This series is produced in collaboration with the Fintech Association of Malaysia (FAOM), a national platform that supports Malaysia become the leading hub for fintech innovation and investment in the region.
An academic working in Indonesia told me that nowadays, the easiest way to win a research grant is to throw in the phrase Industrial Revolution 4.0, with all its accompanying accessories: digitisation, innovation hubs, 5G connectivity, etc.
The COVID-19 pandemic has vastly accelerated the pace of digitisation, bringing millions, whether by entrepreneurship or by pure necessity, into the realm of e-commerce, digital payments, and virtual spaces. It has galvanised talk of fostering innovation and thrust government policy surrounding the digital economy into the spotlight. Every policymaker is eager to crack the code in terms of what can attract founders, and of course, investments, into a nation.
For more than a decade, Dato Ng Wan Peng was a key figure at the Malaysian Digital Economy Corporation (MDEC), driving investments, building local tech champions, and propagating digital inclusivity. She was crucial to the rollout of the Multimedia Super Corridor. She has weathered through sweeping reforms, a historic change in government (twice), and gained a formidable reputation as a highly pragmatic, systems-focused executive. She is perhaps one of the most experienced people in the region regarding growing a digital economy.
Twenty minutes into the interview, when I bring up the impact of the pandemic, she pounces on the topic with frank, sobering precision:
“The digital divide has always been there. It just has been laid bare by the pandemic and it is a wake-up call that a lot more needs to be done. Infrastructure was supposed to be the ‘easy’ part, but there are huge gaps that still exist.”
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Indeed, the pandemic has supercharged digital adoption. Karen Puah, President of the Fintech Association of Malaysia (FAOM) noted that QR code registration has tripled, going from 330,000 to more than one million in one year; while digital payments have grown 44 per cent in the first half of 2021 to MYR4.5 billion (US$1 billion). Yet, it has also highlighted glaring gaps. “What Dato Wan Peng points out is absolutely key. Financial literacy, connectivity, merchant coverage, all these aspects of digital inequality are going to be the make or break as to whether this transformation benefits the larger segment of society.”
Dato Wan Peng wastes no time in pressing the issue:
“Now is the time to make it happen. The crisis has made it such that awareness of the importance of digitalisation is now sky-high. It has become a mainstream political agenda, where internet and e-commerce have become voter issues even during the recent state elections. What we need now is a clear plan. The plan should be out in the open so everyone knows, everyone can participate, everyone can contribute. Communication is key; the policies are usually there but it is sometimes not clear, and people feel changes are arbitrary or sudden.”
Of course, there is the elephant in the room – we can talk a good talk, but at the end of the day, can Malaysia really be a digital innovation hub, for fintech or for the larger tech industry?
“After everything is said and done, it comes down to execution. Look, this is a cliché by now, but Malaysia has a lot of advantages. Our talent is adaptable, trainable, loyal, linguistically accomplished, and culturally-savvy; our jurisdiction is business-friendly, flexible.”
“So local talent is great, but are we retaining them? Are we providing a conducive environment for them to grow? We have a lot of money being poured into the digital economy, but is it being used at the right places, with purpose? We consistently have great blueprints, but how is it being implemented on a day-to-day, person-to-person basis?” Even through the glaring blue light of the computer screen, through the audio encoding of Zoom, one can hear Dato Wan Peng’s real passion (and frustration) for the topic.
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But we come back to solutions, not problems. What is the grand panacea to all these issues? What is the glue that could tie in all the building blocks Malaysia (or many other jurisdictions) supposedly already has?
Dato Wan Peng looks at me, and states her case simply as if it were the most obvious thing in the world.
“Clarity. From an investor’s perspective, they want clarity. This is not the same as a guarantee of results; all investors understand there is risk involved. But clarity in terms of the plan is essential. Then we need to stick to it. The issue is that policies keep changing direction, chasing the latest fad, and moving on to the next thing without having pursued the previous goal properly. This, of course, feeds into political stability: whether investors can trust the policies you say will be there now, will still exist into the future.”
In this respect, Puah completely agrees. “Political stability is a real issue for investors, it has a direct bearing on the reliability of our policies. If we can get our policies consistent and clear, then we can do a lot better. For a business to truly scale, they need to hit a market with a sizeable middle class.”
Dato Wan Peng continues to expound on what clarity could bring to a country:
“We need that clear goal then we need to break it down to bite-sized tasks we can execute, then push it forwards at every single level –public and private. Many people go on and on about how other places are awash in money. Money is undeniably a factor, but it cannot keep people around forever. There needs to be a value add; as a country, you have to be very clear you are driving this agenda, and it cannot be wishy-washy.”
“One example is global business services (GBS), especially in animation, design, and game studios. Malaysia has done very well in this. This is because we tackled it from multiple angles with a clear and consistent strategy: having the right educational institutes produce quality talent, having the facilities and infrastructure, and having supportive policies which allowed us to position ourselves well in this burgeoning market.”
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Turning to specific industries, I ask what could be the next technology that may revolutionise the Malaysian digital economy. Unwavering, Dato Wan Peng puts me down gently: “It’s not what technology that is the question. It is how we are going to utilise that technology that really matters.”
Puah provides a ground-level view of what needs to happen next. “Ultimately, it falls back to how companies are enabled and how they respond. This pandemic, we saw a huge growth in fintech, but really, it was not so much the result of new products, but more of the influx of older generations, SMEs, and migrant workers into these digital systems.”
“Whether or not they continue to stay past the pandemic, whether companies can ride on this momentum to supercharge their growth, it will be back to basics: expanding financial literacy initiatives, improving the user-friendliness of the product, ensuring the customer is taken care of throughout their lifecycle. They need to keep at it.”
At the end of it all, it always comes back to clarity and consistency.
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