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Budget 2020: Malaysia gets it (mostly) about the Digital Economy

  • 5G Ecosystem Development Grant of RM50m won’t move needle
  • Slow adoption of productivity tools hurt businesses, targeted grant aims to help

The Malaysian government clearly gets it that the nation needs to prepare well, and prepare fast, in order to be a winner in the digital economy, that is already upon us. It has made “boosting economic growth in the New Economy and Digital Era” as the first pillar of its 2020 Budget that was introduced yesterday by Lim Guan Eng, Malaysia’s Minister of Finance.

With the Digital Economy being all about workers upskilling themselves to be ready for future jobs, the second pillar of investing in talent is especially crucial. Here I really like the TVET focus carved out. For example, the strengthening of Technical and Vocational Education and Training (TVET) with an allocation of RM5.9 billion to ensure the pipeline of skilled and semi-skilled workers will remain robust.

At the same time, there is an allocation of RM11 million, (a relatively small amount) to the Ministry of Energy, Science, Technology, Environment and Climate Change (MESTECC) to encourage the uptake of STEM education.

[RM1 = US$0.24]

Still, if you were to look at some of the specific incentives introduced to support the Digital Economy for 2020, your jaw may drop at the small amounts given to support this acceleration to becoming a digital powerhouse nation and some of the incentives may induce bouts of head scratching as well as to questioning the logic behind them.

To the jaw dropping example, we have the 5G Ecosystem Development Grant worth RM50 million that the government hopes will “significantly enhance Malaysia’s economic competitiveness” through seeding technological developments by Malaysian companies to ride the global 5G wave. Lim’s specific remark here was, “The government wants Malaysians to be prepared for the coming 5G era.”

I’m sorry but RM50 million won’t move the needle to achieve the great things hoped for here. Although it is not mentioned where the money will come from, I suspect it will be contributed by the Malaysian Communications and Multimedia Commission or MCMC.

With Finance Minister Lim always talking about stretching public funds for maximum impact, the RM50 million should be matched by the same amount from the telco hardware and software players chipping in together. I am talking about the likes of Nokia, Ericsson, ZTE, Huawei, even Samsung, some of the Japanese network players, the Softbank owned British chip designer ARM Holdings and of course the American chip makers like Intel, Broadcom, Texas Instruments etc. Whoever has an interest in wanting to do business in Malaysia’s 5G market.

A RM100 million a year grant for at least four years? Now we’re talking and giving our tech entrepreneurs and companies a chance to think bigger than just fighting over a small RM50 million sum.

And if the government grant is not coming from the MCMC, and I would be surprised if it is not, then our telco operators must contribute as well to the matching amount.

Of course, if the Axiata Group-Telenor merger had gone ahead, the global innovation centre they would have established in KL would have become the fertile ground from which possible Malaysian tech innovators in 5G could have arisen.

By the way, this standalone RM50 million grant is surprising when considering the RM25 million matching grant announced to spur pilot projects around applications such as drones, autonomous driving, blockchain and based on fibre and 5G. Why the different approach for much tougher technology development challenge?

Now for the head scratching, logic defying example, we have the RM70 million allocated to build 14 one-stop Digital Enhancement Centres in all states to facilitate access to financing and capacity-building for businesses, especially small and medium-sized enterprises (SMEs).

The funding will be allocated to Malaysia Digital Economy Corporation (MDEC) to set up these centres. Here come the head scratching moment. Lim says that the initiative is an extension of the 100 Go Digital programme.

Now if you know what this programme is, then you need to take over running DNA from me. Because in my seven years of running DNA, we have not carried a single article on this programme. Neither can I find anything about it online as well, though Singapore has something called SME Go Digital.

[Ed note: MDEC has since pointed out to me that this is a very new program

That mystery aside, and taking the word “build”, literally, it defies logic that we need to actually build 14 centres, one in each state, likely in the capital as that is where the majority of SMEs are located.

It would be a total waste of money to do so. I say just use an existing government facility and channel the full RM70 million to the purpose of capacity building for our SMEs. Actually, I wouldn’t be surprised if the government came out to clarify that this will not entail actually building 14 facilities.

Lim also spoke of establishing, not building – though it could mean the same thing – three new digital libraries in Kedah, Perak and Johor to spur “knowledge-sharing and education through digital-enabled content.”

Again, I am sure, Minister of Communication and Multimedia, Gobind Singh Deo, will have enough resources on the ground in each of these states, to offer one of his ministry’s facilities for this purpose. Waste not a cent on any pointless construction here as that will not help the government achieve its goal of pushing the nation towards digital transformation.

These two particular grants aside, there is a lot I like about the various digital initiatives announced.

For example the RM20 million for MDEC to further grow digital content champions in the e-Games, animation and digital arts space. This support no doubt serves as validation to the impressive work being done by the outstanding Hasnul Hadi Shamsudin who leads MDEC’s creative content efforts.




Dear Valued Entrepreneurs, Partners & Start-ups, The Malaysian Government has announced a Movement Control Order (MCO) from the 13th January – 26th January 2021 in 6 states including Kuala Lumpur by the Prime Minister, Tan Sri Muhyiddin Yassin on the 11th January 2021.

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