Asia is the powerhouse of the global economy, from enterprise to consumer. 4.5 billion people and some of the most innovative enterprises in the world are testament to the innovation and potential. Malaysia has been a country that for some has slipped under the radar in the overall growth of Asia.
Economically it remains solid. Since the GFC it has annual GDP growth has been consistently around 5%. Average incomes for consumers are growing, reflected by strong retail sales growth. In spite of these metrics, Malaysia faces a number of challenges. It’s old frenemy Singapore takes so much of the investment as the city-state wrings every piece of economic, political and innovation from the magic of its location, social makeup and benevolent dictatorship. It also suffers from a level of corruption that is unheard of in Singapore. According to the Transparency Index benchmark, it is ranked in the mid 50’s well behind Singapore and Hong Kong amongst others.
More broadly in ASEAN, with 31 million people, it does not have the population and thereby, consumers and related investment that is enjoyed by Indonesia, Vietnam, the Philippines and Thailand. There is also an over-reliance on Petronas (state oil provider), that represents almost 30% of GDP, and an economy, particularly in Kuala Lumpur that commonly measures success in the number of skyscrapers it can build.
As a veteran of the commercial property market, the skyline is impressive but typifying Malaysia, cannot meet the likes of Shanghai, Dubai, Singapore or of course, Hong Kong. The economy is dominated by the Klang Valley Metropolis, with limited exposure to the rest of the country politically, or economically (To be fair, capital city primacy is an issue faced globally, Thailand suffers from it, but also France and the UK have particularly dominant political, social and economic capitals) It seems to fall between a few of these cracks to be in a middle economy limbo.
Subsequently, it struggles for innovation. The government has made long-term investments in Cyberjaya, but transformational digital innovation is lacking throughout the economy. When one looks at the banking, retail and telco sector, there is very few formats and dynamic customer experiences that are developed by Malaysian based enterprises. It is “follow the leader” from the likes of Singapore, Dubai etc. There is no Malaysian stamp. Education needs to improve as well. Education offshore needs to be balanced with growing a skillset locally that wants to remain, and one that wants to return to work locally in their home country rather than Singapore, Hong Kong, Australia or other markets.
The agencies charged with creating an innovative and digital leading Malaysia are not doing enough to create a great leap forward for the economy. It is all words and talk, but not enough differentiation to enable innovation to be homegrown, rather than imported. It must turn this around, take leadership from diverse countries such as Singapore, China, the UAE, Estonia and Korea and find a way to lead with digital outcomes and innovation that is for the Malaysian experience.
Malaysia is a country that can fall in the middle of the pack, whether it is economically, socially or population wise. It needs to drive digital and innovation outcomes within the local market to avoid this fate for the Digital economy of the future. It needs to develop local solutions, diversify the economy, remove corruption and encourage educated professionals to remain or return in the country. It needs to do this whilst at the same time decentralise the economy to ensure that solutions meet the needs of the entire country, not just Kuala Lumpur. This is a considerable challenge and requires the public and private sector to have more focus on real outcomes rather than just talkfests.
If you require further information, please contact Phil Hassey, CEO of capioIT. capioIT is an advisory firm focused on helping organisations to understand emerging technology as the world becomes Digital. Phil may be contacted easily in the digital and real world.