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Malaysian Tech Sector Receives Government Support

Malaysian Government Support for Tech Sector

The technology sector, particularly e-commerce, eGames and animation industries, saw impressive improvements in earnings and market access in 2019. This was bolstered by ample support from the government and established players amid an expanding digital culture.

Lead government agencies, associations, as well as private entities, have worked hand-in-hand since the start of the decade, and it was no different in 2019, to chart the path ahead and lay the foundations for the years to come.

PIKOM, the National ICT (Information and Communications Technology) Association of Malaysia which has rebranded itself as the National Tech Association of Malaysia, predicts that the Malaysian economy will turn around by mid-2020 as the government’s newly introduced initiatives and programmes begin to bear fruit.

The Chairman of PIKOM stated that the government is also directing its attention to the fourth industrial revolution (Industry 4.0) via its ICT framework – the Industry 4.0 policy Industry4WRD, robotics, analytics and artificial intelligence (AI) as enablers of the country’s future economy.

Malaysia Digital Economy

In April 2019, Malaysia’s Finance Minister noted the economy has grown nine per cent on average annually in value-added terms between 2010 to 2016, outpacing the country’s overall gross domestic product (GDP) growth.

According to the Department of Statistics Malaysia, the digital economy contributed 18.5 per cent to the national economy in 2018, translating into RM267.7 billion in revenue.

The e-commerce sector, which contributed RM115.5 billion or eight per cent last year, is expected to be the key driver of the digital economy by next year, according to the Malaysia Digital Economy Corporation (MDEC).

While Malaysia’s GDP contribution from the domestic e-commerce sub-sector is still relatively small compared to China or the United States, the future of e-commerce is bright as online retail sales in Malaysia are expected to grow 23 per cent a year until 2021.

The DESA Project – a digital economy programme – is a significant catalyst to Malaysia’s e-commerce as it enables the rural-based entrepreneur supply chain.

With the support of MDEC and a few e-commerce giants, rural-based businesses, which include sellers of food and agriculture products, are now able to participate and benefit from the digital economy.

The pilot project in Bentong, Pahang, will help rural producers of organic rice, raw ginger, ginger powder, soy sauce and Sempalit groundnuts to market their wares to online consumers across Malaysia and new markets around the world.

Animation

Over 2019, Malaysia’s animation industry became a sector to watch, taking a significant chunk of the Malaysian box office receipts among local movies.

MDEC’s South East Asia Animation Report 2018 stated that the region’s animation industry was forecast to be US$404.8 billion in 2023.

Based on the study by MDEC, the country’s creative content industry, which includes film and game developers, generated RM7.4 billion in 2017, while in 2018, the animation export product value alone totalled RM146 million.

The industry has also created thousands of job opportunities. The report stated that there were 100 animation companies in Malaysia while the whole national creative digital group totalled 350 companies. The country’s creative content works have been exported to 120 nations.

Malaysia is being urged to not ignore the global animation market as the country could truly and collectively be a force to be reckoned within the realm of creative content technology.

With the increasing number of outsourcing projects awarded to the region, coupled with a few notable, original local intellectual properties, Southeast Asia’s creative industry looks promising and could definitely be a strong contributor to the member countries’ respective economy.

EGames

Within the eGames sector, MDEC, in its Southeast Asia Game Industry Initiative report, stated that Malaysia, Thailand and Vietnam have game companies that were able to generate between US$5 million and US$10 million revenue per year.

Meanwhile, the Communications and Multimedia Ministry has partnered with a major game studio to establish the global games powerhouse’s very first Southeast Asia studio in Malaysia in 2020.

With this establishment, Malaysia will be working closely with the studio to create more opportunities for the local and regional games industry, uplift the talent pool in Malaysia and establish a partnership with local partners.

The studio’s Malaysia branch will provide art and animation services and aid in the development of global exclusive titles for PlayStation platforms.

In terms of exports, the MSC Malaysia Annual and Quarterly Industry Report reported that games exports grew by a compound annual growth rate of 118 per cent to RM681 million between 2014 and 2018.

The domestic landscape features 53 game studios, many of which are developing local games and creating intellectual properties while also nurturing talent for both local and international projects.

The industry is now an undeniably critical driver for the country’s digital economy. Moreover, it is the ‘next big thing’ that many of the region’s youth have a keen interest in, in terms of career choices.

All in all, be it ICT, e-commerce, eGames or animation, the years ahead appear to see the Malaysian tech landscape becoming better, with fortified support from all quarters, including the lead government agencies, related associations and the general public.

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