Malaysia Information Technology Industry Update Quarter 1 2012

  • December 2013
  • -
  • Business Monitor International
  • -
  • 80 pages

Market Overview
Malaysian IT spending is expected to grow to US Dollar 5.2bn in 2012, from US Dollar 4.9bn in 2011. BMI projections 9% overall growth in Malaysian IT spending in 2011. Demand is expected to stay resilient overall, even as economic growth moderates. IT-friendly budget measures boosted the upturn in 2011 and there was also a boost from previously delayed computer hardware tenders.
There will be increasingly attractive opportunities in the IT services area as the government implements measures to make Malaysia a regional services hub. The government has a number of initiatives with favourable implications for demand for IT products and services, including cloud computing for SMEs and computers for education programmes.
The IT industry overall has strong growth fundamentals and key segments will include government, telecoms and finance, including Islamic banking. The National Broadband Initiative has the potential to boost demand across all IT industry sectors .

Industry Developments
In October 2011, the Multimedia Development Corporation (MDeC) announced it was allocating RM1.8mn to help SMEs to use cloud-computing. The funds will be provided in the form of disbursements and benefits for independent software vendors (ISVs) to develop cloud solutions for SMEs. The MDeC has also set aside RM2.25mn to deploy cloud software and services developed by ISVs.
Malaysia's 2011 budget contained a number of measures to boost the IT market and help stimulate ICT adoption in the country. Key measures included a two-year extension on import tax and revenues tax exemption on broadband equipment, and the establishment of the MY Creative Content programme to encourage the development of local content. The tax exemption should stimulate the purchase of various types of connectivity devices, including notebook PCs.
In H111, the Malaysian government announced a new initiative to provide every adult in the country with a free web-based email account. The 'Malaysia Email' initiative, which will enable the government to deliver tax returns, court documents and other official notices online, is expected to provide a major boost to e-government development. The government will spend US Dollar 16.6mn setting up the service.
Competitive Landscape
Cloud computing services are now being actively promoted by vendors in the Malaysian industry . In August 2011, Malaysia telco giant Maxis launched its 'Maxis Cloud' service, which it promoted as an ondemand, full-managed cloud service. Maxis Cloud features a self-service portal that provides real-time statistics, and simplified remote management. Clients can access the service via Maxis's 100 Gbps optical backbone network and Telekom Malaysia's HSBB network.
Japanese IT vendors are also actively pursuing the cloud opportunity in Malaysia. In August 2011, Fujitsu Malaysia announced it had formed a partnership with local IT giant HeiTech Padu to grow cloud offerings in Malaysia. The partnership, which also includes data-storage industry player NetApp, will target projects in the government segment, as well as banks and oil and gas firms .
One focus for Microsoft and other software vendors is to make products more affordable to the key small and medium-sized enterprises (SME) sector . In 2011, Microsot launched a cooperation agreement with the SME Corp Malaysia to provide SMEs with cloud computing solutions based on Microsoft's Office 365 software.
Computer Sales
BMI projections that the addressable Malaysian computer hardware industry, including notebooks and peripherals, will have a value of US Dollar 2.7bn in 2012, up from US Dollar 2.6bn in 2011. PC revenues will be supported by the government's push for greater broadband penetration, for which an optimistic target of 75% by 2011 was set.
Other factors include ICT in education programmes and a number of e-government initiatives. The government is determined to tackle the digital gap beyond the Klang Valley and is rolling out an extensive network of community PC centres. One of the target groups of the plan is middle-income potential computer owners who have the ability to afford a PC. Such initiatives, alongside falling prices, are opening up the industry to lower income tiers.
Software
Malaysia's addressable software industry is expected to grow to US Dollar 871mn in 2012, consolidating a recovery in 2011. The cloud computing spend is projection to grow in 2012 as more small industry players adopt the idea, creating opportunities for vendors along the market chain.
E-business applications such as enterprise resource planning (ERP) and finance are Becoming increasingly popular in the business industry as enterprises try to enhance productivity through automating accounting and other functions. Customer relationship management (CRM) is expected to be a doubledigit growth opportunity despite the economic downturn. Software-as-a-service (SaaS) has achieved double-digit regional growth in Malaysia in the past few years, but this industry is still at an early stage.
IT Services
The government has accounted for about 15% of Malaysian IT spending in recent years. The upgrade of core banking systems will drive bank spending on application services. The government also continues to try and create a more competitive environment in the telecoms segment, encouraging newly licensed WiMAX operators to roll out services.
E-Readiness
Malaysia is developing most 'e-society' indicators at a steady rate. The government is pursuing programmes to reduce the digital divide between urban and rural areas, with the Ministry of Rural and Regional Development cooperating with the Ministry of Science, Technology and Innovation and the national IT market association on plans to establish more community PC centres in the country. Nearly 2,000 centres are already managed by the Economic Planning Unit.
The growing popularity of broadband, after a slow start, is set to be an important driver of PC penetration over the next few years. To encourage faster penetration, the government awarded WiMAX licences are to be issued to a number of service providers, including ISP Jaring. Telekom Malaysia was awarded a MYR11.31bn contract to roll out a high-speed broadband network. The government will invest MYR2.4bn and Telekom will foot the rest of the bill. This covers the first phase of the project that will be implemented over 10 years.
Over BMI's five-year projection period, the most potential for large projects is in segments such as financial services, oil and gas, telecoms and agriculture.

Table Of Contents

Executive Summary . 5
Industry SWOT Analysis 8
Malaysia IT SWOT .. 8
Malaysia Telecoms SWOT 8
Malaysia Political Environment and Risk Analysis 9
Malaysia Economic Environment and Risk Analysis 10
Malaysia Business Environment SWOT . 11
IT Business Environment Ratings . 12
Regional IT Business Environment Ratings .. 12
Asia IT Industries Overview 17
IT Penetration .. 17
IT Growth And Drivers 19

Industry Analysis .. 24
Government Authority .. 24
Background 24
Hardware 26
Software .. 28
Services 30
Banking 33
Islamic Banking .. 33
Telecoms . 33

Industry Developments 34
Open-Source Software . 36
IT-BPO 37

Market Projection Scenario 38
Market Drivers 39
Segments . 39
Summary . 41
Data : Malaysia's IT Segment - Historical Data and Projections (US$mn Unless Otherwise Stated) . 41
Internet .. 42
Telecoms Segment - Internet - Historical Data And Projections 42

Competition Overview .. 44
Hardware 44
Software .. 45
IT Services . 47
Internet Competitive Landscape . 49
Macroeconomic Projection 50
Data : Malaysia - Economic Activity .. 52
Company Profiles 53
IBM Malaysia .. 53
HeiTech Padu .. 55
HP Malaysia . 56
Microsoft Malaysia 57
Country Snapshot: Malaysia Demographic Data . 58

Section I : Population 58
Data : Demographic Indicators, 2005-2030 . 58
Data : Rural/Urban Breakdown, 2005-2030 59

Section II : Education And Healthcare .. 59
Data : Education, 2000-2003 .. 59
Data : Vital Statistics, 2005-2030 .. 59

Section III : Labour Industry And Spending Power . 60
Data : Employment Indicators, from 2001 to 2006 60
Data : Consumer Expenditure, from 2000 to 2012 (US$) .. 60
Data : Average Annual Manufacturing Wages, from 2000 to 2012 .. 61
BMI Methodology 62
How We Generate Our Market Projections 62
Transport Market . 62
Sources .. 63

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