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Reimagining Malaysia's digital economy

The World Bank put Malaysia’s digital economy into the spotlight with its 2018 report Malaysia’s Digital Economy: A New Driver of Development. The report encourages investment in telecommunications infrastructure to harness opportunities offered by new technology and innovation. Corbin Stevic explores how Malaysia can meet its connectivity needs, make fixed broadband services more attractive, and grow the digital economy.

Corbin Stevic

by Corbin Stevic

Associate

03 July 2019
Malaysia skyline

In Malaysia, investment is needed to eliminate barriers to digital adoption. Increased access to inexpensive, reliable, and high-speed internet is key. It is common practice for internet service providers to offer lagging internet connections (less than 100Mbps) at high prices, with fixed broadband in Malaysia more expensive than in most other ASEAN countries.1 The perceived lack of value has resulted in a slow rate of digitalisation by businesses and a national decline in fixed broadband subscriptions.2

Making broadband more attractive will help unlock the digital economy. The Malaysian Communications and Multimedia Commission (MCMC), which regulates the national telecommunications industry, is preparing its National Fiberisation and Connectivity Plan (NFCP) in response to the urgent need to improve broadband quality, reduce subscription fees, and expand fibre networks. The plan aims to support the implementation of initiatives that will facilitate and drive the adoption of future technologies. 

Increasing competition amongst service providers is also high on the agenda. Malaysia’s fixed broadband market is dominated by Telekom Malaysia, a government linked company that controls over 87 percent of the fixed broadband retail market and a significant part of the national backhaul and international connectivity markets.3  While the mobile broadband market has benefited from competition, mobile service providers are restricted from entering the fixed broadband arena due to high infrastructure costs and other barriers, such as operating licenses and installation approvals. 

connectivity graph

Increasing competition and improving outcomes for subscribers is vital to eliminating the status quo, which hinders growth of Malaysia’s digital economy.

Increasing competition and improving outcomes for subscribers is vital to eliminating the status quo, which hinders growth of Malaysia’s digital economy. The roll-out of active open access networks across the country will allow multiple service providers to utilise a single, high speed network. Subscribers will have the freedom to pick data, voice, and entertainment packages to suit their needs on either month-by-month or fixed-term contracts. The accelerated phasing out of the copper network will also ensure broadband services become faster and more reliable.

Elsewhere in the world, the open access model has supported new internet service providers to reach scale quickly, reducing broadband prices and increasing flexibility for subscribers. In South Africa, for example, open access networks were introduced four years ago and have resulted in up to an 80 percent decrease in cost for an uncapped 100Mbps broadband package.4 Enhanced broadband speed and coverage at reduced prices will change the way Malaysians live and work for the better.

The digital economy is a key pillar of economic growth in Malaysia and a vital component of the country’s transition to becoming a high-income nation. If the current rate of digital adoption continues, it will fall further behind other developing countries in Southeast Asia and relinquish the opportunity to be a truly connected and productive country. But with modern fibre networks, greater coverage and affordable high-speed internet Malaysia can begin to reimagine its digital economy.  

reimagined graph


[1] Malaysia’s Digital Economy: A New Driver of Development (World Bank, 2018) 

[2] MCMC 2016 Annual report

[3] Malaysia’s digital future needs faster Internet, World Bank East Asia & Pacific blog (http://blogs.worldbank.org/eastasiapacific/endpovertyinsouthasia/endpovertyinsouthasia/malaysia-s-digital-future-needs-faster-internet, accessed December 2018)

[4] 100Mbps uncapped fibre – How prices have fallen since 2014 (MyBroadband, November 2018)

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