Malaysia Information Technology Report Q1 2013

Business Monitor International
December 19, 2012
83 Pages - SKU: BMI4933623
Countries covered: Malaysia

BMI View: Malaysian IT spending is expected to reach US$5.6bn in 2013, up 7%, although economicactivity is expected to slow over the coming quarters. Demand for IT products and services is forecast tostay resilient overall, even as economic growth moderates. There should be several areas of opportunity,particularly in key spending verticals such as telecoms, and a new government Digital Malaysia Plan wasunveiled in 2012. Spending on IT products and services should be boosted by growing enterprise andgovernment interest in cloud computing, and ICT-friendly budget measures, but much will depend onconfidence in a sustainable economic recovery. Malaysia's IT market is distinguished by a marked digitaldivide and, in the Klang Valley area around Kuala Lumpur, a mature urban population surpasses evensome developed nations in terms of IT adoption on some indicators.

Headline Expenditure Projections

Computer hardware sales: US$2.7bn in 2012 to US$2.9bn in 2013, +6% in US dollar terms. Forecast inUS dollar terms upwardly revised due to to macroeconomic factors, and PC sales will be supported by thegovernment's push for greater broadband penetration.

Software sales: US$876mn in 2012 to US$952mn in 2013, +9% in US dollar terms. Forecast in USdollar terms upwardly revised due to analyst modification, and e-business applications such as enterpriseresource planning (ERP) and customer relationship management (CRM) are becoming increasinglypopular in the business market.

IT services sales: US$1.6bn in 2012 to US$1.8bn in 2013, +9% in US dollar terms. Forecast in US dollarterms upwardly revised with government accounting for about 15% of Malaysian IT spending.Risk/Reward Ratings: Malaysia's score is 51.2 out of 100.0. Malaysia ranks fifth in our latest Asia RRRtable, behind developed markets such as Singapore and Australia, but ahead of ASEANregional peers such as Thailand, Philippines and Vietnam. Its overall rating was boosted byrelatively high 'country structure' and 'market risk' scores.

Key Trends & Developments

The MSC Malaysia has named cloud computing as a strategic priority and has said that it will tryto develop a national cloud computing platform. Cloud projects are not confined to the nationallevel, as state governments are also exploring this area. Malaysia's Melaka State Government hasstarted to build new infrastructure, including a common datacentre and a disaster recoverycentre. The Melaka State Government has virtualised the datacentre infrastructure to make sureit is 'cloud-enabled'. Cloud computing is also seen in Malaysia as having considerable utility forschools.

Around 90% of Bursa Malaysia companies fall into the small and medium-sized enterprise(SME) category and these are increasingly being seen as a key IT vertical demand sector in thecountry. Many are facing a tough time due to rising costs and high oil prices. At the same time,SMEs need to become more competitive and have greater access to information and technology.Cloud computing software delivery models, with monthly costs as low as MYR300, are seen ashaving great potential to help more SMEs to access technology.

In 2012 the government announced its latest Digital Malaysia Masterplan to drive the next stageof development of Malaysia's ICT sector. The plan will propose a number of measures tostrengthen Malaysia's ICT ecosystem, including talent development, as well as stimulatingdemand by consumers and businesses for ICT products and services. Encouraging the creation ofmore local applications for cloud computing is expected to be one focus of the Digital Malaysiaplan. The government's plan to develop a national cloud computing programme should also driveopportunities in this key emerging area for vendors.

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