Understanding Malaysia’s Digital Future: Thoughts from World Bank’s Siddhartha Raja

Malaysia, like other nations around the world, is facing the challenge of transforming to a digital future. The recent World Bank report Malaysia's Digital Economy: A New Driver for Development explores what the future of digital transformation might look like. But how can this transformation best be delivered in partnership, ensuring stakeholders across private and public institutions work together to enhance the future opportunity for a more connected Malaysia?

GE Reports Malaysia had the opportunity to speak to Siddhartha Raja, World Bank Senior Specialist for Technology and Jobs, who is also one of the authors of the recent report. Siddhartha shares his thoughts and delves into some of the exciting opportunities that await us.[Attachment]

The Building Blocks of Malaysia's Digital Future - Siddhartha Raja

The development of any digital economy relies on a few building blocks: widely available, affordable, and high-quality broadband connectivity that connects devices, homes, businesses, the state, and people to each other; a robust talent pool that can exploit digital technologies to the fullest; and an enabling policy environment that promotes innovation and competitiveness. Malaysia does well on some of these building blocks but can do more to truly position itself to take the next big leap into the digital future.

Our report discusses some of these aspects in detail and especially notes the role that the private sector will play across the board¹. But the private sector cannot do it alone: while there is an emerging, shared vision of the digital future and its rewards, there are risks that might constrain investment that has a purely commercial motive. And there are specific bottlenecks that would need policy, regulatory, or institutional reforms.

For example, internet companies may be willing to invest in expanding broadband networks, but the complexity of the permitting process might delay or even divert those investments; simplifying these processes across levels of government is critical. Similarly, efforts to grow entrepreneurship and innovation are scattered across different programs hosted by different agencies; a streamlined, coordinated approach will make it easier-and more efficient-for the government and beneficiaries.

'Partnerships between the public and private sector will be essential.'

Thus, partnerships between the public and private sector will be essential: to diagnose, design, and deploy programs that transform Malaysia into a leading digital economy. These partnerships are often thought of in financial or risk-sharing terms, such as PPPs that many countries use to expand access to broadband connectivity in rural or commercially-unviable areas². But the idea also extends to a robust dialogue, when public and private sector stakeholders (with civil society, academia) talk to each other to identify where bottlenecks to growth exist and arrive at solutions to fix them.

In Malaysia, such an approach can help to prevent today's digital divides becoming deeper. A clear vision to roll out cheaper, faster broadband is a step in this direction, but addressing the policy failures and market failures that hold back investment through reforms that open markets further and promote competition would help. So too would PPPs that catalyse private investment through risk-sharing, either reducing the costs of connecting or improving the demand among users. We discuss more on this in our report, in Chapter 3.

'Digital development is a topic where the mix of rapid technological change, market evolution, and global forces means that challenges and solutions are constantly shifting.'

Indeed, digital development is a topic where the mix of rapid technological change, market evolution, and global forces means that challenges and solutions are constantly shifting. This is a recipe for uncertainty and for emerging challenges that might evade older solutions. For example, even as Malaysia's mobile networks are deploying fourth-generation (4G) networks, technology companies are already positioning 5G as the next stage, enabling high-speed broadband, and innovations such as the Internet-of-Things (IoT).

How can on-going investments in 4G be balanced with the new interest in 5G, to avoid mistiming the transition? What regulatory policies can ensure the introduction of 5G in Malaysia, especially as these networks will need new radio frequencies and possibly different infrastructure? And what public policies can spur demand for these networks-projected to deliver extremely high-speed broadband or support innovations like IoT-where services might still seem futuristic?

Or consider how online social media rapidly connected billions of people in the past decade, has gone mobile with the smartphone, begun to create massive amounts of data, and raised critical questions about privacy (among others). It would be unwise to assume that one group of stakeholders would be able to address these questions alone! A constant and trusting conversation-fostered through a partnership among stakeholders-would be essential.

One area where such a constant partnership will be critical is the development of human capital. Malaysia has some difficulty in developing its highly-skilled technical talent and has a risk of 'brain drain.' Chapter 4 in our report discusses how human capital is the major constraint faced in the digital economy, forcing many digital entrepreneurs to import talent. Deeper partnerships between the public sector-especially in the education sector-and the private sector can help to address some of this.

'Ties with industry can help the government to improve the relevance, quality, and attractiveness of STEM and TVET programs.'

One area is to identify short-to-medium-term skills needs and to ensure that graduates from secondary and tertiary education are workplace-ready, and that the existing workforce can improve their skills. Ties with industry can help the government to improve the relevance, quality, and attractiveness of STEM and TVET programs, while the government can ensure that primary education imparts the foundational skills that will prepare tomorrow's workforce for the future of work, in a digital and possibly more unpredictable labour market.

This unpredictability is embedded in the movement now to 'Industry 4.0'. The mix of technologies and processes included will need high-speed internet, a deep talent pool with advanced skills, infrastructure improvements, and a proactive policy stance to encourage such innovation. The effects-in terms of reshaped value chains, evolving demand for different skills, and innovative products and services-are still unpredictable. But Malaysia, like other countries, can ensure that workers of today and the future have the foundational skills to then adapt, that businesses have the appropriate enabling environment to embrace innovate, and infrastructure is improved to support those transformations. While there might be more specific tactical steps to take, these broad themes will remain relevant into the future.

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Taking these steps-expanding access to affordable, high-speed broadband, investing in human capital development for the future of work, and defining public policies for innovation-will unlock significant benefits for Malaysia over the coming decade, and beyond. Every sector and every occupation are being digitized, to various extents for sure, but leading to outcomes that are difficult to predict, but exciting to consider.

'Malaysia has many of the building blocks to set the stage for its digital future.'

Connecting the world to electricity has transformed homes, factories, and our social lives. It changed the layout of our cities and laid the foundations for the digital revolution. The proliferation of digital tools and technologies will similarly change our world, shrinking it and connecting more people to information and innovation, while also introducing new risks.

As a country that took the lead in the microelectronics revolution, has invested in new technologies such as e-commerce and Industry 4.0, Malaysia has many of the building blocks to set the stage for its digital future. There is now an opportunity to build a new momentum around a new, shared vision of that future with stakeholders-from the public and private sectors, and beyond -playing a role in its definition and implementation.

CEO of GE Malaysia Datuk Mark Rozario shares his insights on the digital economy in Malaysia.

Click here to view the video courtesy of World Bank Malaysia.

For more information on World Bank's 'Malaysia's Digital Economy: A New Driver of Development' report, visit @WorldBankMalaysia Facebook Page and World Bank Malaysia's Official Website.