Balancing the impact of digitalising the Malaysian economy


HOW do you interpret the concept of Shared Prosperity as the basis of our nation’s development?

This concept was highlighted as the overarching theme for a stakeholder consultation workshop on digital economy that I had attended recently to assist with preparing the 12th Malaysia Plan (2021-2025) paper slated to be announced in October next year.

I heard many great ideas from both industrial players and researchers alike, but also a healthy dose of the usual wish list and expecting the government to do more of the same.

Overall though, it was encouraging to note that some of the government and agency workers that I met shared the importance of working towards a more inclusive and sustainable path of digitalising the Malaysian economy.

Digitalisation can mean at least two things.

First, it may mean to increase the creation of digital products and services.

Here lies the challenge (or relevance) of measuring the contribution of the digital to the total national economy because in years to come, the boundary between the two may be significantly blurred.

Second is increasing digital adoption and its creative use that has resulted in revolutionary business models. We may soon no longer be able to identify AirAsia Group Bhd, for example, purely as an airline business because of its ambitious e-commerce platform that may outgrow ticket sales.

But one of my personal concerns is with the tendency for the government to pick its winners.

For instance, the recent proposal to bring Jakarta-based Gojek, popularly known for its bike ride-sharing service, to Malaysia has been received with a mixed response. I am, in fact, encouraged by the ongoing inter-ministerial conversations on how Gojek can potentially address the seemingly multifaceted issues such as youth unemployment, traffic congestion, as well as public transport feeder networks.

But would it not be better if local entrepreneurs were given equal opportunities to compete? If anything, my bet is with our local players who may understand Malaysia’s unique taste and demand better.

There is a human cost to digitalising the Malaysian economy too.

Going back to the example of e-hailing services, we have already seen the disruption to the traditional taxi industry.

Although, in that case, many taxi drivers have been able to make use of the new technologies too.

Another example would be the digital disruption to traditional media as in the case of Utusan Melayu (M) Bhd, who is ceasing its operation soon because of a general failure to keep up with the changing reading behaviour and taste.

Re-skilling and re-inventing can take time, and many might fall through the cracks of our social safety net, notwithstanding the low bar to recognise poverty officially, while the transition is taking place.

We cannot afford to ignore the human cost of digital disruption nor should we, at the same time, frustrate or block progress from happening.

As firms destroy traditional boundaries and redefine value propositions in new and unexpected ways, the government should instead focus on updating its regulation and compliance processes to be in line with international standards, so that the private sector can stay competitive in an increasingly borderless global economy.

Special attention should also be given to produce demand-led skills through tighter coordination between various agencies, if not centralising planning, and to possibly pool resources together with the private sector so that affected individuals can find employments in new sector.

Ultimately, it is the ongoing calibration and balancing between the winners and (short-term) losers, inevitably as a result of digital disruption, that will truly define the success of Shared Prosperity. That is why we should discuss more regularly and intently about the longer-term development for Malaysia.

Lau Zheng Zhou is a research manager, Economics and Business Unit at the Institute for Democracy and Economic Affairs (IDEAS).