Helping Malaysia’s Economy Recover From COVID-19 Through Digitalisation 

A full digital transformation is seen as the way forward to help the country’s economy surge forward from the effects of the pandemic.

June 2021 , by Alexandra Santiago

After a rough year due to the COVID-19 pandemic, Malaysia’s economy is showing positive signs of recovery. According to the June 2021 issue of Forbes Asia, exports grew by 31% in March, the largest year-on-year expansion in the last four years. The country’s GDP, already outpacing its SEA neighbors, is expected to grow between 6% to 7.5% in 2021.  

But with other countries in the region also ramping up their recovery strategies, Forbes stipulates that “full-throated digital transformation” is crucial in ensuring Malaysia’s continued economic growth, as other Southeast Asian countries vie to compete for its industrial dominance.  

Already the country has begun its digital transformation, but urgently needs the support of its business stakeholders to accelerate growth. According to the white paper Accelerating Your Digital Transformation: Are Malaysian Companies Geared to Digitalise? by YCP Solidiance, addressing the existing barriers to digitalisation—in both larger companies and SMEs—will be crucial in helping the country overcome the losses of the pandemic and surge forward to enjoy higher GDP growth. 

The Current Barriers to Digitalisation 
As of 2018, Malaysian companies have been divided into 98.5% SMEs (small to medium enterprises) and 1.5% larger companies. While SMEs make up the bulk of the country’s business establishments, it is the larger companies who drive the country’s economy, contributing 61.7% towards the GDP in 2018. 

However, SMEs make up the foundation of the country’s GDP growth rate at 6.2% in 2018. It is vital for SMEs to lead the way when it comes to digital transformation in order to urge larger companies, who are wary of buying-in to risky digital solutions, to adopt these innovative solutions. 

Overall, both types of companies suffer from similar barriers when it comes to digitalisation:  

  1. Issues with digital competency, at 62% for SMEs and 38% for large companies 
  2. Difficulty in securing organizational buy-in, at 48% for SMEs and 52% for large companies 
  3. The high cost of adopting this new technology, 55% for SMEs and 45% for large companies 
  4. Lack of dedicated digital talent, 51% for SMEs and 49% for large companies 

Initiatives for Digitalisation 
To tackle these issues, various measures have been introduced by key government agencies: the Ministry of International Trade and Industry (MTI), the Malaysian Investment Development Authority (MIDA), and the Malaysian Digital Economy Corporation (MDEC). Enhancing digital infrastructure, as well as digital competency programs to help the workforce upskill their digital literacy, are at the forefront of several financial grants for business establishments: 

For Small to Medium Enterprises 

For Large Companies 

Ensuring Business Recovery 
The impact of COVID-19 has further highlighted the importance of digital transformation to secure a steady progression into recovery. Knowing the different barriers for digitalisation, as well as the various initiatives available for both SMEs and large companies to recover, will be the first step into crafting a long-term digital strategy that will accelerate business recovery and propel Malaysia’s economy further. 

To learn more about how Malaysia’s businesses can incorporate digital strategy into their business plans, read and download our full report here

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