Over the past decade, Malaysia has been undergoing a digital transformation thanks to a robust ICT environment, supportive government policy, and investments in cybersecurity and emerging technology. Digitalization is expected to add an estimated $10 billion to Malaysia’s GDP by 2021 and increase the growth rate by 0.6% annually, according to a study by Microsoft and IDC Asia/Pacific.
Yet the country ranks sixth in the Economist Intelligence Unit’s Asian Digital Transformation Index, and behind the average score of the 11 Asian markets covered in the study. The primary reason is Malaysia’s lag in the ‘industry connectivity’ category – meaning the propensity of companies to collaborate with other organizations and communities to advance digital transformation.
A report by the World Bank Group and Malaysia’s Ministry of Finance confirmed that “Malaysian businesses have adopted associated technologies less readily than the Malaysian government or population.”
In an effort to accelerate digitalization, in April 2018, the Malaysia Digital Economy Corporation (MDEC) launched its Digital Transformation Acceleration Programme (DTAP), aimed at offering Malaysian companies a structured approach to transformation, leveraging the expertise of its Digital Transformation Labs’ in the adoption of emerging digital technologies.
Including SMEs, which account for 98.5% of Malaysian businesses and contribute 36.6% of the country’s GDP, in the fourth industrial revolution presents a particular opportunity, says Indranil Lahiri, president and CEO of Siemens Malaysia. “We are reaching out to SMEs in Malaysia to show them the way forward, in terms of the digitally enhanced automation that we have to offer.”
Siemens Malaysia launched a ‘digitalization expedition’ this year moving through six different locations from Sabah to Kelantan to help businesses map out their digital direction. The company also teamed up with training provider Kedah Industrial Skills and Management Development Centre to run a Siemens Mechatronics Systems Certification Program.
“We started with this expedition, because we wanted to take it out to SMEs and increase our reach,” Lahiri says. “We cannot potentially reach out to all of them, so what we are doing is trying to create an ecosystem.” By using their own contacts, working with government organizations and industry associations, Siemens is trying to “bring them together and showcase the technologies so businesses can figure out what they can take from it.”
Traditionally a major player in manufacturing and automation, the focus on SMEs across a variety of verticals represents a new direction for Siemens says Lahiri. “The automation of tomorrow is going to be very different. Everything will be controlled by software and the cloud and will be hardware independent. To prepare for such a situation, we have to look at different industries and we have to look at different technologies right now.”
One example of the company’s expanded competencies is Mindsphere, a cloud-based, open IoT operating system that allows a business’s products, plants, systems, and machines to speak to each other.
“Every manufacturing unit probably has hundreds of different kinds of machines coming from hundreds of different suppliers with hundreds of different kinds of sensors and controllers,’’ he says, adding that “they are all talking different languages, so what is needed is an open IoT platform, which can be used by multiple players.’’
The focus on SMEs, many of which are manufacturers, is a win-win. Siemens can unlock a new customer base by enabling those enterprises to access technologies that their leaders might not have even known were available for smaller-sized business. For Malaysia, connecting SMEs with the digitalization ecosystem is key to accelerating the nation’s economic competitiveness.