Slow Internet speeds damping Malaysia’s digital economy aspirations: MDEC CEO
By Chong Jinn Xiung July 20, 2016
- Malaysia’s 7.3Mbps far below the global average of 23Mbps
- Even Indonesia is fast catching up and may soon overtake Malaysia
E-COMMERCE will be one of the key drivers of Malaysia’s digital economy, but that aspiration is being dampened by the relatively slow Internet speeds available here, the head of the country’s national ICT custodian admitted.
Malaysia has done well in improving Internet access, with nearly 70% of the country enjoying fibre connectivity, but overall Internet speed is still lacking, according to Yasmin Mahmood, chief executive officer of Malaysia Digital Economy Corporation (MDEC).
At a recent forum hosted by Google Malaysia in Kuala Lumpur, she said that Malaysia’s average Internet speed of 7.3Mbps was far below the global average of 23Mbps, citing figures from a World Economic Forum report (PDF).
In comparison, neighbouring Singapore enjoys an average connection speed of 122Mbps. Even Indonesia is catching up, with average speeds of 6Mbps, and the Indonesian Government has declared it aims to overtake Malaysia by 2019.
“It all comes down to a matter of speed and affordability – there is no technical limitation on us to access faster speeds as there is no limit to speed with fibre connectivity,” Yasmin said.
Malaysia’s notoriously slow Internet speeds are often the subject of ire both by consumers and corporates alike. The worrying implication is that country’s e-commerce aspirations may be hampered if things do not improve.
It does not help that Communications and Multimedia Minister Dr Salleh Said Keruak was quoted as saying that Malaysians choose to pay less for slower Internet speeds instead of spending more on fast connections.
Yasmin noted that in terms of data speed and affordability in the mobile space, Malaysia is not far off from other countries. But the big gap lies in fixed broadband.
“This falls under the Malaysian Communication and Multimedia Commission’s (MCMC) charter, and it is something that it needs to figure out in terms of the policy and regulatory frameworks to allow this to happen,” she said, referring to the industry regulator.
Malaysia needs to get its Internet speeds up to parity with the regional level or else everything would be for naught, she warned.
Google Malaysia, Vietnam, Philippines and New Emerging Markets managing director Sajith Sivanandan agreed with Yasmin that faster Internet speed is crucial to spur the growth of Malaysia’s online market.
“Once you have faster Internet speeds, the more people will go online and spend time online,” he said.
The forum discussion also included iMoney cofounder and chief executive officer Lee Ching Wei, and was moderated by Zeffri Yusof, head of communications and public affairs at Google Malaysia.
E-commerce and attracting FDIs
Malaysia’s online market is set to grow to US$21billion by the year 2025, mainly driven by e-commerce which would record an expected compound annual growth rate (CAGR) of 24%, according to a joint report by Google and Singapore’s sovereign wealth fund Temasek Holdings.
“The Internet economy in South-East Asia is the fastest growing in the world, with 260 million users online and is expected to reach US$200 million by 2025,” said Sajith.
“We expect 124,000 new users coming online everyday over the next five years. That’s like having a new customer walk into your shop every day,” he added.
Even though there is a high concentration of foreign direct investment in Indonesia and Singapore, Malaysia has a chance to grab a slice of the pie.
“Malaysia has all the right factors to grow its online market since online transactions are expected to grow as consumers buy larger variety of products online,” Sajith said.
According to the Google-Temasek report, there will be a 17% CAGR in the total number of annual online transactions, driven largely by a 12% growth in online buyers.
Speed isn’t the only factor that Malaysia is lacking. There is also talent, which is why it was important to grow future talents and encourage create thinking, Yasmin said.
This is in line with MDEC’s Digital Maker Movement, where coding would be embedded in the school curriculum from Standard three onwards, which is set to launch next month, she said.
The rollout is expected to happen next year, and coding will be part of both the primary and secondary school curricula, she told the Google forum.
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