Mobility and social media growth plus young population make it ripe for providers
Enterprise IT spending to hit US$12.6bil in Malaysia and US$19.1bil in Singapore
BY 2018, enterprise IT spending in South-East Asia will total US$62 billion, according to forecasts from Gartner Inc.
The South-East Asian region comprises 11 countries of which Singapore, Malaysia, Indonesia and Thailand spend the most on IT and account for roughly 80% of IT spend in the region, Gartner said in a statement.
Together, Indonesia, Malaysia, Singapore and Thailand will spend US$52 billion on IT in 2015, with annual growth of 6%.
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“Some might argue that given recent political, financial and climate challenges, South-East Asia is a risky proposition,” said Venecia Liu, research vice president at Gartner.
“However, Gartner believes that South-East Asia's economic development and growing consumer demand mean that its growth potential outweighs the risk.
“The growth of mobility and social media and the high percentage of younger people make this region suited to technology providers,” she added.
Vertical industry trends in Singapore
Gartner estimates that enterprise spending on IT products and services in Singapore will be US$19.1 billion (S$24 billion) in 2015.
Compared with other mature markets in the region, such as Australia, this intensity of IT spending is high relative to Singapore’s gross national output and population.
The dominant sectors in 2015 will be communications, media and services, banking and securities, government and manufacturing. Together, they will account for 70% of total enterprise IT spending in the country in 2015.
The fastest-growing industry segments through 2018 will be banking and securities, utilities and manufacturing, and natural resources.
“Along with the Nordic region, Singapore routinely tops the lists of countries with innovative IT initiatives, efficient business practices, good levels of equality and other factors,” said Gartner research director Derry Finkeldey.
“The Government has transferred several of its services online and it has an open data initiative similar to the US Government, with nearly 9,000 datasets available in open format,” he added.
Communications, Media and Services: Despite the country's small geographic size and population base, Singapore has a competitive communications market. Singapore has been proactively developing a leading-edge infrastructure and was among the first countries in the world to have a fully digital telephone network. Expected areas for technology investment include analytics and equipment – especially mobile network upgrades to improve coverage – as well as investments in WiFi hotspots and cloud computing.
Banking and Securities: Singapore is challenging Switzerland as a hub for private banking and wealth management, and its financial services sector is the focus of much new investment in information technology. The banking system has a robust infrastructure, and a new real-time payments platform, Fast and Secure Transfers (FAST), was launched in 2014. There are around 700 financial institutions operating in Singapore providing a healthy market opportunity for technology providers, especially as Singapore’s banking system prepares itself for digitalisation.
Government: The government sector looms large in Singapore’s ICT landscape. The Infocomm Development Authority (IDA) is committed to promoting the use of IT within government services and developing the ICT industry in the country, incorporating sector transformation and development, social engagement, infrastructure development, and staffing development. The government transparently outlines its ICT spending priorities that include g-cloud, big data, analytics and information security.
Manufacturing: Manufacturing is a crucial component of Singapore’s economy, and with the help of the Government, the country attracts a lot of investment into manufacturing innovation. Electronics is a major area, contributing around a quarter of the total manufacturing value-add.
Chemicals: This a growth sector, especially in pharmaceuticals and biomedical products, and public-private partnerships are bringing big investments into Singapore. They are also driving investment in IT across product and service categories, especially in analytics capabilities.
Vertical industry trends in Malaysia
Spending by enterprises in Malaysia is projected to be US$12.6 billion (RM40.6 billion) in 2015 at an annual growth rate of 6.4% across data centres, software, IT services, internal services, devices, and telecom services.
“Nearly two decades of programmes and initiatives have helped to turn Malaysia into the second-largest enterprise spender on IT in South-East Asia,” said Liu (pic).
“The Government’s vision is to encourage foreign investment through tax incentives and other benefits, as well as to encourage local businesses through venture capital funding and more.
“This two-pronged approach has started to reap benefits in key sectors like healthcare and manufacturing,” she added.
Healthcare: Gartner estimates that the healthcare sector in Malaysia will spend US$292 million (RM940 million) in 2015, with annual growth of 9.4%. E-health and telehealth are key areas of IT development as the healthcare industry evolves toward connected healthcare. In the past few years, hospitals and clinics have been spending on upgrading their infrastructure to support an online healthcare information system.
Government: Recently, the Malaysian Administrative Modernisation and Management Planning Unit (Mampu) and the Multimedia Development Corporation (MDeC) outlined four big data projects to be carried out collaboratively with various ministries and commissions. The Government has also introduced a number of initiatives to improve the online procedures and access for businesses and citizens, and to encourage transparency.
Manufacturing and Natural Resources: The manufacturing and natural resources industry will account for IT spend of US$2.5 billion (RM8 billion) in 2015, with an annual growth rate of 5%. At 20%, the sector will account for the largest share of Malaysia’s IT spending in 2015. Malaysia's manufacturing sector is no longer competitive for labour-intensive operations, and enterprises urgently need to move to high value-added business. Manufacturers are looking to technology to help transform the way they work. However, at present, in a significant proportion of local manufacturers in Malaysia, technology use is still at a very basic level of automation, except in leading electronics and automobile producers.
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