Malaysia looks to higher ICT spend

Driven by government's ongoing efforts in pushing broadband penetration, as well as growth in wireless broadband and cloud adoption, Malaysia's ICT spend expected to hit US$6.5 billion in 2011.
Written by Edwin Yapp, Contributor

Malaysia's ICT spending is expected to rise this year and growth will be driven by several emerging technological trends, say industry watchers.

In its annual ICT predictions, research firm IDC noted that IT spending in the country will grow by 9 percent from US$5.9 billion in 2010 to US$6.5 billion this year. Spending in the telecommunication sector is expected to hit US$7.3 billion in 2011, up 5.3 percent from 2010.

Roger Ling, research manager for IDC Asean, said more changes are expected in the local ICT market that will drive this year. The total IT spending for Malaysia, driven mainly by purchases of hardware and packaged software, grew 6 percent in 2010, he added.

Ling said: "The growth in IT spending in 2011 is expected to be driven by factors such as the government's continued efforts to increase the level of broadband penetration, and outsourcing initiatives by organizations looking to address the increased IT complexity." Other factors include the continued adoption of system infrastructure software to operate and manage computing resources, he added.

In its annual prediction, Frost & Sullivan pointed to wireless broadband and cloud computing as two growth areas in the local ICT sector.

"The wireless broadband subscriber base overtook its fixed counter in 2010 and we expect this trend to accentuate leading to, among other things, the increased demand for smartphones and more competition among wireless players," said Nitin Bhat, Asia-Pacific partner and vice president for ICT Practice, Frost & Sullivan.

In an e-mail interview, he noted that cloud will gain significant traction this year, driven by the "twin factors of supply-side maturity and demand-side understanding". "We see a high propensity of trials, and some transactional-based cloud computing adoption among enterprises in Malaysia," Bhat said.

Talking cloud
According to Ananth Lazarus, managing director of Microsoft Malaysia, IT investments in both the private and public sector will shift toward the cloud this year, driven by two key factors.

The first, he said, is business needs. Second, Lazarus said the government's transformation programs will see key projects taking off this year.

"The promises of the cloud are applicable [to these programs]. Reducing costs, providing flexibility and agility in how organizations use their IT resources, ease of adoption and implementation, and not least, allowing organizations to explore and develop innovative services with a low cost of entry is what the cloud can do," he said in an e-mail interview.

Customers will also start to explore the tradeoffs between private and public cloud offerings. Large enterprises that have been testing the waters will begin more earnest deployments and will aggressively look at building their own private clouds, he noted.

Early adopters will serve as proof-points and best practices will encourage cloud adoption among small and midsize, he said, adding that government agencies would initiate discussions on key issues such as data sovereignty and public policy.

Johnson Khoo, managing director of Hitachi Data System (HDS), noted that businesses this year, in particular, will start looking at new investments in IT infrastructure and services, such as data centers, while continuing to focus on keeping costs low and maximizing their existing IT investments.

In an e-mail interview, Khoo noted that with the announcement under the government's Economic Transformation Program (ETP), Malaysia is seeking to be a world-class hub for data centers in the region. The ETP is designed to boost the country into a high-income nation by doubling its per capita income to US$15,000 by 2020. A bulk of the program involves infrastructure-driven projects such as the Mass Rapid Transport system due to kick off in July.

He said HDS expects to see growing interest in data center infrastructure and related services such as co-location and Web-hosting, managed networks, disaster recovery and other outsourcing services.

Skilled workers needed
Khoo, however, cautioned that Malaysia still lacked a skilled and knowledgeable workforce to complement these infrastructure investments. He noted that the country faces a shortage in human capital with skills that are particularly crucial for the ICT industry.

"Malaysia is globally recognized as a profitable regional hub for shared-services activities," he said. "It is vital that both the government and [industry] intensify efforts to address this to remain competitive against our neighbors in the region."

Yuri Wahab, country general manager for Dell, concurred. "More initiatives such as the newly established Talent Corporation aimed at attracting human capital, including Malaysians working overseas, are vital to ensure the nation's talent pool grows and that our knowledge workers contribute positively toward the development of the country," Wahab said.

He also expressed enthusiasm for Malaysia's ICT industry, pointing to the rollout of the country's high-speed broadband initiative. He added that it will promote greater digital inclusion, which is a key contributor to economic growth.

"This would allow more Malaysians and local entrepreneurs to connect to and participate in an increasingly global and borderless economy… We believe that this will also drive ICT consumption in the country," he said.

Edwin Yapp is a freelance IT writer based in Malaysia.

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