MDEC urges companies to tap SEA ICT potential
By Goh Thean Eu October 7, 2016
- Asean ICT market is expected to be worth US$48 billion by 2019
- Indonesia and Philippines among the fastest growth markets
MALAYSIA Digital Economy Corp (MDEC) is urging Malaysian companies, in particularly the MSC-status companies, to capitalise on the immense potential of the South East Asian ICT market – as the market is expected to grow by about 5% a year over the next few years.
According to the Asean ICT Market Landscape Study by International Data Cooperation (IDC), the South East Asian ICT market is expected to be worth about US$48 billion (RM198 billion) by 2019, against US$42 billion in 2016. The projection would also mean that the region’s ICT market is to grow at an average of 4-5% annually between 2016 and 2019.
The study, which was commissioned by MDEC, focuses on six emerging countries in the region namely Cambodia, Indonesia, Myanmar, Philippines, Thailand and Vietnam.
It is aimed at providing MSC companies with insights and recommended strategies, and to help connect them with viable foreign partners.
“Asean has seen robust growth in recent years with on-going market liberalisation and integration. As these markets continue to develop and move towards becoming knowledge economies, the ICT sector plays a key role in enhancing market competitiveness and economic growth,” said MDEC infotech industry development vice president Norhizam Abdul Kadir.
“The study is also part of MDEC’s Global Acceleration and Innovation Network (GAIN) initiative. In line with MDEC’s charter to grow MSC companies, GAIN is a long-term globalisation intervention programme that aims to create a robust ecosystem to help catalyse local companies with the potential to become global tech icons,” added Norhizam.
Norhizam added that he hopes that all the 150 companies under the GAIN initiative would look into SEA-expansion seriously, and stressed that MDEC is committed towards helping these companies to make inroads into new markets.
“If I can set a timeline on when I hope all these 150 companies will have a presence in the export market, the answer would be ‘yesterday’. However, we see our role as a match-maker. We will make the introduction, but the follow-ups and the follow-throughs, will need to be done by the companies themselves. We are not their business development team,” said Norhizam.
Tremendous growth potential in SEA
The Asean ICT Market Study by IDC highlighted the fact that ICT spending in the region will grow over the next few years as ICT is a key enabler of economic development.
“Although you can see some form of political instability in some of these Asean countries, there is one thing you cannot deny – their appetite and demand for ICT. Many industries in these countries see ICT as an important tool for digital transformation, to improve efficiencies, and others,” said IDC Malaysia country manager Vijay Sundararaman.
IDC projected that IT spending in Cambodia would grow at a CAGR (compounded annual growth rate) of 6.6% to US$259.9 million by 2019, predominantly on hardware spending.
In Indonesia, IDC expects IT spending to grow at a CAGR of 9.2% to US$18.8 billion by 2019, predominantly on hardware spending with an uptick of IT services seen within the next five years. The IT services market is expected to hit US$1.3 billion by end 2016.
Given the poor state of ICT infrastructure and access in Myanmar, hardware sales will represent the primary driver of IT spending through 2019. Hardware spending is forecast to hit US$256.41 million by 2019, representing a CAGR of 12.49%.
IT spending in the Philippines is expected to grow by 10% CAGR by 2019 and is skewed towards hardware, with more than 70% focused on devices such as smartphones and tablets.
In Thailand, IT spending is expected to grow at 3.7% with CAGR to reach US$13.6 billion by 2019, predominantly on hardware spending with a continued increase in IT services. The IT services are expected to reach US$4.01 billion by 2019.
In Vietnam, hardware spending is expected to reach US$5.9 billion by 2019, and this represents a CAGR of 4.5%. Software spending is expected to reach US$403.84 million by 2019, representing a 11% CAGR.