October 22, 2020

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Malaysia Looking to Partner with Japan for Digital Transformation

Malaysia Digital Transformation

The Minister of International Trade and Industry called on Japanese investors to leverage Malaysia’s push for digital transformation.

The country has been undertaking several digital transformation efforts through the National eCommerce Strategic Roadmap and through the country’s engagements at the international level.

These efforts signify the determination of the Government of Malaysia to propel the nation to become a digital nation thereby creating a conducive environment for investors to do business in Malaysia, the International Trade and Industry Minister stated at the Seminar on Business Opportunities in Malaysia.

The Malaysian government has developed several options for the Japanese investors to help them leverage Malaysia’s initiatives on Digital Transformation including setting up operations in the country and obtaining the MSC Malaysia status.

On the digital front, Japanese investors can apply for the MSC Malaysia status which provides eligible ICT-related businesses, both local and foreign, with a wide range of incentives, rights, and privileges to promote continued growth.

The tax exemption would also be granted for income that is derived from either services activities or intellectual property.

Japanese investors can partner with local companies that have access to the RM1 billion Domestic Investment Strategic Fund. The fund was set up to accelerate the shift of Malaysian-owned companies in targeted industries to high value-added, high technology, knowledge-intensive and innovation-based industries.

The fund aims to harness and leverage on outsourcing opportunities created by multinational companies (MNCs) operating in Malaysia, intensify technology acquisition by Malaysian-owned companies and enable Malaysian-owned companies to obtain international standards or certifications in strategic industries.

In partnering with local firms, Japanese investors can enjoy initiatives available for local companies such as Malaysia Digital Economy Corporation’s (MDEC) Digital Transformation Acceleration Programme (DTAP).

Established for large corporations and mid-tier companies, DTAP is an outcome-driven programme which aims to help businesses achieve an increase in productivity, reduce foreign labour dependency, as well as create new sources of growth or business models.

In addition, Japanese investors can tap into the robust Malaysian start-up ecosystem and utilise the Malaysia Digital Hub initiative which works to support tech and digital co-working spaces.

The Digital Hubs are essentially the centre that offers start-ups with the opportunity to expand globally, have ready access to high-speed broadband connectivity, funding and facilitation opportunities, and a workforce-ready ecosystem, among others.

The government has also announced new initiatives in the 2020 Budget to further boost the digital transformation such as customised incentive package.

An RM1 billion customised package incentive is available to attract investment from Fortune 500 and global unicorn companies in high technologies, manufacturing, creative and new economic sectors, which is allocated annually from 2020 to 2024.

To qualify, the Fortune 500 and global unicorns must invest at least RM5 billion each in Malaysia in selected high technology, knowledge-based and strategic projects.

The projects are advanced electronics and computing, advanced semiconductor, integrated circuit, artificial intelligence, medical devices, biotechnology, pharmaceuticals, biodiagnostics, specialised chemicals, aerospace, and green technology, and strengthening Malaysia’s manufacturing and service ecosystems.

Another initiative is the Global TestBed, which provides foreign companies with the platform for testing, developing and co-creating new technology and products in Malaysia to nurture an ecosystem for new technologies with proper governance structure and policies which encourage innovation.

Investing in Malaysia would enable Japanese investors to access the country’s robust tech talent ecosystem produced by the local educational institutes.

Moreover, Malaysia is willing to Japanese investors access to the ASEAN Data Analytics Exchange (ADAX), a data technology hub designed to proliferate data-driven decision making.

It is the catalyst for talent development and access to vibrant data ecosystem for investors to foster collaboration among businesses, start-ups, academia, and professionals so that these focus areas become an integral part of business innovation and decision making. In accessing ADAX, Japanese investors can tap into the data technology ecosystem within ASEAN.