KUALA LUMPUR: With the digital economy contributing to some 19.1 per cent of gross domestic product (GDP) in 2019, it is evident that Malaysia is well on its way to realising the aspiration of integrating the 'digital' into the national economy.
This requires a pro-active adaptive policy stance at the federal level to help smoothen business transactions across industries and borders and, at the same time, accelerate programmatic efforts to further expand digital inclusion to ensure that larger swathes of Malaysian society can benefit from the digital economy.
IBM Malaysia Sdn Bhd managing director Catherine Lian believes that Malaysia must continue to play a leading role at the regional level in developing and benefiting from the digital trade 'rules of the road' that will govern the post-Covid global economy and the next generation of trade agreements.
"Malaysia has always been a trading nation, and in a world being reshaped by data, Malaysia has much to gain from being a leader in developing the provisions that will govern digital trade," said Catherine in a statement.
"The government has done a commendable job in prioritising the digital economy as evidenced in the recent budget 2021 announcement, and we look forward to government playing a leading role to further stimulate it with an open approach to digital trade policies," she said.
According to the Department of Statistics, the information and communication technology (ICT) sector expanded to RM289.2 billion in 2019 with a growth of 7.1 per cent to touch 19.1 per cent contribution to the nation's GDP.
Its chief statistician Datuk Sri Dr Mohd Uzir Mahidin explained that the major contributor was ICT services at 43.5 per cent, followed by ICT manufacturing at 33.7 per cent, ICT trade standing at 15.4 per cent and content and media at 7.4 per cent.
Catherine said long before the pandemic struck, increased internet access and the ability of data to flow across borders was driving the widespread transformation of how we live, work and trade globally.
"Cross-border data flows, for example, already made a bigger contribution to global GDP than the trade in manufactured goods," she said, adding that the pandemic has only accelerated this trend.
"This year, demand for broadband communication services in Malaysia and throughout the year has increased at a record pace," she said.
Data from the Malaysia Internet Exchange (MyIX) certainly confirms this increase, with the exchange having registered peak internet traffic of 670Gps in September 2020, even higher than the 588Gbps posted in April after the Movement Control Order (MCO) was introduced.
MyIX chairman Chiew Kok Hin said connectivity is extremely crucial in elevating national competitiveness as ICT continues to transform value creation process while fostering local innovation.
"The brick and mortar economy was extremely reliant on cheap labour to create value. Within today's digital economy, technology has disrupted the old equilibrium and energised innovation, entrepreneurship and new business models," said Chiew.
"Hence, numerous industries have capitalised on latest technologies to transform their operations and value creation processes; from product development to production, supply to sales, and service," he said.
Catherine explained that with 59 per cent of the world's population estimated to now be online, from just 20 per cent a decade ago, the free flow of data is now the lifeblood of the global economy.
"Paradoxically, even as the internet and cross border data flows have become more essential, there are increasing calls for 'data sovereignty' to ring-fence and cut off national data from the global marketplace," said Catherine.
"Legitimate concerns by governments and individuals about the safety, security, and use of data, underscores the urgent need to engender trust and confidence in the digital economy."
In parallel to the global and regional trade negotiations, there have been renewed global efforts to enhance cybersecurity, privacy, and data protection cooperation between governments and the private sector, shown in the Data Free Flows with Trust Initiative launched by former Japanese Prime Minister Shinzo Abe at the 2019 G-20 Summit.
Catherine, thus, suggested a four-pronged approach to attain a 'healthy balance' between safeguarding innovation and engendering trust based on these key principles:
Enable the free flow of data: As global digital integration accelerates, companies of all sizes must be able to move data securely across borders to maintain operations, reach customers, and compete. Trade agreements must include specific provisions protecting a) the movement of data across borders and b) the ability of companies to operate without requiring them to use local infrastructure or build expensive and redundant data centres.
rotect source code and algorithms: As data-driven solutions, such as Artificial Intelligence (AI), become more ubiquitous, trade agreements must prohibit parties from requiring companies to hand over source code and algorithms as a condition for accessing the market.
Ensure technology choice and encouraging open digital architectures: Companies of all sizes should be able to choose and use the technology that works best for them, based on their specific needs. The use of closed architectures prevents interoperability and diminishes competition, limiting the ability of companies to benefit from the most cost-effective, secure, and innovative technologies. Trade agreements should protect technology choice and encourage the widespread use of open architectures to drive innovation in key technologies, including cloud computing, AI and 5G telecommunications.
Enhance Privacy and Cybersecurity: Trade agreements should require parties to adopt legal frameworks to protect personal information and promote industry best practice and international standards to strengthen privacy and data protection. In parallel, trade agreements should encourage parties to strengthen cybersecurity capabilities through international cooperation and employing risk-based approaches to cybersecurity regulation.
"Malaysia's ability to drive economic growth, job creation and innovation will depend on greater integration with a digitising global economy," said Catherine.
It is imperative that Malaysia leads the way in shaping market-leading principles in the digital trade chapters of free trade agreements to solidify that nation's competitiveness in the global market for trade and services.
She added that IBM is committed to working with local government agencies to help them tap into IBM's vast range of technologies so that they can improve productivity and operational efficiencies, particularly in their transition to hybrid cloud operational models.
This is because a hybrid cloud platform approach is said to deliver 2.5 times more value than a traditional, public cloud-only approach.
"At our end, we have also established our Centre of Digital Excellence as the platform to help organisations embark on their digital transformation journeys towards hybrid cloud," she said.
"Organisations are now able to learn and co-create solutions on AI, cloud, advanced analytics, blockchain and security with IBM experts, tools and platforms," she concluded.