TECHNOLOGY and innovation go hand in hand in today’s digital world, and according to the World Bank’s Senior Economist Smita Kuriakose, Malaysia is making good progress.

“Technology-led innovations are pivotal in economic transformation, job creation, and the growth of an economy. The use of technology is transforming the way businesses do business and nations trade, and in effect, influencing consumer preferences,” Kuriakose told Tech Wire Asia.

The Malaysian digital entrepreneurship ecosystem is young, yet during its brief existence, has seen substantial growth.

It’s important to remember that 98 percent of Malaysian businesses are SMEs and moving them into the digital space is not only critical to their survival but also important for the nation’s transformation.

Luckily, almost every aspect of business, in every industry in Malaysia, has seen progress on the digital front.

“In large part, this is due to the government mandate put forth to harness and promote the digital economy in the late nineties.”

The Senior Economist points out that there have been countless regulations, initiatives, programs, and agencies established in support of the directive, most notably around entrepreneurship, all of which have helped Malaysians interested in starting and scaling up a business.

The promotion of digital entrepreneurship, and several notable examples of Malaysian companies’ success has helped more people accept and adopt an increasingly modern and progressive lifestyle, which has massive overarching benefits to the economy.

Though some areas of digital adoption are slow to take up, the current culture in Malaysia’s digital entrepreneurship ecosystem is buzzing and, Kuriakose believes, is on the verge of reaching its pinnacle.

“Having already brought people back into the workforce, it has ignited the private sector with homegrown solutions that not only benefit the Malaysian society, but also offer gains to the economy, and most importantly have made the Malaysian market better known globally.”

Malaysia needs more talent to go full throttle on digital

While analyzing the digital entrepreneurship landscape for The World Bank Digital Economy Report, 2018, the difficulty of finding highly skilled local technical talent came out as a major constraint.

“This may be an indication of the need to revise the curriculum of the education system, a need to reskill existing talent, or a result of the high levels of brain drain and is a barrier to Malaysia being able to fully expand its digital economy.”

While the data from the Global Competitiveness Index suggests an improvement in education and skills quality over the past decade, according to the National SME Development Council, SMEs and start-ups still face difficulties in recruiting and retaining skilled workers at the technical, supervisory and managerial levels.

Thus, ensuring that the skills of the Malaysian population are developing in tandem with technology is essential to reaping the benefits of an increasingly digital world, such as promoting inclusive labor markets, reducing the risk of increased unemployment and growing inequality, and spurring innovation, productivity, and growth.

In the 2018 budget, the government re-constituted its focus on STEM education and coding in schools by announcing MYR250 million (US$60 million) for teacher training, with an additional RM190 million (US$45 million) for the creation of 2,000 “smart classes” in schools, and lastly extending the curriculum for coding in secondary schools to primary schools.

“These are crucial steps and could have a critical impact on the country’s productivity,” emphasized Kuriakose.

Well begun, but what next for Malaysia’s digital growth?

The Malaysian Government’s digital strategy has been focused on technology adoption and “digitization” of more traditional industries.

“The next step would require laying the groundwork for the development of more advanced technology that can have impacts in sectors beyond mobile telephony, in sectors such as agriculture. For digital to have a disruptive impact on the economy, it is essential to invest in high-tech innovation.”

According to the World Bank’s Senior Economist, Malaysia needs to create institutions that can help nurture and sustain innovation to increase their attractiveness to investors.

She emphasized that a specific emphasis on the development of skills and education of existing workers and new workers entering the industry is needed.

“They need to be equipped with the know how that is required to help Malaysia fully realize its innovation potential.”

Kuriakose, who will be sharing more ideas about fuelling digital growth at Malaysia Tech Week later this month, said that it is key for the country to showcase its innovative abilities at platforms with global audiences, to drive foreign investor confidence that can boost the nation’s digital economy.

After all, that’s what will help accelerate progress for businesses and people in the country. Looking at the numbers, it seems Malaysia is doing quite a good job on that front.

Recently released figures from the Malaysian Investment Development Authority (MIDA) suggest that Malaysia’s approved foreign direct investment (FDI) hit an all-time high last year.

The country’s approved FDI reached MYR 80.5 billion (US$19.3 billion), a 48 percent jump over 2017’s MYR 54.4 billion (US$13 billion).

Going by the conversation with Kuriakose, Malaysia is headed towards an exciting and competitive digital future, leading the APAC region, closely following its neighbors Singapore, Hong Kong, and Australia.