In many respects, Malaysian SMEs have a long way to go before they transform into digital-savvy businesses. Source: Mohd Rasfan / AFP

In many respects, Malaysian SMEs have a long way to go before they transform into digital-savvy businesses. Source: Mohd Rasfan / AFP

Evaluating Malaysia’s plan to climb the digital maturity curve

MALAYSIA isn’t known for it’s “digital capabilities” — it’s often its neighbor Singapore that is regarded as the digital visionary of Southeast Asia. But Malaysia isn’t far behind.

In fact, compared to its neighbors in the region, Malaysia is doing quite well when it comes to creating awareness of emerging technologies and use cases, developing digital capabilities, and adopting and implementing new-age solutions in the public and private sector.

What’s interesting, however, is that the government has plans to further accelerate its climb up the digital maturity curve.

The country recently announced the national policy on Industry 4.0 spanning eleven “enabling” technologies: Additive manufacturing, artificial intelligence, big data analytics, advanced materials, cybersecurity, simulation, cloud computing, augmented reality, the internet of things, autonomous robots, and systems integration.

Obviously, the government’s focus is aligned with the key areas that leading consulting firms like BCG, McKinsey, Gartner, and IDC believe will transform business in the coming months — and this policy makes pursuing development in these areas “more manageable”.

In an exclusive interview with Dr. Ong Kian Ming, Malaysia’s Deputy Minister of International Trade and Industry (MITI), Tech Wire Asia learns how the country aims to help set its businesses up for success.

The government recognizes that the key to success lies in implementing the policies that they’ve formulated and announced — and hence:

  1. The government has launched an Industry 4.0 Readiness Assessment tool to identify specific areas for firms to focus on in order to improve their productivity
  2. MITI will identify industry champions to help set best practices in terms of Industry 4.0 adoption, and
  3. MITI is also setting up multiple briefing sessions with agencies and SMEs in order to understand the challenges that each industry faces and provide a broader and better understanding of the nation’s Industry 4.0 goals.

Transforming manufacturing can transform Malaysia

According to MITI, SMEs make up 97 percent of the manufacturing firms in Malaysia — and yet, has contributed about 22 percent to the country’s GDP in the last five years.

Under Malaysia’s 11th five-year economic development plan, the country aims to help the manufacturing sector remain resilient and achieve a growth rate of 5.1 percent. For this to happen, understanding digital and adopting industry 4.0 is critical.

Most of the country’s SMEs do not currently have a strong global presence, however, MITI believes that many have the potential to be global exporters in the future, when they climb the digital maturity curve.

Together with other ongoing initiatives like the eCommerce Strategic Roadmap or the Digital FreeTrade Zone (DFTZ), the government is trying to provide the right platform for SMEs to reinvent themselves and adopt the latest technologies to be globally competitive.

And MITI thinks the country’s SMEs and the entire manufacturing sector as a whole, is ready for Industry 4.0 — based on a recent study by the World Economic Forum (WEF) and AT Kearney.

Titled Readiness for the Future of Production Report 2018, the study is a global assessment of 100 countries and positions Malaysia in the “Leader” quadrant.

It is also interesting to note that Malaysia and China are the only two countries in the “Leader” quadrant, who are not high-income countries, MITI’s National Industry 4.0 Policy Framework observed.

The WEF and AT Kearney report not only underscores Malaysia’s strong current manufacturing position and its readiness for Industry 4.0 but also highlights the economic value at stake if Malaysia is not able to transform itself in an accelerated manner.

MITI recognizes that the gap to global leaders like Japan, Korea, Germany, Switzerland, and China is still significant and that other countries in the region such as India, Indonesia, Singapore, and Thailand have aggressive plans and are moving fast in their implementation — but Malaysia is determined to keep pace and surge ahead.

Only time can tell if Malaysia can get ahead of its competitors in the region in the race to digital maturity, but there’s certainly a lot of regulatory thought and effort in the right direction — and SMEs and local businesses seem to be beginning to respond to the push for digital.