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Rural Malaysian entrepreneurs get help with digital economy goals

The 5th ASEAN Rice Bowl Startup Awards was held in Kuala Lumpur on 19 January 2020. The event was organised by the New Entrepreneurs Foundation (myNEF) with support from the Malaysia Digital Economy Corporation (MDEC) and the Malaysian Global Innovation & Creativity Centre (MaGIC).

This year’s awards were a testament to the ingenuity, drive and creativity of regional digital entrepreneurs serving their community, one report notes.

This push towards digitization is echoed in the National Budget 2020 blueprint. Budget allocations make it clear that the government is a strong proponent of driving economic growth via the digital economy.

RM10 million is designated to Malaysia Digital Economy Corporation (MDEC) for the training of micro-digital entrepreneurs and technology experts to leverage e-marketplaces, social media platforms.

In addition, RM70 million is allocated to the development of Digital Enhancement Centers across every state to facilitate upskilling of businesses to be eCommerce ready.

The CEO of MDEC stated that the digital transformation agenda for Malaysia continues to be a major catalytic driver for the nation’s economy.

E-Commerce – a key contributor to the growth of the digital economy

The digital economy contributed 18.5% to Malaysia’s economy in 2018, amounting to RM267.7 billion in the gross domestic product (GDP).

The e-commerce sector accounts for 43% of the digital economy’s value, contributing RM115.5 billion in revenue. With a forecasted growth rate of more than 20%, this sum could reach RM170 billion by the end of 2020.

Currently, the growth of the Malaysian e-commerce sector depends on a large segment of active mobile users.

In 2019, 91% of internet users in Malaysia searched online for a product or service to buy, and 88% visited an online retail store in their purchasing journey.

The nation’s 2019 #MYCYBERSALE event, which took place between 27 September and 6 October 2019, saw RM3.2 billion worth of products sold – an eightfold increase on 2018’s figures.

Enabling rural digital entrepreneurs to tap the e-commerce sector

With the aim of fostering digital inclusivity, MDEC and the Desa project will partner to connect rural areas to the global e-commerce boom.

Supported by various e-commerce giants, the Desa project enables rural-based entrepreneurs to participate in cross-border supply chains by providing technical support and knowledge in product packaging and e-commerce services.

In addition, a pilot project involving a group of Orang Asli villages in Bentong, Pahang was conducted last year where local produce such as organic rice, ginger and groundnuts were sourced and marketed on the Desaku LazMall Flagship Store in Lazada. The stock sold out within 24 hours.

The DESA project has since scaled to feature 2,198 rural SME entrepreneurs.

Challenges faced by rural communities in the digital economy

While the digital economy promises a lot, poor connectivity remains a challenge on the ground, especially in rural areas.

The urban-rural divide in internet use is significant, 71% of the urban population uses the internet compared to 55% in rural areas.

In states such as Kelantan and Terengganu, only 31% and 36% of business establishments have internet connections.

To provide comprehensive internet coverage especially in remote areas like Sabah and Sarawak, the government is entering private-public partnerships with players in the telecommunications sector to implement its National Fiberisation and Connectivity Plan (NFCP) over the next five years.

As part of NFCP, RM21.6 billion will be deployed to leverage various technologies ranging from 5G to satellite broadband connectivity.

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