management Hub; Establish and deploy to pilot agencies

Programme 5 – Sustainable and Resilient ICT 

Establish Government Unified Communication



1Gov*Net; Implementation of Government Integrated Telecommunication Network



1Gov*DC; Establish Consolidated Government Data Centres



1Gov*DRC; Establish Consolidated Government Disaster Recovery Centres



Deployment of Mobile Solutions and applications



Deployment of ICT Security Compliance Scorecard



Develop and Implement Business Continuity Plan for agencies



Malaysian Public Sector Trustmark; Establish and deploy certification to agencies

ICT SECTOR MALAYSIA

Ehealth The health sector comprises public and private hospitals. In 2008, the public sector accounted for 77.2 per cent of the total hospital beds in the country. The total number of beds in the country is 51,267.

“There were 209 private hospitals with 11,689 beds. There were 22 private maternity homes, 12 private nursing homes and 3 private hospices, with a total number of 553 beds. Private hospitals beds only accounted for 22.8 per cent of the total hospital beds in the country. However private hospitals are growing rapidly”. (Source Malaysia Country Health Plan 2011-2015)

The budget for public hospitals for the years 2011-2015 is USD 60 billion. This is a reduction of USD 16 billion from the past five years. The Health Department is expected to cover the shortfall by PFI (Private Funding Initiatives) which gives rise to future opportunities for private companies to be involved with the PFIs. The Country Health Plan has identified the following initiatives: The Country Plan has also identified the need for an Integrated Health Information System (IHIS) for



planning, monitoring and evaluation of the health system over the entire country. This IHIS is expected to include both public and private hospitals, as well as, consulting GPs and specialists. Data management - security, quality of data and confidentiality. Transparent access to data. This is sorely



lacking at the moment in the Malaysia. 

Pharmaceutical management systems, especially Medication Error and Adverse Drug Reaction systems.



Centralisation of records - Currently an Australian company is putting all the records into a cloud based application. This project is expected to be completed in the year 2015. Standard medical systems such as Laboratory Information Systems, Patient Management systems, Radiology



Information Systems etc., have been identified in the Health Plan. Telehealth.



4.2

IT SECURITY / CYBER SECURITY / ACCESS SECURITY

The areas covered are IT security (which includes mobile computing, standard computing and surveillance, and access security). 4.2.1

IT Security / Cyber Security

IT Security is fairly well established in Malaysia. Malaysia has established a federal agency called Cyber Security Malaysia. Cyber Security Malaysia is the national cyber security specialist agency under the Ministry of Science, Technology and Innovation (MOSTI). MOSTI is a full-fledged ministry of the Malaysian government.

In essence; the role of Cyber Security Malaysia is to provide specialised cyber security services such as: 

Cyber security emergency response, incident handling, and digital forensics

http://www.moh.gov.my/images/gallery/Report/Country_health.pdf

http://www.cybersecurity.my/en/index.html

ICT SECTOR MALAYSIA



Cyber security quality management



Cyber security capability and capacity development



Cyber security outreach and acculturation



Cyber security research and risk assessment



Cyber security evaluation and certification

Because of the advent into cloud computing and mobile computing, there is a considerable emphasis on ICT security. Like most agencies, Cyber Security Malaysia sources applications from the private sector. The current situation in Malaysia on security is as follows: 

Services are adequately supplied by local companies. This is inclusive of Security assessments and audits, and so on.



Technology is adequate in terms of hardware. There is a market for software, especially in mobile computing. Please also see Section 9 The quality of people is inadequate. Whilst the ICT professionals are qualified in terms of certificates and 21

training, application of knowledge is considered inadequate. There is no in-depth knowledge.

4.2.2 Access Security The market to access control systems is well serviced in Malaysia. However, the personal security situation in the country is deteriorating, and there is an increased demand for access control systems and security monitoring systems for large commercial property and residential estates. The market is well established, but because of rapid growth there is more capacity for new entrants to the market. There is also a demand for perimeter and access security for commercial, public sector, and defence and law enforcement establishments, as well as up – scale residential estates.

4.3

CLOUD COMPUTING



Cloud computing will be a significant opportunity. Data Centres and Disaster Recovery Centres as described in the MAMPU ICT Plan (Refer to Section 4.1.5) will be based on cloud computing which offer immense potential in the near future.



Currently cloud computing has taken off in Malaysia, albeit in a small way. The Ministry of Health Malaysia is currently negotiating a cloud computing project. The State of Malacca, one of the 13 states in Malaysia has undertaken a cloud computing project that will support 43 departmental offices and 4 local councils. The technology is based on Red Hat Enterprise Linux.



The market potential has been identified but not yet tapped fully. Some corroborative statements on the future of cloud computing are presented below for reference.

Table 2 Cloud Computing Highlights

http://www.digitalnewsasia.com/digital-economy/ict-talent-gap-still-a-catch-up-game

ICT SECTOR MALAYSIA

Statement

Source



Ling said while cloud services uptake was still lethargic,



the familiarisation of the service among local business

Manager, IDC Asia-Pacific in a press

and stronger movement by the government to deploy

conference dated 6 December 2012)

cloud next year would create the opportunity for the



service to prevail.

usiness/187041-malaysias-ict-industry-

(Robert Ling, Research

http://www.malaysiandigest.com/b

to-cross-rm10-billion-spending-markby-next-year.html



Malaysian Business Application as a Service (BAaaS)



(Frost & Sullivan, 2011).



Business Software Alliance

alone is expected to reach a market size of USD161.4 million by 2017 This is primarily cloud computing



Malaysia has made one of the biggest gains in terms of overall points on its scorecard scale, thanks to advances

(BSA) and Edge (Edge is a

in cyber crime, intellectual property laws and efforts to

business paper in Malaysia) in

improve digital trade, said the Business Software Alliance

its report dated 7 March 2013

(BSA).



ndex.php?option=com_content&tas

Global Cloud Computing Scoreboard study showed that

k=view&id=232470&Itemid=79

worldwide, has crossed the divide between mature and developing economies and was cloud-ready. "Cloud computing also features as a big bet both in Malaysia's Economic Transformation Programme and Digital Malaysia Master plan," it said.

ICT SECTOR MALAYSIA

http://www.theedgemalaysia.com/i

In a statement, today, BSA said findings from its 2013 Malaysia while ranked 13th out of 24 economies



Cloud Computing In Malaysia 



mobile88.com/news

30 May 2012 – Microsoft recently released the results of a study into cloud computing in APAC countries, of which Malaysia was one of the territories studied. The

By Jonathan Cheah,



benefits from using the cloud.

http://www.mobile88.com/news/re ad.asp?file=/2012/5/30/201205300

research showed that small and medium sized enterprises (SMEs) are gaining significant IT security

May 30, 2012,

94930



This report is mentioned here as SMEs are predicted to be a major user of cloud computing



“Malaysian SMEs must take that bold step to adopt

services.

secure and scalable technology infrastructures such as the cloud if they are to succeed in a global, interconnected economy,” said SME Corp’s Chief Executive Officer, Dato’ Hafsah Hashim. “Among other benefits, the cloud takes the hassle of managing security away from the SMEs, which then gives them the freedom to focus on innovating and growing their business.”



More than half those surveyed said that using the cloud enabled them to add new products and services to their business in a manner that was quicker and more secure.

4.4

TELECOMMUNICATION / MOBILE CARRIERS / APPLICATIONS

Malaysia is no exception to the trend where mobile telecommunication growth is the fastest growing sector in the industry. The International Data Company – IDC, (the ICT research company) makes the following observations:



"Telecommunications equipment is set for high year-on-year growth, hitting 19.7 per cent next year (2013). Enterprise networks will reach 18.6 per cent, service provider equipment 9.3 per cent and smart phones a whopping 34.6 per cent in terms of year-on-year growth," he said. He said the recent issuance of 2,600 megahertz 4G licences would also provide a stimulus to the sector”.



He said next year was also the year for the seven-inch tablet as consumer lifestyle changes and desirability shifts from 10-inch tablets to seven-inch devices.



(Quote from Robert Ling, Research Manager, IDC Asia-Pacific in a press conference dated 6 December 2012.)22

4.4.1

The Communications Content And Infrastructure

Malaysia’s telecommunications network is more advanced than any other in South-east Asia with the exception of Singapore. Infrastructure utilised includes optic fibres, wireless transmission, satellites and copper. The offerings include unified communication, 3G content, and WIMAX digital TV, VOIP, and sensor technology. Technologies like IPV6 and digital TV are also available.

http://www.malaysiandigest.com/business/187041-malaysias-ict-industry-to-cross-rm10-billion-spendingmark-by-next-year.html

ICT SECTOR MALAYSIA

Transactions and services such as unified communications, data centre services, authentication services, e-commerce, payment services and billing are conducted daily. Fixed Line Carriers in Malaysia 23

Telekom Malaysia

is the largest carrier and the dominant carrier. (Telekom Malaysia is into many other

services including e commerce, cloud computing, call centres etc. Telekom Malaysia Bhd is the primary carrier with the biggest penetration. Telekom Malaysia used to be a publicly owned entity and was a monopoly. The network covers the entire country. It was privatized in 1987. Telekom Malaysia provides more than 90 per cent of the fixed lines and services associated with fixed lines particularly broadband services.

Time dotcom Bhd

is a carrier that utilises its fibre optic network for the provision of services. The focus

market is corporate and government sectors. 3.

Maxis Communications Berhad

is a carrier that provides fixed lines in urban areas. Its primary

business is mobile telecommunications. There is hardly any rural penetration of fixed services.

Digi Telecommunication Berhad

is primarily a mobile network operator but has a very small fixed line

service. 5.

Packet One Network (M) Bhd

A small operator with negligible penetration on fixed lines.

Broadband The Malaysian broadband market is dominated by Digital Subscriber Line (DSL) technology. Telekom Malaysia has been the primary service provider. Under the 10th Malaysia Plan, the government aims to increase the penetration rate to 75 per cent by 2015. The Malaysian government intends to implement a high speed broadband (HSBB) of up to 1Gbps nationwide. The second initiative is the broadband to the general population (BBGP). BBGP will be driven by wired and wireless broadband but will primarily depend on 4th generation cellular technologies such as WIMAX and LTE. Mobile Network Operators (MNOs) The key players are

Celcom Bhd

2. Maxis Bhd

3. Digi Telecommunication Berhad

http://www.tm.com.my/Pages/Home.aspx http://www.time.com.my/ https://new.maxis.com.my/content/maxis/en/business/products-and-services/fixed-voice-solutions.html 26 http://www.digi.com.my/landing.do 27 http://www.p1.com.my/ 24 25

29 30 31

http://www.celcom.com.my/ http://www.maxis.com.my/ http://www.digi.com.my/landing.do

ICT SECTOR MALAYSIA

U Mobile

is also a MNO, but is a new comer with a small market share and is aggressively seeking a larger

market share Refer to Appendix E for market share and revenues for a comparative analysis of the three main players. Mobile Virtual Network Operators (MVNOs) There are several MVNOs that are operating in the country. The majority are tied up with Celcom. The MVNOs are



Merchantrade Asia Sdn Bhd33 Merchantrade Asia is a prepaid mobile services provider. It is also involved in mobile funds transfer. A significant target market group is the million odd migrant workers from Bangladesh, Indonesia, Philippines, India, and Pakistan. There are approximately 3 million foreign workers in Malaysia (registered and unregistered/ legal and illegal)



Baraka Telecom34 Baraka Telecom also acts as a Mobile Virtual Network Enabler. At the time of this report, it was still carrying out prepaid mobile services.



MY Evolution Sdn Bhd35 MY Evolution focuses on machine to machine mobile communication, and is more geared to Business to Business applications.



Pavo Communications Sdn Bhd36 SpeakOut Wireless - This is a prepaid services provider and is owned by 7-Eleven the international retail chain.



REDtone Mobile Sdn Bhd37 REDtone Mobile Redtone provides prepaid services to individuals and post paid services to businesses. 38

– Salamfone is a prepaid MVNO that caters for the Muslim market.

PLDT – Smart Pinoy is a Philippine based company with a presence in Malaysia. It



Salamfone Sdn Bhd



PLDT - Smart Pinoy

provides prepaid services and targets the Filipino migrant workers in Malaysia estimated at 700,000 workers. 40



XOX Com Sdn Bhd (XOX)



Talk Focus Sdn. Bhd., DBA Tron

This is an MVNO that targets the Chinese speaking people in Malaysia. 41

Tron provides both pre paid and post paid services.

http://u.com.my/all-about-u/key-milestone http://www.mtradeasia.com/m_home.html http://www.barakatelecom.com/ 35 http://www.myevolution.my/ 36 http://speakoutwireless.com.my/ 37 http://www.redtonemobile.com/ 38 http://www.salamfone.my/ 39 http://www.facebook.com/SMARTPINOYMYOFFICIAL/info 40 http://www.xox.com.my/ 41 https://tron.com.my/tron/ 33 34

ICT SECTOR MALAYSIA



Yes Mobile

Yes Mobile provides both pre paid and post paid mobile services.



Tune Talk Sdn. Bhd. – TuneTalk

TuneTalk has emerged as a successful MVNO targeting the young

customer market. They are owned by the Tune group. 4.4.2 Cellular Phones44 By 2010, the number of cellular phone subscribers had risen to 33.859 million with a penetration rate of 119.2 per cent and further expanded to 35.707 million at the end of 2011 with a penetration rate of 124.6 per cent. Smart phones get the lion’s share of RM4.5b sector. 4.4.3 Smart Phone Smartphone penetration is about 30 per cent according to the Nielsen report, although GfK claims it is a staggering 88 per cent.

This is a huge disparity; however, if we apply the Nielsen statistic for the whole nation it is acceptable, the

statistic from GfK must be applicable to the Klang Valley, or the Greater Kuala Lumpur region, only. 4.4.4 Tablets In 2011, there was a significant boom in tablet PCs. The success of the Apple iPad 1 & 2 in the global market has sparked a strong development worldwide and in Malaysia as well. The demand for tablet PCs is now growing at phenomenal speed. This growth is expected to hit the sales of Notebooks, Readers, and Laptops. The above confirms that Malaysia is also following the global experience in mobile computing and communication trends.

4.5

CREATIVE INDUSTRY – GAMES, CONTENT CREATION

The Creative Industry is nurtured by MDeC with grants and incentives. Content creation is seen as a significant revenue earner. “Creative Multimedia covers four categories: animation; games & digital comic; film, TV and visual effects, and mobile content; apps & new media. It's film, TV, and visual effects component alone generated RM5.78 billion in revenue last year, followed by mobile content, apps and new media which generated RM670 million”, according to 46

MDeC Chief Executive Officer Datuk Badlisham Ghazali . At a conference in 2012, the Vice President of the Multimedia Development Corporation (MDeC), Kamil Othman, said “The Creative Multimedia Cluster continues to be a leading growth area within the MSC Malaysia as it recorded total revenue of RM6.1 billion with export sales amounting to RM363.43 million last year”.

Of the 2247 active MSC Status

companies, 257 companies are actively involved in the creative industry. Refer to Appendix F. 42

http://www.yes.my/v3/index.do http://www.tunetalk.com/my/ *http://www.malaysia.ahk.de/fileadmin/ahk_malaysia/Market_reports/IT_and_Telecommunications_in_Malaysia.pdf 45 http://www.digitalnewsasia.com/node/107 43 44

http://www.btimes.com.my/Current_News/BTIMES/articles/MSCMDEC/Article/ http://www.mscmalaysia.my/sites/all/themes/mscmalaysia/templates/images/press_release/press_release_20120920.pdf

Further reading: MSC Malaysia draws RM2.92b investments http://www.btimes.com.my/Current_News/BTIMES/articles/MSCMDEC/Article/#ixzz2UNjboLEm MSC Malaysia draws RM2.92b investments http://www.btimes.com.my/Current_News/BTIMES/articles/MSCMDEC/Article/#ixzz2UNj1gXPB ICT SECTOR MALAYSIA

5. FUTURE TRENDS This subject is addressed in two parts. â&#x20AC;&#x153;Trendsâ&#x20AC;? is understood as part of a nationwide or worldwide development.

5.1

MALAYSIAN SPECIFIC TRENDS

Malaysia is not a trend setter by any means. The country is generally a follower and adopter of technology that has been developed by the more advanced countries. Section 4.1 provides an overview of what the national government is aiming at. Please also refer to Section 9. The country is very much a consumer of enabling technologies and develops applications to support the enabling technologies, for example; the mobile carrier is an enabling technology and Malaysia develops applications for the mobile telephones that use the carrier. Malaysia does not have any software, or hardware product or inventions that will have a significant impact with the exception of Islamic products. The country has developed a niche industry in Islamic banking and Islamic insurance, and Islamic based applications such as halal tracking and halal products supply chain. E.g. AETIMS Sdn Bhd is a Malaysian company that develops and supplies Islamic Insurance Software applications worldwide. MCIS Zurich is a user of the product. Halal is the Islamic equivalent of Jewish Kosher.

5.2

WORLD TRENDS

Malaysia is a follower and will adopt technology based on world trends.

6. PLAYERS IN THE MARKET There are numerous well established players in the ICT market. It is hard to pinpoint companies in specific market segments as Malaysia is primarily a user and consumer of European and American technology. The business model of doing business is such that companies here are opportunistic. Local companies do not focus on a core competency but will pursue any ICT opportunity as a general rule. That means company A will dabble in cloud computing because it is the in-thing to do, and drop out when the market is fully exploited. Of course, there are exceptions. There is no single inventory available for the total number of ICT companies in Malaysia, but it exceeds 3000 and is more like about 4000 companies. For example; MSC Malaysia status was awarded to 2,954 companies as of 31st December 2011. 48

PIKOM has a member list exceeding 1000.

http://www.mscmalaysia.my/status_company

ICT SECTOR MALAYSIA

The numerous multinationals operating in the Malaysia include the following: Table 3 Multinationals Operating In Malaysia

ACCENTURE

HEWLETT-PACKARD

ORACLE CORPORATION

ATOS ORIGEN SERVICES

HITACHI ASIA

PARADIGM SYSTEMS

CSC MALAYSIA

IBM MALAYSIA

SYMANTEC CORPORATION

EDS

KPMG MANAGEMENT & RISK CONSULTING

SAS INSTITUTE

CISCO SYSTEMS

NEC CORPORATION OF MALAYSIA

SAP MALAYSIA

There are also many relatively large local companies. These companies are groups and have a number of subsidiaries under them with different names. It makes sense to look at the group and drill down to the subsidiaries. Please refer to group web links wherever possible and drill down. 50



Sapura



Dataprep Holdings Bhd



Formis Resources Bhd



Felda Prodata Systems Sdn Bhd



VADS Bhd

52 53

The above are quite large companies. Sapura specialises in secure communication and has a national secure voice network in place. Felda Prodata Systems Sdn Bhd

is a subsidiary of the Felda Group, a Global Company. Prodata Sdn

Bhd is an example of a subsidiary that provides ICT services for its own group, and sources its ICT needs form the open market place.

6.1

PLAYERS IN EGOVERNMENT / EHEALTH

Virtually all the leading companies like IBM, EDS, and Sapura etc., are in this sector.

6.2

PLAYERS IN IT SECURITY

Local companies include Scan Associates Sdn Bhd and Malaysia Cyber Security Sdn Bhd. IBM is also in this sector. BAE and EADS are also in the market.

http://www.pikom.org.my/cms/AllProductByCat.asp?CatID=53&type= http://www.sapura.com.my/ 51 http://www.dp.com.my/default.asp 52 http://www.formis.net/Formis/Contact/default.aspx 53 http://www.feldaprodata.com.my/ 54 http://www.vads.com/ 54 Felda Prodata Systems Sdn Bhd is the IT arm of Felda Group of companies http://www.feldaprodata.com.my/index.php/about-us/overview 50

ICT SECTOR MALAYSIA

6.3

PLAYERS IN CLOUD COMPUTING

Local companies include VADS Cloud Computing, Teliti International, and Skali. Cloud 8 of Australia is negotiating out a cloud project with Ministry of Health.

6.4

PLAYERS IN MOBILE SOLUTIONS

Telekom Malaysia, Celcom Bhd, Maxis Bhd, and Digi Telecommunications are all into developing mobile applications for smart phones. There are several MNOs whose names have been mentioned earlier who are also involved in developing mobile applications. (See page 18)

6.5

PLAYERS IN CREATIVE INDUSTRIES

These are generally small players, e.g. Bimbit.com Sdn Bhd, Oriental Digital Imaging Sdn Bhd, Cosmopoint Sdn Bhd, KRU Studios, Tripod Entertainment, Creative Media Lab, and Backbone Entertainment.

ICT SECTOR MALAYSIA

7. SWOT ANALYSIS The SWOT analysis is carried out on the known strengths and market entry of Swiss ICT companies, and on the market itself. STRENGTHS

WEAKNESSES



The Swiss are well known for their quality of work.



The Swiss labour rates are decidedly much higher than local labour rates.



The Swiss are mostly English speaking. Malaysia is an English speaking country when it comes down to computers and software.



Pricing is an issue. Swiss prices are generally higher than the local suppliers from Taiwan, Korea, and India.



There are insufficient skilled human resources to carry out large scale development or implementation. However the country does allow for import of skilled labour on a work visa basis.



In Malaysia, the Swiss are recognised applications and security products.

for

security

OPPORTUNITIES 

Large Projects. The list of opportunities has been described in Section 4 and Section 9. These are all large projects that require funding. Swiss companies with access to capital will do well.



Consumer Products Explosive growth in mobile computing means that there is an emerging and growing market in mobile applications.



Although there are many established players in the local market, there is sufficient capacity for new entrants.



The public sector seeks capital for their projects on a Private Financing Initiative. This is seen as an opportunity for Swiss companies that have access to long term finance. Generally the public sector invites PFIs and the supplier gets paid on a monthly basis for an agreed period of time.

ICT SECTOR MALAYSIA

THREATS 

The current market is reasonably well served by over 4,000 ICT companies. There is a barrier to entry of new players. New players need to differentiate themselves in terms of the products that they offer. The differentiation needs to be very clear.



Selection of a local partner. This is a critical step.



Local partners when appointed do have a tendency of carrying more than one product or competing products. Integrity is not always practised.

8. MARKET ACCESS Relationship marketing is a necessary prerequisite to service all types of clients from the public sector to the private sector. It is, therefore, next to impossible for a foreign company to operate in Malaysia without a local partner. A local partner is, therefore, a must. There is a problem in selecting a local partner because of the constraints in the procurement policies of the nation. A significant constraint is the understanding of doing business and the purchasing policies (both written and unwritten) by the federal government, state governments and GLCs. Over 60 per cent of the population is of the Malay ethnic stock from West Malaysia and East Malaysia. They are called Bumiputras (sons of the soil) and are given favoured status. Public Sector and GLC purchasing policies are heavily slanted in favour of companies that have majority Bumiputra equity. This leads to what is called a rent seeker mentality. A Bumiputra business partner may not do any work in business development except to lend his name as a Bumiputra. He will expect to be paid for using his name. This is called rent seeking. Not all Bumiputras are rent seekers. The smartest ones, however, know their rent seeking value and will drive a harder bargain with the foreign company. The large private corporations and the SMEs do not practice the above purchasing policies that require Bumiputra equity. However, as stated the relationship marketing is critical.

8.1

SUGGESTED BUSINESS MODELS

There are four suggested business models: a.

Direct Presence. The Swiss company establishes itself as a legal entity in Malaysia. There will be a requirement for two resident directors. These can be Swiss nationals (so long as they are resident) or local Malaysians. It then appoints resellers for its products and services based on the resellersâ&#x20AC;&#x2122; Bumiputra status and relationship status. The Swiss company can form a Joint Venture on a project by project basis for public sector and GLC projects. If there are ten projects, the Swiss company can have ten separate partners for each joint venture. For example, if selling to the Malaysian Police, the Swiss company will choose a partner who is Bumiputra and who has a strong relationship with the Police. It will choose another partner for say the Malaysian Army. The Swiss company can also appoint resellers on a project by project basis as the above for the private sector. In this model, the Swiss company maintains its own legal entity at all times and has the freedom to select partners based on each opportunity.

Distributor The Swiss company remains in Switzerland and appoints a national distributor for its products and services. This is usually an exclusive arrangement. Under this arrangement, the distributor will usually

ICT SECTOR MALAYSIA

honour an agreement not to carry competitorsâ&#x20AC;&#x2122; products. The distributor will act in the same manner as paragraph in a, above. The distributor does not have to be a Bumiputra. c.

Form a Joint Venture that is permanent and for all projects Form a joint venture with a local Bumiputra entity by giving them 51 per cent equity. In many cases, the local Bumiputra entity might expect the equity to be given for free. Alternatively form a joint venture with a non Bumiputra and ensure that the equity taken is paid for by the local non Bumiputra partner. The JV will establish relationships with Bumiputra entities only when selling to the public sector. A lot of due diligence needs to be exercised in both cases.

Appoint Resellers. In this model, a number of resellers are appointed according to the industry and the relationships the reseller has within their industry. The Swiss company does not establish itself in Malaysia as a legal entity. Do take note that the Resellers will not necessarily honour a commitment not to promote competitors products.

8.2

MSC STATUS COMPANY

If a Swiss entity decides to establish a wholly owned or joint venture company with the intention of developing products locally, it should consider becoming an MSC status company. Fundamentally an MSC status company involves the following benefits. 1.

Unrestricted employment of local and foreign knowledge workers.

Competitive financial incentives, including pioneer status, which gives 100 per cent, tax exemption for up to 10 years, or an Investment Tax Allowance for up to 5 years. No duties on import of multimedia equipment. 56

Eligibility for R&D grants

(for majority Malaysian ownership MSC Malaysia-Status companies).

Access to an effective one-stop agency - MDeC.

An MSC company derives many additional benefits from its status, but the key items are as above.

8.3

RECENT DEVELOPMENT

Digital Malaysia

is a programme that operates under MDeC. Digital Malaysia has been tasked with the

implementation of a programme that will pursue the goals of Malaysia becoming a digital economy. There are a number of projects that have been identified. The desired outcome is a developed digital economy by 2020. The programme has three thrusts. These are identified as game changers. Namely: ď&#x201A;§

Supply to Demand-Focused Currently the Malaysian public sector spends almost 54 per cent of its ICT investment on building information-based infrastructure. Initiatives such as the High Speed Broadband project have successfully ensured that the supply of the ICT infrastructure needed to prepare this nation for the change is in place.

56 57 58

http://nitc.mosti.gov.my/nitc_beta/index.php/ict-financing-and-funding/msc-malaysia-research-and-development-grant-scheme-mgs http://www.mscmalaysia.my/isv http://www.digitalmalaysia.my/

ICT SECTOR MALAYSIA

Digital Malaysia will focus on initiating more demand-focused activities that will maximise usage of existing information and infrastructure.



Consumption to Production-Centric Digital Malaysia intends to create platforms and programmes to nurture and develop netizens to become producer-consumers or prosumers. It also plans to create new income generation opportunities via new digital business models.



Low Knowledge-Add to High Knowledge-Add Currently Malaysian companies have low business ICT usage, as well as low knowledge-intensive activities and outputs. Malaysian SMEs’ contribution to GDP also remains low, at 32 per cent. Digital Malaysia will promote innovative digital business models that will drive the creation of high-value products and services. Through its projects, it will also target to increase productivity of employees through automation and innovative digital tools.

Please refer to Section 9 on the opportunities created by Digital Malaysia. Mobile banking is beginning to take off. Companies are positioning themselves to offer mobile banking applications.

8.4

MARKETING STRATEGIES

The strategies suggested are as follows: a.

When selling to end user, use the Business models that have been briefly mentioned in Section 8.1.

Brand recognition and product introduction can be done at trade shows run by various organisations

Conventional and internet marketing is not a solution except for the mass consumer market with easily identifiable products. Such as Samsung Note IV

Target the big industry markets with the marketing dollar, namely 

8.5

Banking



Oil & Gas



Insurance



Telcos

TRADE SHOWS & EVENTS

We highlight some relevant trade shows and events. Some of the events have already taken place. The webpage is given so that readers can make themselves aware of future events that have yet to take place. Some events are the following: Table 4 ICT Events Malaysia

Event Malaysia Technology Expo

Dates TBA

All things software

TBA

ICT SECTOR MALAYSIA

Web link http://www.biztradeshows.com/tradeevents/malaysia-technology-expo.html http://www.biztradeshows.com/all-thingssoftware/

ITX Asia 2013 Kuala Lumpur Defence Services Asia LIMA (Langkawi International Marine & Aero Space) Mobile Communication Systems : Evolution Towards Mobile Broadband CloudSec Conference 2013

11-13 September, 14-17 April 2014 TBA 27 - 29 August 2013 June 13, 2013

http://www.smemagazine.asia/itxasia/ http://www.dsaexhibition.com/ http://www.lima.com.my/

http://www.cloudsec.co/my/event-7

There are several communications events, but they are usually held in Singapore.

8.6

RISK FACTORS

Risks to be encountered are as follows: a.

Customers extending payment of invoices. Days outstanding can be as long as 12 months. This is a real problem with the private sector and Government Linked Companies as well as SMEs and local multinationals.

Labour mobility â&#x20AC;&#x201C; staff has a high labour mobility.

The use of resellers and joint venture comes with the risk that the Swiss company might not get paid, although, the customer pays the reseller, or the joint venture company.

The distributor, reseller appointed does not actively market the product.

9. MARKET OPPURTUNITIES This report has identified a number of initiatives in Section 4. These are opportunities for Swiss companies. Additional initiatives are described below. Digital Malaysia has identified eight projects below. Total investment to implement these initiatives is USD 10 billion, of which 95 per cent of funding will be from private sources. The level of funding indicates that foreign companies will stand in good stead for these projects.

ICT SECTOR MALAYSIA

PROJECT 1: ASIAN E-FULFILLMENT HUB What Will the Project Do? 

Logistics and fulfilment make up the key components of the e-Commerce value-chain, facilitating the movement of goods and products of various shapes and sizes across borders. Through this project, Digital Malaysia will build e-Fulfilment capabilities and infrastructure in Malaysia, targeting global online retailers to use as their Asian e-Fulfilment centre. The hub will offer integrated logistics solutions to global online retailers and also make available comprehensive fulfilment services such as warehousing, packaging, kitting, etc. With MIDA as the Public Sector Lead, this project aims to make Malaysia the centre of e-Commerce logistics and fulfilment services for Asia by leveraging Malaysia’s existing strengths in regional connectivity, and in anticipation of Asia’s e-Commerce growth from 22 per cent today to 35 per cent in the next 10 years.



Estimated Investment is USD 200 million.

PROJECT 2: ENABLING E-PAYMENT SERVICES FOR SMEs AND MICRO ENTERPRISES What Will the Project Do? 

The ability to accept cashless payments is necessary to increase revenue for business owners. In view of this, Digital Malaysia with SME Corp Malaysia as the Public Sector Lead aims to drive the adoption of e-Payment methods especially for SMEs and micro enterprises by providing them with easier access to affordable terminals and readers, integrated with e-Commerce solutions. As a result, more Malaysian SMEs and micro enterprises will be encouraged to offer e-Payment services at their respective outlets.



Estimated Investment is USD 200 million.

PROJECT 3: SHARED CLOUD ENTERPRISE SERVICES What Will the Project Do? 

Local businesses, particularly SMEs often lack the resources and knowledge to invest in new digital technology. This impedes their ability to increase efficiency and improve competitiveness. With MDeC as the Public Sector Lead, this Digital Malaysia project aims to accelerate the adoption of cloud-based enterprise application solution (EAS) by local companies whilst encouraging more independent software vendors (ISVs) to offer their services on the Cloud. Recognising that the availability of qualified ICT talents is critical in this area, this project also intends to train and certify ICT professionals in the Software-as-a-Service (SaaS) model.



Estimated investment is USD 100 million.

ICT SECTOR MALAYSIA

PROJECT 4: DEVELOP ON-DEMAND, CUSTOMISED ONLINE EDUCATION What Will the Project Do? 

As Malaysia strives to become a high income nation with knowledge-workers at its core, it needs to address the shortage of resources and the lack of a one-stop portal for online learning for degree and non-degree programme, as well as career counselling services. The project with MDeC, as the Public Sector Leader aims to develop a centralised customised education and learning exchange portal (CELEX) for Malaysia. It will offer online programme which will allow students of all ages to access rich content and combine courses from different institutes. CELEX is also a portal that offers education and career counselling. It will also serve as a virtual meeting point for employers and students. In turn, this portal will lead to the creation or the growth of the larger online education ecosystem of educational content and course providers.



Estimated Investment USD 12 million.

PROJECT 5: MICROSOURCING TO GENERATE INCOME FOR THE B40* What Will the Project Do? 

Malaysia has a large and connected latent workforce of approximately 6.6 million people who are well suited to perform micro-tasks. Some examples of micro-tasks that can be carried out are data entry, census taking, price watch, translation work and promotional services. Although anyone can participate as a task worker, it especially offers opportunities to the bottom 40* per cent of the community (B40)*. This project, with the Ministry of Women, Family and Community Development aims to provide training for the Bottom 40 members of the community, to enable them to work remotely from their homes in order to generate additional income for themselves and their families. It includes basic computer literacy skills training that will enable them to perform simple tasks such as data collection and data entry for corporations and organisations.



Estimated Investment is USD 140 million.

ICT SECTOR MALAYSIA

PROJECT 6: FACILITATING SOCIAL UPLIFT What Will the Project Do? 

Malaysia has many social programmes run both by government and the private sector. There is a fundamental need to consolidate the various efforts by the government to create a cohesive system to raise the social well-being of the Malaysian people across all levels of society. Also with the Ministry of Women, Family and Community Development as the Public Sector Lead, this project provides the framework and tools needed to match community development programme and funding distributions to the right communities and areas. It will also ensure that there will be appropriate mechanisms in place to deploy and track this programme as well as obtain feedback from the target communities.



Estimated investment is USD 24 million.

PROJECT 7: GROW THE EMBEDDED SYSTEMS INDUSTRY What Will the Project Do? 

An embedded system is some combination of computer hardware and software, either fixed in capability or programmable, that is specifically designed for a particular function. Industrial machines, automobiles, medical equipment, cameras, household appliances, airplanes, vending machines as well as the more obvious mobile computing devices are among the myriad possible hosts of an embedded system. This project with MDeC as the Public Sector Lead aspires to develop the embedded systems industry as a new source of growth in order to capture the growing global embedded systems market by leveraging on Malaysia’s established electronics ecosystems and skilled local SMEs. By collaborating with technology partners and other embedded systems industry ecosystem partners, this project aims to move the SMEs up the value chain. Opportunities for SMEs to participate in this project include technology access, training, go-to-market assistance and opportunities to work with technology leaders.



Estimated Investment is USD 3,000 million. This figure is right across the whole industry, and we would expect Swiss companies to be interested only in some specific areas of the industry and even then only at the enabling technologies.

ICT SECTOR MALAYSIA

PROJECT 8: DEVELOP A TRUSTED MOBILE DIGITAL WALLET SYSTEM What Will the Project Do? 

With a mobile penetration rate of 137.7 per cent in Malaysia and more Near Field Communications (NFC) enabled mobile phones and devices becoming available for consumers, the emergence of mobile wallet applications using NFC will stimulate local demand, allowing consumers to shift from cash to electronic payments. This project with MDeC as the Public Sector Lead will develop a trusted national platform that enables consumers to transact securely and confidently, by putting virtual cards, vouchers, and coupons in mobile digital wallet applications, for their smart phones. In turn, having a trusted platform will create an ecosystem that will ensure a more pervasive adoption of Near Field Communications (NFC) by encouraging greater service provider participation and subsequently enabling more customers to enjoy these services.



Estimated Investment is USD 40 million.

OTHER OPPORTUNITIES 

There is a global trend in the use of mobile devices and companies are looking at management of these devices. The concept is for the user to own his device and use the device for the work place. Asset management, recognition of assets by the host network, and security of data is a concern.

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A Swiss company with expertise in this area could approach large oil companies in Malaysia such as PETRONAS, Kencana and other large local conglomerates such as Genting Group and offer a solution to this problem.

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Banking software is fairly well established for back end applications. There is, however, a push for mobile banking applications by the banks in Malaysia. CIMB is a bank that is looking at Micro SD applications, other banks are looking at software based applications.



Any kind of product that tracks the money trail will be looked at closely by the Central Bank.



Covert surveillance is an area that even now is looking for new applications and ideas.



Providing Cloud Services to SMEs.

ICT SECTOR MALAYSIA

10. RECOMMENDATIONS Malaysia is in a high growth mode. It is desperate to move out of the middle income trap and is intending to become a developed nation by the year 2020. The country is technically advanced in the application of ICT technology, but it is looking for progress from what it has. There are many opportunities as stated in the report. It is easy to do business in Malaysia. However, there are many established players in the market. In view of these factors our recommendations are as follows: a.

Have a clear differentiator. Without a differentiator, the Swiss company will be competing head on with established players.

Be prepared for PFI activities. This is the easiest way to get into the market as PFIs in the past have been constructed by direct negotiation without going through a tender process. It is also possible to transfer some of the revenue risk to the government: for example; when there is a shortfall in the revenue collected the public sector will be required to pay out the shortfall.

Bring in new innovative products, which will face no competition.

We strongly recommend that each Swiss company conducts its own qualifying exercise for the specific product or service that it offers. We suggest that the company engage a local professional to do this. The local professional will qualify the specific market and make realistic recommendations for the Swiss company.

ICT SECTOR MALAYSIA

11. APPENDIX APPENDIX A – MINISTRIES, GOVERNMENT AGENCIES AND ASSOCIATIONS



Ministry of Science, Technology and Innovation (MOSTI) Aras 1-7, Blok C4 & C, Kompleks C, Pusat Pentadbiran Kerajaan Persekutuan, 62662, Putrajaya, Wilayah Persekutuan, Malaysia. Tel: +603-8885 8000 Fax: +603-8888 9070 Email: info@mosti.gov.my Website : www.mosti.gov.my Multimedia Development Corporation Sdn Bhd (MDeC) MSC Malaysia Client Contact Centre (CliC) MSC Malaysia Headquarters, 2360 Persiaran APEC, 63000 Cyberjaya, Selangor, Malaysia. Tel: +603-8315 3000 Fax: +603-8315 3115 Email: clic@mdec.com.my Website : www.mscmalaysia.my Malaysian Communications and Multimedia Commission (MCMC) 63000 Cyberjaya, Selangor Malaysia. Tel: +603-8688 8000 Fax: +603-8688 1000 Email: ccd@cmc.gov.my / william@cmc.gov.my / noraini@cmc.gov.my Website: www.skmm.gov.my The National ICT Association of Malaysia (PIKOM) 1106 & 1107, Block B Phileo Damansara II, No. 15, Jalan 16/11 46350 Petaling Jaya, Selangor Malaysia. Tel: +603-7955 2922 Fax: +603-7955 2933 Email: info@pikom.org.my / oky@pikom.org.my / aishah@pikom.org.my Website: www.pikom.org.my Malaysian Association of Bumiputra ICT Industry & Entrepreneur (NEF) Suite 1-15, Perdana The Place Jalan PJU 8/5 G, Damansara Perdana 47820 Petaling Jaya, Selangor Malaysia. Tel: +603-7722 2706 Fax: +603-7726 2706 Email: ashran@nef.org.my / ferdaus@nef.org.my Website: www.nef.org.my

ICT SECTOR MALAYSIA



Technopreneurs Association of Malaysia (TeAM) Unit 204, Plug & Play Technology Gardens C/O Kumpulan Modal Perdana Sdn Bhd Level 7, The Gardens South Tower Mid Valley City, Lingkaran Syed Putra 59200 Kuala Lumpur Malaysia. Tel: +603-2264 5320 Fax: +603-2264 5321 Email: wingyew@team.net.my Website: www.team.net.my Malaysia Software Testing Board (MSTB) Lot G-2, 1-2, 2-2 Jalan Kenari 12B Bandar Puchong Jaya 4700 Puchong Selangor Darul Ehsan Malaysia. Tel: +603-8076 6100 Fax: +603-8075 0334 Email: info@mstb.org Website: www.mstb.org Outsourcing Malaysia 1106, Block B, Phileo Damansara II, 15, Jln 16/11 46350 Petaling Jaya Malaysia. Tel: +603-7955 2922 Fax: +603-7955 2933 Email: info@outsourcingmalaysia.org.my / rachelkuan@pikom.org.my (Membership Manager) Website: www.outsourcingmalaysia.org.my

ICT SECTOR MALAYSIA

APPENDIX B - COMPONENTS OF MALAYSIA’S EXPORTS AND IMPORTS 2012 Components of Malaysia's Exports & Imports 2012

Source: Department of Statistics, Malaysia Compiled By: MATRADE

ICT SECTOR MALAYSIA

Source: Department of Statistics, Malaysia Compiled By: MATRADE

ICT SECTOR MALAYSIA

APPENDIX C Total Sales of MSC Status Companies in RINGGIT MALAYSIA Year-on-Year growth was reported for Total Sales. Total MSC Malaysia exports in 2011 rose 8.5 per cent from 2010 against a backdrop of a 16.3 per cent increase in total revenue within the same period. Total Sales (RM Million) Local Sales Export Sales Total Sales

Source: MDeC Annual 2010-2011 For more mostatistical information on the ICT industry please click on the link below. http://www.skmm.gov.my/Resources/Statistics/Communications-and-Multimedia-Pocket-Book-of-Stati.aspx

ICT SECTOR MALAYSIA

Report

APPENDIX D MSC Malaysia Status Companies by Technology Cluster As of 31st December 2011, there were 2,247 active MSC Malaysia status companies out of which 74 per cent represented the InfoTech Cluster. This was followed by 11 per cent made up of the Creative Multimedia Cluster. While the Global Sourcing Cluster and Institutions of Higher Learning constituted 10 per cent and 5 per cent respectively. ACTIVE AS AT 31 DECEMBER 2011 (CUMULATIVE)

Cluster

Note: This chart shows the number of MSC status companies. Not all the companies that have been given MSC Status are active, some are dormant. IHL stands for Institutions of Higher Learning Global Sourcing refers to shared services and outsourcing Source: MDeC Annual Report 2010-2011

Awarded

Active

Creative Multimedia

342

257

IHLs & Incubators

114

107

InfoTech

2,245

1,667

Global Sourcing

253

216

2,954

2,247

Total

ICT SECTOR MALAYSIA

APPENDIX E - A COMPARISON OF REVENUE DISTRIBUTION AMONGST THE DOMINANT CARRIERS

Source: Serious Investing issue dated 3 September 2012

ICT SECTOR MALAYSIA

APPENDIX F â&#x20AC;&#x201C; FINANCIAL DATA FROM PIKOM

ICT Spending : 2001-2017

Growth assumption for the period is based on DOSM data reported on Value Added ICT Services , which is growing at 12%.

ICT SECTOR MALAYSIA

ICT Spending Projection: 2008-2017

Source: Digital Planet and PIKOM estimates

ICT SECTOR MALAYSIA

APPENDIX G – ECONOMIC TRANSFORMATION PROGRAMME THE KEY GROWTH ENGINES 1. OIL AND GAS To leverage the potential of oil and gas even further, initiatives such as increasing international market access, enhancing skills training in partnership with industry and enhancing linkages in the downstream industries would be taken. Further efforts would involve expanding opportunities in logistics and maritime business activities and strengthening oil and gas related professional services. 2. PALM OIL AND RELATED PRODUCTS During the 10MP, the target is for the industry to increase output to GDP to RM 21.9 billion. To achieve this, key initiatives include promoting Malaysia as a global hub for palm oil and preferred destination for foreign investments. Also palm oil industrial clusters would be developed into integrated sites to promote downstream activities such as biofuel, oleo chemicals and etc. The government also plans to centralize the procurement of agricultural inputs such as fertilizer and pesticides to lower input costs for small holders. 3. FINANCIAL SERVICES Here, a new financial sector blueprint will be devised to articulate strategies to further evolve the Malaysian financial sector to support and drive the next phase of Malaysia’s economic development. Furthermore, Malaysia’s position in Islamic finance would be enhanced globally via the strengthening of the Malaysia International Islamic Financial Centre (MIFC) Initiatives. 4. WHOLESALE AND RETAIL The retail and wholesale sectors would be liberalized to encourage investments. Local retailers would be encouraged to consolidate to promote efficiency and economies of scale. Franchise, direct sales and e-commerce would also be promoted to reach its full potential. 5. TOURISM Differentiated strategies would be promoted to cater for unique and distinctive travel patterns. Tourism products would also be improved through the creation of focused tourism clusters that will leverage on existing and iconic tourism products. Also, new tourism products would be developed through the private sector and public private partnerships.

ICT SECTOR MALAYSIA

6. INFORMATION AND COMMUNICATIONS TECHNOLOGY MSC Malaysia would identify and support the development of niche areas in software and e-solutions, creative multimedia, shared services, outsourcing and as well as e-business. The government will aggressively promote the use of ICT in all industries in keeping with the development of the ICT sector. Education and training will be prioritized to meet the human resource requirements in this sector. 7. EDUCATION The government would improve the quality of public institutions of higher learning through performance based funding by expanding the rating system for Malaysian Higher Education Institution (SETARA) to include private universities and colleges, and at faculty level. Also, a central enrolment process would be introduced in stages for all students, including international students with flexible credit accumulation framework. A conducive, educational ecosystem would be provided, to engage students and world leading faculties in niche areas to set up branches in Malaysia. 8. ELECTRICAL & ELECTRONICS Centres of engineering excellence would be developed by collaborating with industry and academia. State skill centres and co-founding masters and PhD programmes in key fields would also be promoted. Furthermore, incentives would be focused on strategic segments of the value chain, such as design, testing and precision machining. 9. BUSINESS SERVICES Here, the focus will be on further developing construction related and environmental management services. A consolidated presence and brand for Malaysian construction services overseas would be established. Legislation would also be amended to enable commitments made at bilateral, regional and multilateral levels to liberalize the industry and create new business opportunities. 10. PRIVATE HEALTHCARE During the tenth plan, the target is to raise revenue from healthcare by 10 per cent per annum. Thus, key strategies to be taken include encouraging more private hospitals to seek accreditation with international healthcare accreditation bodies, promoting investment in and utilization of high end medical technology and also intensifying coordinated and integrated promotional activities to strengthen the presence of Malaysia healthcare brand globally. 11. AGRICULTURE In this sector, consortiums and cooperatives would be set up to reap the benefits of scale. Reviewing and streamlining current regulation would also be undertaken to attract greater investment and involvement from the private sector. Also, innovation based growth and production processes that utilize modern farm technology and ICT would be promoted.

ICT SECTOR MALAYSIA

12. GREATER KUALA LUMPUR In order to position Greater KL as a world class city, a combination of economic growth and liveability strategies would be needed. The Kuala Lumpur International Financial district would be established as a global financial centre. The Sime Darby Vision Valley would also get the green light. Also, urban public transportation will be transformed by the mass rapid transit system to ensure seamless interconnectivity links.

ICT SECTOR MALAYSIA

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