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Digital economy focused announcements in Malaysian Budget 2017 include 'Digital Free Zone'

The Malaysian Government’s Annual Budget for Fiscal Year 2017, presented last week on October 21st, revealed a continued strong focus on the digital economy.

Through the Malaysian Digital Economy Corporation (MDEC) RM 162 million (USD 39 million) was allocated for development of an e-commerce ecosystem, the Digital Maker movement and the introduction of Malaysia Digital Hub. The Digital Maker movement is an initiative to transform Malaysian youth from digital users to producers through collaboration between the public and private sectors and academia. The Malaysian Government has planned for the digital economy to contribute to 18.2% of the national Gross Domestic Product (GDP) by the year 2020. Skill development through better inclusion of ICT in school curriculum, enabling the youth to take advantage of disruption is a core aspect of the strategy and here the Digital Maker movement would play an important role.  

The Government also announced plans to develop a Digital Free Zone (DFZ), through a merging of the physical with the virtual. The zone will be a first of its kind in the world. It will include the provision of online and digital services to ‘facilitate international e-commerce and invigorate internet-based innovation’.                    Improving connectivity across the country would be an essential component of the base infrastructure. To enhance connectivity, it was announced in the budget speech that fixed line broadband service providers will offer services at a higher speed for the same price. There would be an effective doubling of speeds. 

Going forward, during the next two years, the speed would be doubled again, accompanied by a 50% reduction in price.                    In order to improve coverage and quality of broadband, the Malaysian Communications and Multimedia Commission (MCMC) will provide RM1 billion (USD 241 million) .Speeds are expected to increase up to 20 megabytes per second. Inclusive growth is another cornerstone of the Government’s strategy. In order to improve income opportunities for the B40 (bottom 40% of households in terms of income), RM 275 million (USD 66 million) was allocated. Part of this, RM 100 million was allocated for revitalising the eUsahawan and eRezeki programmes. These programmes, comprising 300,000 participants are under MDEC.

eUsahawan is a digital entrepreneurship program aiming to help the public enhance business growth via online sales. The eRezeki initiative, based on the concept of crowd-sourcing aims to connect low-income households to digital income opportunities. Participants are trained, qualified and matched against suitable available tasks and/or work, helping them earn additional income and acquire new skills, equipping them to cope with an increasingly digital world.

In addition, a new pass category, called Foreign Knowledge Tech Entrepreneurs will be introduced to encourage investment in high technology startups in the country. This could help in expanding the talent pool available in the technology sector in the country.

Click here to read the full text of the Malaysian Government's Budget 2017 speech.

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