MALAYSIAN TECHNOLOGY STRATEGIC OUTLOOK 2019/2020

MALAYSIAN TECHNOLOGY STRATEGIC OUTLOOK 2019/2020

INTEGRATION OF HIGH TECHNOLOGY

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Malaysian Technology Strategic Outlook 2019/2020 Intergration of High Technology

PUBLISHED BY Malaysian Industry-Government Group for High Technology (320059-P) MIGHT Partnership Hub Jalan Impact

63000 Cyberjaya Selangor, Malaysia.

www.might.org.my

© MALAYSIAN INDUSTRY-GOVERNMENT GROUP FOR HIGH TECHNOLOGY (MIGHT), 2020

ISSN No. : 2773-5133 e-ISSN No. : 2773-5168

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Malaysian Technology Strategic Outlook 2019/2020 Intergration of High Technology

MALAYSIAN TECHNOLOGY STRATEGIC OUTLOOK

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Malaysian Technology Strategic Outlook 2019/2020 Intergration of High Technology

TABLE OF CONTENTS

i ii

ACKNOWLEDGEMENT QUOTES FROM YAB PRIME MINISTER OF MALAYSIA

iv vi viii ix

QUOTES FROM YB MINISTER, MINISTRY OF SCIENCE, TECHNOLOGY AND INNOVATION (MOSTI) MESSAGES FROM THE JOINT CHAIRS MIGHT AND PRESIDENT & CHIEF EXECUTIVE OFFICER, MIGHT EXECUTIVE SUMMARY ABOUT MIGHT

A. THE INSIGHT High Technology Industries Overview

C. TECHNOLOGY IN CRISIS (2020 AND BEYOND) Introduction Digital Technology • Artificial Intelligence • Bioinformatics • Blockchain

02 06 10 17 20 25 31

61

MIGHT FIRST™ Matrix • Funding & Finance • Infrastructure • Regulation & Governance • Skills & Talents • Technology

63 66 73

Food & Health Security • Modern Agriculture Transportation & Logistics • Autonomous Vehicles

79

B. HIGHLIGHTS IN TECHNOLOGY APPLICATIONS (2018-2019) Mobility • Aerodyne Group • Asian Rail Academy • CTRM Aero Composites Renewable Energy • UNITEN R&D Sdn Bhd • Institute of Energy Infrastructure • PETRONAS

84 89 92

• Biofuel • Drones Future of Work

42 43 45 47 50 52 55 57

101 107

• Collaborative Robotics • Work from Home (WFH)

D. MOVING FORWARD Moving Forward References

117 120

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Malaysian Technology Strategic Outlook 2019/2020 Intergration of High Technology

ACKNOWLEDGEMENT

We would like to acknowledge the contribution and assistance of many individuals and organizations involved in this project. More spe- cifically, to the authors, reviewers and editors that took part in the completion of the Malaysian Strategic Technology Outlook 2019/2020 document. Without their support, this publication would not have become a reality. On a personal basis, we would like to thank each and every one of the organizations for their contributions. Our sincere gratitude and thanks go to the authors who contributed their time and expertise to this document. We are immensely grateful. Second, we wish to acknowledge the valuable contributions of the reviewers and editors in ensuring the quality, coherence, and content presentation of the document. Last but not least, many thanks go to the team for their effort and commitment to deliver the publication.

External Contribution Aerodyne Aerospace Malaysia Innovation Centre (AMIC) Ahmad Fairuz Mohamed Noor, National Cyber Security Agency (NACSA) Asian Rail Academy Composites Technology & Research Malaysia (CTRM) Dr. Aziz Hassan Intellectual Property Corporation of Malaysia (MyIPO) PETRONAS Prof. Dr Mohamad Osman Prof. Dr. Norita Md Norwawi, Universiti Sains Islam Malaysia (USIM) Tenaga Nasional Berhad (TNB) Universiti Tenaga Nasional (UNITEN)

Consultant Copyeditor Suhaimi Mohamed Ariffin

Editorial Team Mohd Nasir Md Ibrahim Dr. Aini Abdullah Nik Sufini Nik Mohamed Nor Syahira Sahari Nur Suraya Mustafar Raha Halip Rosniwati Hasan Safiyyah Mohd Salleh Ts. Farah Abu Bakar Ts. Izzatul Huda Mohd Jalil

And last, but not least, special thanks to the members of our Management for their thoughtful encouragement and close supervision.

Internal Contribution Ir Qaharuddin Abdullah Mahalil Amin Abdul Malek Mastura Ishak Mohd Hasan Mohd Saaid Natrah Mohd Emran Robert Tai Chiang Vun Suzie Ismail

Advisor Datuk Dr. Mohd Yusoff Sulaiman

Project Director Mohd Zakwan Mohd Zabidi

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Malaysian Technology Strategic Outlook 2019/2020 Intergration of High Technology

QUOTES FROM THE PRIME MINISTER OF MALAYSIA

TAN SRI DATO’ HAJI MUHYIDDIN YASSIN

The only way for Malaysia to become a high-income nation is to become a high- tech country. History had shown that the economic and military strengths of a country depend on its mastery of technology.

The pandemic has changed our way of lives. However, in the new norm, there are opportunities for the government to look into certain sectors that need to be enhanced to develop the nation and help the rakyat.

I believe by looking into some current regulations and providing some leeway will enable the testing and development of new technologies.

Launching of the National Technology and Innovation Sandbox (NTIS)

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Malaysian Technology Strategic Outlook 2019/2020 Intergration of High Technology

Future trends indicate that technology-related fields will become highly sought professions . The use of the latest technologies will turn this 3D image into one that is prestigious because the technical profession requires a deep degree of knowledge and expertise. The government will strive to strengthen the quality of STEM (Science, Technology, Engineering and Mathematics) and TVET (Technical and Vocational Education and Training) graduates in its efforts to develop the technical profession. To date, Malaysia has a total of 203,966 registered members in various technical skills and professions, clear proof of the critical roles they play in the country’s development.

” ”

National Technical Profession Day (HPTN) 2020

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Malaysian Technology Strategic Outlook 2019/2020 Intergration of High Technology

QUOTES FROM YB MINISTER MINISTRY OF SCIENCE, TECHNOLOGY AND INNOVATION (MOSTI) YB KHAIRY JAMALUDDIN

“ “

By setting a target of becoming a high- technology country, the efforts would be able to reduce dependence on foreign technology and labour. An integrated approach combining the two major sectors of the country, namely 'STI' and 'Economy' as one sector to ensure that all programmes are implemented to complement each other and have a high impact, thus making STI as an enabler in addressing national issues and challenges.

In the efforts to make Malaysia a high- technology country with a GERD (Gross Domestic Expenditure on Research and Development) of 3.5 per cent by 2030, 10 STIE leap programmes have been formulated.

Launching of DSTIN & 10-10 Framework of MySTIE

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Malaysian Technology Strategic Outlook 2019/2020 Intergration of High Technology

“ “

The government has the responsibility to invest in R&D so those that are successful later could be commercialised, with private sectors investing in them. R&D funds under the Malaysia Grand Challenge (MGC) initiative was in support of Malaysia's High-Tech Nation Council in charting the current and future technology development in the country that would cover issues like health, environment, food, access to technology and security.

Malaysia Grand Challenge (MGC) launching ceremony

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TAN SRI DATUK DR. IR. AHMAD TAJUDDIN ALI, FASC JOINT CHAIR (INDUSTRY) | MIGHT MESSAGES FROM THE JOINT CHAIRS OF MIGHT AND PRESIDENT & CHIEF EXECUTIVE OFFICER, MIGHT DATUK IR. (DR.) ABDUL RAHIM HJ. HASHIM JOINT CHAIR (GOVERNMENT) | MIGHT

DATUK DR. MOHD YUSOFF SULAIMAN PRESIDENT & CHIEF EXECUTIVE OFFICER | MIGHT

As a driving force in Malaysia’s high-technology ecosystem, MIGHT serves the nation by playing a pivotal role in nurturing, expanding and building high-technology capacity through public-private partnerships. Given its mandate to advance the nation’s high-technology capacity, there is increasingly a steady stream of national and global exchange of ideas and innovation which helps localise R&D solutions, avail business opportunities and ultimately enhance the nation’s competitiveness. To maximise economic growth, the nation needs to accelerate the adoption of new technologies in tandem with the dynamic environment in which we operate. Malaysia’s performance in high-technology export is encouraging. In 2018, the nation had a total high-technology merchandise export value of USD90.36 billion, and a year-on-year growth of 22.0%. On the global front, Malaysia contributed 2.90% of the world’s total high-technology merchandise exports in 2017, up by 0.27% from 2016. There is aneed for businesses toharness scientific and industrial capabilities through technology-enabled transformations to spur growth in the Malaysian economy. To this end, a stable and coherent framework for technology-enabled transformation is critical. The combined impact of mapping future technology transformation growth prospects complemented by requisite strategies will see Malaysia well positioned to benefit from new sources of economic growth. Also critical is sustained growth which necessitates an ambitious innovation and growth strategy fueled by new technologies and tools with ideas propagated by the public-private partnership. Given the paramount role that technology and innovation plays in the progress of a nation, MIGHT is once again proud to showcase our second edition of the Malaysian Technology Strategic Outlook 2019/2020 which offers a broad perspective of high-technology industries in Malaysia and features our very own MIGHT FIRST™ analysis. Through MIGHT FIRST™ foresighting methodologies are employed to anticipate possible futures and steer preparedness in seizing opportunities and mitigating possible risks; a forward look that is both strategic and holistic in anticipating the future. With COVID-19 spreading across the globe, disrupting health, businesses and economies in an unprecedented way, existing business models may no longer be viable. Although the impact of COVID-19will linger for years tocome, thepaceof technology

innovation should not be compromised. On the contrary, the Government, industries and society should continue to swiftly respond to this disruption to minimise impact, recover and emerge stronger. This demands reinvigoration and resilience. Malaysia aspires to be among the top 30 innovative nations in the world by 2025. MIGHT’s pivotal role in spearheading the quadruple actors and driving transformational changes across industries, government ecosystems, academia and the civil society will continue to strengthen national innovation and promote sustainable and inclusive growth in Malaysia. We trust that the insights gained from this publication will provide the impetus for the development of requisite strategies to leapfrog other manufacturing countries; this by adopting cutting-edge approaches and offering new opportunities for local niche manufacturing. On behalf of MIGHT and the Editorial Team of the Malaysian Technology Strategic Outlook 2.0, we thank all members and partners of MIGHT for their contribution towards making this publication a success.

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Malaysian Technology Strategic Outlook 2019/2020 Intergration of High Technology

EXECUTIVE SUMMARY

In this new edition, our theme revolves around the COVID-19 pandemic where we explore impacts to industries and our country’s socioeconomic. Our focus however is not at the expense of ignoring other global and local events and trends, but rather prioritising on the traditional economic leading indicators in the context of COVID-19 to equip the readers with information to identify tipping points presented about by this pandemic and, how to deal with it in the post crisis. As widely acknowledged, COVID-19 has caused socioeconomic havoc and chaos across the globe. One positive way of looking at the current troubles is the world should hit the reset button in the post crisis. The ‘new normal’ seems like the favourite catch phrase around the globe. In the absence of vaccines, to stop corona virus, nations need to radically change almost everything they do: how work is done, exercise, socialise, shop, manage our health, educate our kids, take care of family members. A thinking nation would take this opportunity (yes, it is true what they say about what the threat does) and run with it. We explore insights from our team and industry experts as to how the Government and industry could prepare and equip themselves when the economy and social life return to normal (new normal), post pandemic. Digging deep into the performance of high technology locally and globally; we focused on how the pandemic impacted the local economy consisting of various industries and societies at large. As recession is underway and before it becomes severe, Malaysia like other economically advanced countries adopted expansionary fiscal policy by putting stimulus packages in place to assist the local businesses and putting more money directly into the pockets of consumers. Several government driven initiatives and programmes are introduced to keep our economic engine humming such as assisting micro-SMEs and limiting retrenchment. To date, the Government has announced USD59.6 billion to fight the COVID-19 virus. We recognise that the pandemic COVID-19 is a low probability, high impact event that comes around maybe once in a lifetime. The last time the world had witnessed an economic downturn of this magnitude was the Great Depression in 1929 in the U.S.

It took a decade for the U.S. to recover, but we predict the Malaysian economy will take a lot less time than that to recover due to the built-in resiliency other than economic stimulus and policies such as effective public healthcare management and infrastructure and, obedience citizens. We outline suggestions on how to deal with this sort of rare and black swan event moving forward from a policy perspective. For decades, public policies have been designed to deal with such current and post events yet apparently not enough. Several times over the last fewdecades, pandemic and endemic have caused either mild or severe socioeconomic disruptions. We ask pertinent questions about our understanding, approaches to policy making and its implementation. We suggest a technique to formulate policies, rules, and regulations, as far as the government is concerned. The technique is to detect fragility in all aspects of the socioeconomic in Malaysia. This is important because fragility comes directly from nonlinearity and convexity effects, and that convexity is measurable. The technique, in a position to detect acceleration of harm, applies to anything that entails making decisions under uncertainty, and risk management. We close by proposing the National Interest Guiding Principles in formulating and reformulating viable policies to motivate industry players to create positive economic impact to stakeholders. We hope lessons learned from crisis such as COVID-19 help us navigate to a better Malaysia.

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ABOUT MIGHT

WHO WE ARE TheMalaysian Industry-GovernmentGroupforHighTechnology (MIGHT), is a not-for-profit company limited by guarantee under the purview of the Prime Minister’s Department. As at 1 April 2020, MIGHT came under the monitoring and supervision of The Ministry of Science, Technology and Innovation (MOSTI). MIGHT plays a key role in developing Malaysia’s high technology industry through its role as a think-tank, private- public consensus building and business nurturing platform. Established in 1993, MIGHT has carried out its mandates and roles for more than 25 years through the development of various national strategic initiatives

MISSION To serve the nation in advancing competency in high technology through partnership towards sustainable development OBJECTIVES • Partnering to delivering impact • Nurturing techno-business innovation • Setting a common direction for high technology industry development • Securing financial foundation for growth and sustainability • Developing capability and competency for high technology industry

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Malaysian Technology Strategic Outlook 2019/2020 Intergration of High Technology

PART A THE INSIGHT

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Malaysian Technology Strategic Outlook 2019/2020 Intergration of High Technology

HIGH TECHNOLOGY INDUSTRIES OVERVIEW

Malaysia is set to be a main player in high technology industries and realising the aspiration of being ranked among the top 30 nations in the Global Innovation Index by 2025. To achieve this, Malaysia needs to accelerate its adoption of new technologies with even greater tenacity, creativity, and effectiveness to ensure rapid and sustainable growth. The Government has looked seriously into science and technology (S&T) related activities dating back to 1986. Where the National Science and Technology Policy (NSTP) was first introduced. Since then, several other S&T policies were announced and implemented like second NSTP and National Policy on Science, Technology & Innovation (NPSTI). These initiatives foster the economic growth; driving robust electronic manufacturing activities. The country aspires to become an innovation specialist with focus on developing a foundation of fundamental research; and encourage cross- collaboration between academia and industry. Struggling to replicate the success to other industries, the country endeavoured in developing innovative technologies to move up the value chain. Therefore, NPSTI is focusing in nine niche areas- biodiversity; cybersecurity; energy security; environment and climate change; food security; medical and healthcare; plantation crops and commodities; transportation and urbanisation; and water security. This shaped the innovation agenda – effective commercialisation continued to become one of the country’s main challenges. 1,800 START-UPS IN MALAYSIA DOMINATED BY E-COMMERCE, FINTECH, AND LIFESTYLE MOBILE APPS

Through Industry 4WD initiative; Malaysia re-strategized its approach as a foundation for a digital transformation of manufacturing. The country continues to work through proof-of-concept and pilot projects to showcase the value of implementing technologies like robotics or IoT platforms. Human factor remains one cornerstone of a successful digital transformation and is being addressed. Indirectly, this initiative promoted the growth of start-up companies. An estimated 1,800 start-ups in Malaysia are largely dominated by e-commerce, fintech, and lifestyle mobile apps. Start-ups targeting these industries have garnered the largest investment rounds in recent years. Video stream app Iflix, used car sales platform Carsome, and fintech company Jirnexu being some top leaders in terms of amount of funding raised. These start-ups are taking their first steps - hopefully towards becoming unicorns – which may still be several years away from their nearest competitors.

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Malaysian Technology Strategic Outlook 2019/2020 Intergration of High Technology

According to OECD, the industries identified as high technology sectors include the pharmaceutical, medical, precision, and optical instruments industry, the radio, television, and communication equipment industry, the aircraft and spacecraft industry, and the office, accounting, and computing machinery industry. During the UK visit in June 2019, the Prime Minister has said Malaysia is seeking investments in high technology in line with the country’s goal to provide high income for its people (Othman). The investments, he said, were necessary to boost the country’s growth. Malaysia was a business-friendly nation and ready to fine-tune its policies to accommodate investors. Coupled with a better trained work force, he expressed confidence that investors would find Malaysia a comfortable investment destination. The country now shifted towards a high technology, knowledge-intensive, high value-added and capital-intensive industrial base. Emphasising on digital transformation, integrating local businesses into international supply chains, as well as creating more skilled job opportunities for local talents. High technology industries ensure the production of exportable products, enhance international competitiveness of countries, attract qualified labour

force, and ensure production of high value-added products. These are related to complex processing of raw materials, innovative activities, as well as translation of research and technology (R&T) into various spill overs. High Technology vs. Industry 4.0 What exactly is the difference between high technology industries and Industry 4.0? High technology is a generic term referring to diverse industrial classifications and innovations driven by the technology intensiveness on R&D expenditure over the production output of the value added. Whereas Industry 4.0 comparatively is a term globally used to define the fourth revolution that has occurred in manufacturing. From the first industrial revolution (mechanisation through water and steam power) to the mass production and assembly lines using electricity in the second, the fourth industrial revolution will take what was started in the third with the adoption of computers and automation and enhance it with smart and autonomous systems fuelled by data and machine learning (Marr, 2018). Industry 4.0 unfolds – computers are connected and communicate with one

What is High Technology?

Technology is derived from two Greek words — techne and logia. Techne means art, skill or craft, and logia refers to the study of [a certain subject]. Linking to its historical root, technology simply means the application of scientific knowledge to produce something beneficial. In the book entitled “Society and Technology Change”, Volti (2013) defines technology as “a system created by humans that uses knowledge and organisation to produce objects and techniques for the attainment of specific goals.” Organisation of Economic Corporation & Development (OECD) subsequently used high technology terms to classify industriesforitstechnologyintensiveness on Research and Development (R&D) expenditure over the production output of the value added (Loschky, 2010). In other words, what makes a certain technology in industries belong in either high or low or somewhere in-between, is their R&D intensity spending and usage. A high technology product is a subset of a product that involves the application of modern scientific and technical knowledge for beneficial purposes and often requires high R&D investments.

THE COUNTRY NOW SHIFTED TOWARDS A HIGH TECHNOLOGY, KNOWLEDGE-INTENSIVE, HIGH VALUE-ADDED AND CAPITAL- INTENSIVE INDUSTRIAL BASE.

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another to ultimately make decisions without human involvement. A combination of cyber-physical systems, the Internet of Things (IoT) and the Internet of Systems make Industry 4.0 possible and the smart factory a reality. Following the support of smart machines that keep getting smarter as they get access to more data; factories become more efficient and productive and less wasteful. Ultimately, it’s the network of these machines that are digitally connected with one another and create and share information that results in the true power of Industry 4.0 (Marr, 2018). High technology focuses on the technological improvement of the highest order. In which requires high investment in R&D to produce the product desired by users. Industry 4.0 focuses on integrating and enhancing disparate information available in factories. Often times do not require high investment as in high technology. Viewing it from user perspective, high technology is dedicated to external users (customers), and industry 4.0 is dedicated to internal users (company staff). Both however are complementary. Industry 4.0 is possible with high technology. The difference between high technology and Industry 4.0 can be illustrated through their complementary roles such as digital transformation where chatbot is categorised as high technology but, while the natural language processing and Artificial Intelligence (AI) powering the chatbot are categorised as Industry 4.0.

and data processing (Industry 4.0) that causes a real-time connection with customers possible. Why does it matter? Widely understood and accepted – customers experience drive technology advancement. How technology industries choose to fulfil customer demands; defines the path of digital transformation. To create such customer experience, it is imperative for high technology products to have several attributes as explained here. today’s high First, high technology must deliver product with superior value propositions to the customer. According to a research carried out by Robert Cooper, and colleagues, this shows products with this single attribute have five times the success rate, over four times the market share, and four times the profitability than “me-too” products (2017). Great high technology products do not entirely satisfy customers; they strive to create and deliver superior value than competing products. Value is a trade- off between perceived benefits from the product and the sacrifices to obtain it (e.g. price, stress, hassle, time). What customers care about are the tangible and intangible benefits they will receive when using the product, i.e. what’s in it for me?, when received benefits exceed the cost of acquisition, ownership, and use; customers perceive a superior value (Weinstein, 2016). Second, to figure out what the customer needs because understanding customer needs is critical for innovation and new product success (Ulwick & Bettencourt,

2008). It is important to recognise that there are different types of customer needs and these needs change over time. As the late Steve Jobs used to say,” You can’t just ask customers what they want and then try to give that to them. By the time you get it built, they will want something new”. Hence, high technology products must address latent customer needs and anticipate future needs. The final attribute integrates technology and design to create new meaning. Innovation scholar Roberto Verganti shows that design can be as disruptive as a game-changing technology. The biggest breakthrough, albeit rare, comes from combining technology with design to create new meaning. Extensive research in marketing and consumer behaviour has revealed customers buy anduseproducts forprofoundemotional, psychological, and sociocultural reasons as well as utilitarian reasons. These deep reasons reflect the higher-level needs for purpose, meaning, and fulfilment (2009). The International Data Corporation (IDC) predicts that digital transformation can add an estimated RM41 billion (US$10 billion) to Malaysia’s Gross Domestic Product (GDP), and increase of growth rate by 0.6% annually. Digital transformation is the integration of digital technology into all areas of a business, fundamentally changing how companies operate and deliver value to customers. It is also a cultural change that requires organisations to continually challenge the status quo, experiment, and get comfortable with failure.

Similarly, it is not the smart beacon (high technology) but the IoT network

In the same study, it also predicted approximately 45% of Malaysia’s GDP

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Malaysian Technology Strategic Outlook 2019/2020 Intergration of High Technology

will be derived from digital products or services by 2021. The study titled, “Unlocking the Economic Impact of Digital Transformation in Asia Pacific¹”, wasproducedbyMicrosoft inpartnership with IDC Asia/Pacific (Mehtrora, 2018). According to Gartner Inc., Malaysia is an ideal and cost-effective testbed for U.S. companies that are interested to expand their business footprint in ASEAN. Malaysia is strategically situated with easy accessibility to other countries and has robust infrastructure, connectivity, and economic stability. ICT has been identified as the key growing sector in the country that grows at an Annual Average Growth Rate (AAGR) 9.0% over a period of seven (7) years. Malaysia has always been a popular destination for U.S. ICT companies for their global market expansion. Some significant-U.S.-companies-that-are well-established in Malaysia are IBM, HP, Intel, Google, Amazon, Cisco and many others. Malaysia has a holistic digital ecosystem and a complete ICT support system for U.S. businesses (Malaysia - Information & Communications Technology, 2019). In this instance, these larger corporations can partner with small, specialised companies from Malaysia (2019). Malaysian companies can integrate themselves into the international supply chain by producing niche products required by these corporations with quick turnaround times and have a close customer relationship which help these corporations to stay innovative and competitive. With established quality certifications, strong financial standing, and ability to scale up, Malaysian companies are in satisfactory position to measure up in terms of quality, price and delivery.

Existing trends where many large corporations are shifting from short- term transaction-based relationships to long-term collaborative partnerships with smaller suppliers provide opportunities to local businesses. Spill over effect of growth in high technology industries inevitably will create skilled job opportunities for local talents as evidenced in the preceding industrialisation phase took place in Malaysia. Driving high technology industries and embracing Industry 4.0 in Malaysia matter simply-because-we-are-already knee-deep in them and a dramatic acceleration in the pace of digital transformation across Asia’s economy is expected to take place. Malaysia cannot afford to be left behind. To illustrate a case in point, in 2017 about 7% of Malaysia’s GDP was derived from digital products and services created directly using digital technologies, like mobility, cloud, IoT, and AI. Examples of digital products are e-books, software, video, audio & music, photography, graphics & art, documents, courses, and a host of other products. Unlike physical products, digital products are in a league of their own. Comparatively, digital products are easy to distribute, significantly more sustainable, can be replicated infinitely, and are oftentimes simpler to create. With little more than one or a few devices, any person can create a digital product worthy of sharing or selling. No physical materials, factories, or staff required. Simply a computer, a sprinkle of passion and drive, and some time.

YOU CAN’T JUST ASK CUSTOMERS WHAT THEY WANT AND THEN TRY TO GIVE THAT TO THEM. BY THE TIME YOU GET IT BUILT, THEY WILL WANT SOMETHING NEW

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MIGHT FIRST™ MATRIX

Making Sense Of Different Perspectives

The world is increasingly experiencing a dynamic environment, where unexpected change is the norm rather than the exception. Strategic foresight uses a variety of methods to assess possible future events. Combining different foresight methods and integrating expert opinions transform the strategic foresight process into a powerful but major undertaking. Such insights require the best understanding of the drivers of change and megatrends. This skill set is needed to deal with complex, multi-dimensional issues, many of them interconnected and interdependent. Change in technologies, service models, the natural environment, and entire societies is so rapid that it is hard to keep up. And that task - making sense of those rapid changes - is not easy, but it is necessary to avoid from becoming a game of chance. While we can never be sure of what the future brings, developing different scenarios is important. Plus, we are dealing with a vast amount of information and perspective be it now or pertaining to the future. Therefore, making sense by connecting and structuring that information through foresight activity is a key ingredient in this complexity pie, as we look out for changes in the world.

Funding allocation, infrastructure availability, regulatory and policies in place, skills and talents, and technology innovation and adoptions are interwoven issues that may hinder or accelerate change or development, whereby availability or unavailability in one of it may alter the strategies formulation. The MIGHT FIRST™ analysis derived from these five main components of common basis of framework development which are Funding & Finance, Infrastructure, Regulatory, Skills and Talents, and Technology as these perspectives are inevitably interrelated and possess equal importance in framing forward looking and holistic strategies.

The overall analysis in this report will look into these five perspectives:

MIGHT FIRST™ FIVE MAIN COMPONENTS

Funding & Finance Monetary capacity is indeed a critical issue that might drives development, innovation and undertakings of initiatives and planning, strategically or slows it down. Discussions about monetary capacity not only about the availability of annual allocation, but also considering other related matters such as sources of income and savings, external funding that can be tapped on, management of the organisation’s financials and its investment plans and projects.

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Malaysian Technology Strategic Outlook 2019/2020 Intergration of High Technology

Regulation & Governance Today’s regulatory environment is characterized by a patchwork of complex, overlapping and often inconsistent rules; hence having one to leverage and comply to accelerate development is critical. There is often the risk that regulations impose significant costs or alter behaviour in unintended ways. Discussion on regulations should also explore on the guidelines and the challenges connected to their implementation and continued effectiveness whereby overlooked details can lead to unintended consequences. Thus, exploring and listing down of capacity and potential interaction between regulations and the other four perspectives, will assist in underscoring the usually unseen interconnection. Skills & Talent Industry 4.0 is fundamentally reshaping the jobs landscape and will require high-skilled talent to operate in this new environment. There will be an increase in demand for talent with 21st century skills to fill high value jobs in the manufacturing sector. The rate of technological development and its convergence are changing the required skills and talents at a rapid pace. Therefore, the future of work is undergoing massive changes—the type and nature of work, the requirement of its workforce, as well as the changing form of workplaces. For instance, the rise of automation and robots has brought along transformation to jobs traditionally undertaken by human for decades. In view of enhanced capabilities to perform tasks beyond non-cognitive and routine activities, alarming signals has been raised globally especially to policy makers, industry players and academicians. Technology Understanding of and access to advanced, cost-effective, and interoperable emerging technologies are at the core of unlocking the potential of Industry 4.0. We can learn from the experiences from number of countries, where importance of digital/technology labs and collaborative platforms are demonstrated, especially in public-private partnerships, in disseminating Industry 4.0 technologies and transferring knowledge. There are governments that work with major industry players cross-borders to set up digital and demonstration and collaboration labs. In addition, there are standards compliance that fosters interoperability of systems; both nationally and internationally, to support seamless value chains, optimise resources, and improve productivity. Infrastructure Development of a country or expansion of an organisation depends on the availability of its infrastructural facilities. Infrastructure plays a vital role in all areas the improvement of living standard, increasing productivity, enabling better quality of education, encouraging innovation among businesses, and many others. There is no doubt that providing support for infrastructure is challenging, and evidence shows that investors in infrastructure are vulnerable to future risk and vulnerabilities. In this sense, it is critical to manage such risks, whether through enabling effective regulation and policy, through increased transparency, or risk sharing through instruments such as guarantees.

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Malaysian Technology Strategic Outlook 2019/2020 Intergration of High Technology

THE SURVEY RESULTS

60 respondents

Introduction

10 Significant Enabling Technologies

MIGHT conducted a survey to gather stakeholder’s insight on their business strategies & technology/ manpower readiness.

1. Big Data Analytics 2. Artificial Intelligence 3. Internet of Things 4. System Integration 5. Cloud Computing

6. Cybersecurity 7. Additive Manufacturing 8. Simulation 9. Autonomous Robots 10. Augmented Reality

Other

Data Privacy

Other

Other

Mergers & Acquisition

Corporate Budget

Adding New Products or services

Product Service/ Innovation

Economic Growth

Regulatory Compliance

Seeking Additional Capital

Cybersecurity Concern

Consumer Demand

Digital Transformation

Pressure to Undergo Digital trade

Recruiting & Retaining Talent

Expanding in Emerging Markets

Scalling the Business

Key Driving Factors Of The Local High Technology Growth

Company’s Top Business Priorities

Company’s Strategies

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Malaysian Technology Strategic Outlook 2019/2020 Intergration of High Technology

THE SURVEY RESULTS

Company’s Experiences/ Capabilities

Agree

No Impact at all

Disagree

There is Adequate of Local Talent or Competency

In-house Ability to Detect Data Breach

Positive Local Market Acceptance of Company's Products & Services

Raw Material/ Components/ Parts are Locally Available

Limited Pool of Available Workers in Local Region

Finding Workers with Skill/

Decreased

Other

Soft Loan

Investment by Strategic Partner

Intense Competition for Tech Talent

Slightly Increased

Private Funding

Slightly Decreased

Experience in Emerging Areas

Unchanged

Government Funding

Finding Workers with Desired Soft Skills

Rising Salary Expectations

Increased

Company’s Top Hiring Challenges

Initiatives To Raise Capital

Current Growth Rate

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Malaysian Technology Strategic Outlook 2019/2020 Intergration of High Technology

FUNDING & FINANCE

In a globalising world economy, the reason for differences in economic growth and inter-country income inequality is explained on the grounds of technological differences. The goal of science and technology is to enable enterprises and individuals to use technologies more efficiently, as this results in reduced costs and enhanced productivity gains. Use of new technologies paves the way for production of new cheapergoodsandfor capital accumulationand, for thatmatter, for an enhanced international competitiveness of individual countries, as well as to an enhanced quality for scientific research institutions. While, comparatively, contributing to the cultural and political development of society. The quality of growth rates is as much important as their size. One may ask the following questions to get a better understanding of whether growth has its reflections on people’s life or not: Are people involved and included in the growth process? Does everybody appreciate the opportunities driven by growth? Do new technologies or trade volumes increase the choices facing people? Is welfare level of the future generations planned? Or, else, who is cared about is today’s generation only? Are markets accessible and open to everybody?. In a nutshell, world economy in general goes up and down in a cyclical way over time yet, some regions and countries continue to make progress or regress, nonetheless. The key is to know what to do and where to seek. In terms of what to do, Malaysia should continue with technological transformation because it plays a key role in the economic growth regardless accurate or wrongful use that technological advances may create considerable positive or negative impacts to a specific

firm, sector or nation. For that reason, it has been assumed that technological development and technological information is an external factor which has a public character. This technology realises the production of specific goods with less input. Technological development is an important factor increasing the growth rate of economy at macro level and profits and market shares of the firms at micro level. In terms of where to look, organisations should seek for strategies and tools that have the most potential to engage decision makers by proving that they understand what challenges their target industry faces, that they’re a thought leader and have a unique solution that can provide substantial return on investment (ROI). These decision makers can be in the U.S. or Myanmar or anywhere else for that matter. Hence, the need for constant engagement with respective trade organisations, our embassies overseas and MATRADE offices all over the world, so we can always have our feet on the ground and our head in the cloud. Financial development can promote economic growth, and finance has gradually become the “first driving force” of contemporary economic growth in the developed countries of the world. Together, the rapid development of the economy objectively requires the support of the financial system, and economic growth can also promote financial development. From the key takeaways from a study conducted by AT Kearney, global economic outlook in short term (2019- 2023), the growth will decelerate which led by several major economies. Cyclical, structural, and political risk are expected contributing factors to this deceleration.

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Malaysian Technology Strategic Outlook 2019/2020 Intergration of High Technology

Asia will continue to be a bright spot with India leading the pack of major economies while China’s economy is still considered robust despite slowing growth. Asia is leading the world in economic integration, with the Comprehensive and Progressive Agreement for Trans-Pacific Partnership recently coming into force and the Regional Comprehensive Economic Partnership still under negotiation. At home, Malaysia’s GDP is expected to expand by 4.8% in 2020 from 4.7% in 2019 with estimated RM2.3 trillion economy (Economic Outlook 2020 Highlights, 2019). However, the recent economic situation will reduce this figure to between -2.0% and 0.5% due to “necessary” global and domestic actions to contain the Covid-19 pandemic (Bank Negara Malaysia, 2020) Governance of the global economy is fragmenting as multilateral institutions become less representative of current realities and economic integration becomes more regionalised. The potential demise of the post-World War II economic order would herald weaker long-term prospects for global economic growth and prosperity as well as a more complicated international regulatory environment for companies. Protectionist policies, violations of both the rules and the spirit of free trade agreements, anda looming risk theWorld Trade Organization’s dispute settlement mechanism will cease to function create profound risks for the current system of international trade. In addition, the US–China trade war threatens to weaken global growth prospects while

raising costs and creating supply chain disruptions for many companies.

Companies need to adjust to slowing growth in a multi-local world. It is becoming clear that the new age of multi-localism—characterised by the preference for local communities, industries, products, cultures, and customs—is extending into international economic governance. National governments are going it alone to implementpoliciesoutside thestructures of the traditional multilateral institutions and are pursuing regional economic integration as global agreements become less desirable or untenable. To compete in this environment, companies may need more regional supply chains and greater devolution of management and operations to the local level. Economic perspective The World Bank’s Digital Adoption Index (DAI), which reflects accessibility and usage of digital services by consumers, businesses and the Government, classifies Malaysia as an ‘adopter’ country. While in some respects, this places Malaysia’s digital progress as comparable with some advanced economies, the economy still lags notable ‘front-runners like the United States, Estonia, South Korea, Japan and Singapore. Malaysia must aspire to become a ‘front- runner’ on the digital front to fully unlock the economic benefits. From the study by BankNegaraMalaysia. Delving deeper into the factors that propel economies to “front-runner” status reveals that these

MALAYSIA’S GDP IS EXPECTED TO EXPAND BY 4.8% IN 2020 FROM 4.7% IN 2019

RECENT ECONOMIC SITUATION WILL REDUCE THIS FIGURE TO BETWEEN -2.0% AND 0.5% DUE TO “NECESSARY” GLOBAL AND DOMESTIC ACTIONS TO CONTAIN THE COVID-19 PANDEMIC

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Malaysian Technology Strategic Outlook 2019/2020 Intergration of High Technology

economies have successfully addressed three key structural features to support their progression. Firstly, fast and affordable broadband. Secondly, talent tailored for digital progress. Thirdly, high digital adoption among consumers and businesses. For Malaysia, transitioning the economy to “front-runner” status can yield significant additional growth dividends of between USD100 billion - USD136 billion per year by 2025. these technological developments will yield more efficient and productive economic outcomes. Being a “front-runner” on the digital front enables Malaysia to fully unlock the economic benefits including E-commerce where it gives firms and consumers access to global markets. On the firm’s side, instead of having a potential market reached by billboard ads, local radio or TV broadcasting, and physical retail outlets, local companies can have their products and services displayed on the virtual shelves of online retailers like Lazada, Amazon, Alibaba and the like, hence expanding their potentialmarket. On the consumer’s side, the availability of such platforms may also result in structurally lower prices, due to enhanced price discovery and the reduced reliance on intermediaries (“middlemen”) to acquire goods and services. As generally accepted, The Gig economy facilitates more flexible work arrangements, while online job platforms reduce demand-supply mismatches in the labour force. Capacity in Big Data Analytics and AI tap into previously unutilised information to yield new insights for decision-making.

Taking for instance the music industry in the U.S., digital recording technology provided by Birdmonster has made studio time cheaper than ever – They can record the tracks in a few days in the studio and then mix and overdub them at home using personal computers. Even in 2006, the cost to record the entire album was less than USD15 thousand, it should be cheaper today. Another company called Cinderblock provided the distribution, which gave aspiring artists reach as broad as iTunes, Rhapsody, and other top services. And MP3 blogs and Myspace are free marketing. Of course, the information management system also provides flexibility for a work group to work on certain documents simultaneously like google share and Microsoft 365. There are few companies in Malaysia including Biz Objek Sdn Bhd that provide such systems that promote centralised, managed and effective solutions with solid information management framework. This solution is web-based, meaning the system can be accessed anytime and from anywhere; digital based solution means it promotes digital workplace environment; and Dashboard UX means it is easy to use and faster user adoption. These two are examples how flexible work arrangement is done in the digital age. Online job platforms provided by companies like LinkedIn Corp. and Indeed Inc. have eased the process of identifying vacancies for job-seekers and attracting applicants for employers. It is imperfect, but there are benefits to a dynamic labour market in which workers are matched with jobs based

TRANSITIONING THE ECONOMY TO “FRONT-RUNNER” STATUS CAN YIELD SIGNIFICANT ADDITIONAL GROWTH DIVIDENDS OF BETWEEN USD100 BILLION - USD136 BILLION PER YEAR BY 2025.

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Malaysian Technology Strategic Outlook 2019/2020 Intergration of High Technology

Incentive In Malaysia, tax incentives are provided for in the Promotion of Investments Act 1986, Income Tax Act 1967, Customs Act 1967, Sales Tax Act 1972, Excise Act 1976 and Free Zones Act. As Malaysia’s investment promotion agency, Malaysia Investment Development Authority (MIDA) has introduced the Investment Incentives Portal (I-Incentives) as a platform providing investment information on tax exemptions, grants, soft loans, equity funding, regional establishment status, training and other facilitation programmes. The year 2018 indicated a positive year, with high technology sectors contributing 24% (RM28.97 billion) to the total approved investments valued at RM87.4 billion in the manufacturing sector. The Foreign Direct Investment (FDI) of approved manufacturing increased to RM58.0 billion from RM21.6 billion in 2017, an increment of 37%. These investments originate from 721 approved projects and are expected to generate more than 59,294 job opportunities for Malaysia. Malaysia’s cumulative FDI has reached RM126.9 billion and largely contributed by the Electronics and Electrical Products value at RM10.7 billion. Malaysia’s high technology domestic direct investment (DDI), yet, has shown a downward trend where the investment amount was declined to RM4.8 billion in year 2018 compared with RM6.3 billion in year 2017. The main contributor of DDI was the Rubber Products, of which amounted RM1.5 billion.

on their skills, interests, and ambitions, so they can earn wages equivalent to the value they contribute to production. However, innovative job-matching platforms, especially those integrated with training programs, can also strengthen workers’ human capital, as well as their bargaining power in the labour market. Companies like CodeSignal (formerly CodeFights Inc.), for example, are creating online platforms that allow job seekers to practice their skills and earn credentials, which they can use to be matched with employers and job opportunities. If programs including those offered by CodeSignal are successful in helping applicants develop the skills required for job opportunities, then the credentials they provide could become strong signals giving credentialed job applicants increased leverage in the recruitment process. These technologies could help create digital apprenticeships of the future, which combine training programs with pathways to gainful employment. The health, financial services and automotive sectors stand out when it comes to using artificial intelligence for decision-making in business. In financial services, from the study done by PwC - a multinational professional service - has put together massive amounts of data from the US Census Bureau, US financial data, and other public licensed sources to create $ecure, a large-scale model of 320 million US consumers’ financial decisions. The model is designed to help financial services companies map buyer personas, simulate “future selves” and anticipate customer behaviour. It has enabled these financial services companies in validating real-time business decisions within seconds. In business, artificial intelligence systems can perform more than 200,000 GTM (go-to-market) scenarios, instead of just a typical handful. What you get is optimising scenarios that maximise revenues (Sincavage).

THE SURVEY

70% economic growth

About 70% of respondents highlighted that the key driving factor for local high technology industry growth is economic growth and followed by consumer demand on local products or services. To ensure success, the public need to be educated on the availability of locally developed products and services offered. For that, a proper promotion and marketing plan will encourage the local high technology companies to invest more.

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Malaysian Technology Strategic Outlook 2019/2020 Intergration of High Technology

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