Adoption across the economy and compared to the rest of the world Adoption by businesses Lingering questions Toward a shared digital economy

2. Digital Adoption in Malaysia:
Successes, Challenges, and
Aspiration
Bradley Larson
ICT Specialist, World Bank Group

3. Adoption across the economy and
compared to the rest of the world
Adoption by businesses
Lingering questions
Toward a shared digital economy

4. Adoption across the economy and
compared to the rest of the world
Adoption by businesses
Lingering questions
Toward a shared digital economy

5. The WDR 2016 was our point of departure
www.worldbank.org/wdr2016
• Highlights the benefits
and risks of digital
development
• Stresses the
importance of digital
complements
• Uses the Digital
Adoption Index to
benchmark countries

6. Malaysia = 79
JPNKOR
SGP
Low
income
Lower-middle
income
Upper-middle
income
High
income
0
25
50
75
100
percentofpopulation
1,005 3,995 12,235
GNI per capita
Individuals using the internet
Malaysia = 141 JPN
KOR
SGP
Low
income
Lower-middle
income
Upper-middle
income
High
income
0
40
80
120
160
subscriptionsper100inhabitants
1,005 3,995 12,235
GNI per capita
Mobile cellular subscriptions
Most people in Malaysia are connected
Source: ITU 2018.
Internet and mobile adoption rates, 2017

7. Malaysia = 0.69
JPN
KOR SGP
Low
income
Lower-mid
income
Upper-mid
income
High
income
0
.2
.4
.6
.8
1
Indexscore
1,005 3,995 12,235
GNI per capita
ASEAN
OECD
Adoption is high across the economy overall
Sub-Index Indicator
Business Internet bandwidth
Business websites
Secure servers
People Mobile-cellular
subscriptions
Mobile broadband
Internet use
Fixed broadband
Government Core administrative
systems
Digital identification
Online public services
Digital Adoption Index, 2016
Source: World Bank 2018.

8. Digital
Adoption Index
People
sub-index
Government
sub-index
Business
sub-index-2
-1
0
1
2
Standarddeviationdifference
ASEAN OECD
Singapore Predicted
Note: Standardized differences between MYS and peer groups (2016). Predicted values estimated using GNI per capita.
Adoption is relatively low among businesses
DAI and sub-indexes, versus comparators (2016)
Source: World Bank 2018.

9. Adoption across the economy and
compared to the rest of the world
Adoption by businesses
Lingering questions
Toward a shared digital economy

10. Internet access has increased across the country,
but remains uneven
Agriculture
C
onstruction
Johor
Kedah
Kelantan
Kuala
Lum
pur
Labuan
M
alacca
M
anufacturing
M
ining
and
Q
uarrying
N
egeri Sem
bilan
Pahang
Penang
Perak
Perlis
Putrajaya
Sabah
Saraw
ak
Selangor
Services
Terengganu
Total
0
20
40
60
80
100
Establishments(%)
Internet
Broadband
2010 2015
Percent of businesses with internet and broadband access (2010–2015)
Source: DOSM 2011 and 2016.

11. The services sector and states that host export
industries lead on web presence
Agriculture
C
onstruction
Johor
Kedah
Kelantan
Kuala
Lum
pur
Labuan
M
alacca
M
anufacturing
M
ining
and
Q
uarrying
Negeri Sem
bilan
Pahang
Penang
Perak
Perlis
Putrajaya
Sabah
Saraw
ak
Selangor
Services
Terengganu
Total
0
20
40
60
80
100
Establishments(%)
Internet
Website
2010 2015
Percent of businesses with internet access and web presence (2010–2015)
Source: DOSM 2011 and 2016.

12. D
eliver products
online
E-m
ail
G
et info
from
governm
ent
G
et info
on
goods/services
Interact w
ith
governm
ent
Internet banking
O
ther (undefined) uses
O
ther financial services
Post inform
ation
or m
essage
Provide
custom
er service
R
ecruit staff
Train
staff
Voice
over IP
0
20
40
60
80
100
Businessestablishments(%)
Total
Agriculture
Construction
Manufacturing
Mining and Quarrying
Services
Manufacturing firms make more sophisticated use of
the internet
Business use of the internet, by activity and sector (2015)
Source: DOSM 2016.

13. E-commerce is dominated by Manufacturing (in
volume) and Services (by establishment count)
Income and expenditures, by sector and category (2015)
Source: DOSM 2016.

14. Women-owned and small- and medium-sized
establishments use the internet lessU
se
the
internet
U
se
IC
T
E-m
ail
H
ave
a
w
eb
presence
Internetbanking
G
etinfo
on
goods/services
Postinform
ation
orm
essage
G
etinfo
from
governm
ent
Voice
overIPInteractw
ith
governm
ent
R
ecruitstaffO
therfinancialservices
O
ther(undefined)uses
Provide
custom
erservice
D
eliverproducts
online
Train
staff
-20
-15
-10
-5
0
Difference(Percentagepoints)
Women-owned establishments Small- and medium-sized establishments
Difference between average rates of internet use, by activity, and use by SMEs and
women-owned businesses (2015)
Source: DOSM 2016.

15. Adoption across the economy and
compared to the rest of the world
Adoption by businesses
Lingering questions
Toward a shared digital economy

16. Malaysia
How big is the digital economy?
10.3% Korea, Rep.
7.3% Finland
6.9% United States
6.0% Estonia
ICT manufacturing; software publishing;
telecommunications; computer programming,
consultancy, and related activities
ICT wholesale and
retail trade; Content
and media activities;
Other ICT services;
etc.
Wholesale and retail sectors.
All sectors across the
economy.
OECD
17.8%
Generally
more “Other”
and less
E-Commerce
Sources: OECD 2012, 2017; UNCTAD 2017; DOSM 2017.
E-Commerce
Other

17. What is driving adoption at different rates,
particularly among business establishments?
Answers in the report: openknowledge.worldbank.org/10986/30383
But more can be learned from data at the firm level, and there
are promising avenues for follow-up research.

18. Adoption across the economy and
compared to the rest of the world
Adoption by businesses
Lingering questions
Toward a shared digital economy

19. Overall, Malaysia is doing very well, but challenges
must be overcome for it to meet its aspirations
Successes Challenges Aspirations
79% of the population
uses the internet
141 mobile
subscriptions per 100
residents Shared prosperity
Broad-based growth
in the digital economy
Universal access
Sectoral/geographical
inequalities
Business adoption is
relatively low
The government has
made a significant
positive impact
Broadband access is
low
Internet use lags
internet access

20. Achieving Malaysia’s aspirations requires addressing
the “analog” complements
DIGITAL
TECHNOLOGIES
INNOVATION EFFICIENCY INCLUSION
CONCENTRATION INEQUALITY CONTROL
with
complements
without
complements
Increased
competition,
especially in fixed
broadband
Skills development
for the digital
economy in
secondary
education and TVET
Privacy protections
and open
government data

22. Panel Discussion:
Digital Adoption in Malaysia:
Successes, Challenges, and
Aspiration
Moderator:
Natasha Beschorner – Senior ICT Policy Specialist, World Bank Group
Panellists:
Tan Sri Saw Choo Boon – Council Member, Federation of Malaysian Manufacturers
Dato’ Seri Ivan Teh – CEO and Managing Director, Fusionex
Mr. Shaifubahrim Salleh – Board Member, SME Corp. Malaysia