Malaysia needs more PPP in 2019. Source: Shutterstock

Malaysia needs more PPP in 2019. Source: Shutterstock

How PPPs can drive Malaysia’s Industry 4.0 agenda

MALAYSIA is working hard to build a fully connected digital economy.

Aside from creating and launching several digital initiatives last year, the country’s national budget for 2019 seems to be an important incremental step in achieving its digital goals.

According to IDC’s analysis, the recent budget focused on the Industry 4.0 blueprint, titled ‘Industry4WRD’, which aims to make Malaysia the prime destination for high-tech industries in the region.

The government plays a central role in the successful implementation of a robust Industry 4.0 strategy by creating clear policies and priorities to support the private sector.

Initiatives like Industry4WRD focus the energy and creativity of the private sector around a common mission to create an era in which AI, robotics, 3D printing, and IoT will take center stage and lead to the digital transformation that Malaysia yearns for.

However, IDC believes that direct support for Public-Private Partnerships (PPP) is necessary to focus Malaysia’s resources and boost the economic growth of the country.

How PPPs can propel Malaysia ahead

A PPP simply suggests that the government works hand-in-hand to build public interest projects with the help and support of private enterprises.

Doing so not only helps accelerate the development and deployment of new-age digital products and services for the public but also ensures public companies get the support they need to fully develop their digital capabilities.

Take BorderPass, for example. A Malaysian SME that started small but was embedded by Malaysia’s airport authority to “automate” and “digitize” the country’s immigration gates.

The partnership not only helped BorderPass develop its capabilities but also allowed Malaysia to keep pace with other airports across Asia in launching automated immigration solutions at its airports.

“As the fourth industrial revolution becomes a key driver of the digital economy, entrepreneurs and SMEs need to assess fundamental aspects of their business, including what products and services they sell, how they deliver them to the market, the new skillsets required, and how they need to organize to support their operations,” said IDC APAC Research Director IoT and Telco Randy Roberts.

“Now is the time to take advantage of the new policies of the government and partner to accelerate new digital businesses,” Roberts added.

IDC has documented examples of successful Public-Private Partnerships in the region, including Indonesia and Singapore, where the combination of public policy and entrepreneurship is driving the digital economy including smart city and mobile commerce services.

In order to ensure the success of the digital initiatives in Malaysia, IDC believes that the government needs to consistently communicate the country’s digital priorities. The private sector should then follow up with investment and development of resources in those areas.

SMEs are really driving Malaysia

Over the past decade, Malaysian enterprises have embraced cloud, mobility, social, big data, and other emerging technologies, which has helped the country’s digital efforts reach critical mass.

Today, the country’s digital economy is still in the early stages, but it’s on the road to creating a robust infrastructure with key core technologies — including artificial intelligence and 3D printing — for better public services and an economic boost.

According to IDC, rapid advances in cloud computing, connected devices, mobile, social media, and data analytics are contributing to the growth of SMEs in Malaysia.

IDC forecasts the size of the big data/analytics investment in Malaysia will be US$670 million in 2019 led by the banking industry, while the spend on IoT will be US$2.2 billion with the largest investment going into manufacturing.

“One of the key infrastructure elements required to support the development and growth of Malaysia’s digital economy is public cloud services.

“IDC forecasts public cloud spending in Malaysia will grow from US$263 million in 2018 to US$635 million in 2022, representing an impressive CAGR of 24 percent over that period.

“Manufacturing leads the Malaysian industry spend on public cloud services which directly supports the Industry 4.0 strategy announced in the 2019 National Budget. This is the perfect example of how Public-Private Partnerships can work together to accelerate the digital economy in Malaysia,” Roberts told Tech Wire Asia.

SMEs constitute 98.5 percent of the total businesses and will spend US$2.7 billion on new technologies in 2019, according to IDC’s 2018 Small and Medium Business Spending Guide. Therefore, it’s important for Malaysia to invest in PPPs to drive it’s technology agenda forward and win at Industry 4.0.