This report talked about the policy initiatives taken up by the Malay government with a goal to build high e-Readiness for the country, especially in the ICT4D domain

1. ICT empowering citizens of Malaysia: Development
with Destiny
January-2007
Upasna Kakroo
Senior Research Associate
csdms
upasna@csdms.in
Malaysia, an upper-middle economic state in SouthEast Asia, found its connectivity with the
world with the installation of the first telephone line in 1874. The country developed its first
computer system in 1966 and since then several initiatives to facilitate the integration of ICT
in different areas have been introduced. The privatisation of the telecom sector in 1987, and
the formation of the NTP (National Telecom policy) in 1994, led to the full liberalisation of the
market. The enactment of the Communi-cations and Multimedia act in 1998 established the
Malaysian Communication and Multimedia Commission (regulator) in support of national
policy objectives. The regulator provides for economic, technical, consumer and social
regulation ensuring competitiveness, licensing, frequency allocation, affordability and
availability of ICT technologies and services. Framework for development (FID) is a five year
rolling plan for ICT development. The country now faces the dilemma of ensuring global
competitiveness as well as access to all.
e-Readiness of Malaysia
With a population of 25.58 million (2004) over an area of 330,000 sq. kms., Malaysia had an
average population density of 74 people per square km., though it is unevenly spread across
the country with the bulk of the population residing in the west half of the country. The
economy of the country has been robust even in the wake of the economic setbacks in the
Southeast Asian economies in 2000 and a SARS outbreak in 2003. The GDP of the country
was reported as RM394 billion (2003) (RM 3.8= US $1), with a growth of 5.2 percent over
2002.

2. ICT has grown substantially in Malaysia contributing a (gross) revenue of RM19 billion to the
economy. The total telephone penetration rates have reached a combined telephone
penetration of 61.99 telephones per 100 people (2003).
The tele-density (fixed) has climbed to 20, with the mobile phone connections overtaking
fixed lines. Deployments for 3G and EDGE mobile networks have also started. Malaysia's
performance with respect to other ASEAN countries has also been good, as shown in the
graph.
The country's Internet development started in 1988 and by the end of 2003 the total dial-up
penetration rate was 11.4 percent. Broadband Internet services started in 2001 and are still
in their infancy. The absence of regulatory mechanisms allowing for local loop unbundling,
the slow paces of the incumbent, and issues with last-mile connectivity have resulted in
wireless broadband being preferred by operators. The broadband as well as the mobile
segments though have been deployed around cities and urban areas.
Malaysia has embarked upon various measures to ensure the ICTs play an important role in
the society. For ICT development the MSC - Multimedia Super Corridor (for global
competitiveness) has been developed.
The government has invested highly in its infrastructure. The MSC contains a high-speed
10Gb/s network connecting MSC to Japan, ASEAN, EU and the US. It supports public
administration, education and business applications. Malaysia was ranked 26th in the world
for e-Readiness. The telephone penetration rates rose by 7 percent while for the rural sector
there was a rise of 6 percent (2000).

3. Facing challenges
ICT infrastructure development in Malaysia has been concentrated mainly in the urban areas.
Even in the urban sector itself some areas are highly developed as compared to others.
Regional differences in economic development and population density across the country
have also resulted in some areas are considerably lagging behind. About 89 out of 136
districts in the country have been identified as undeserved. According to MEWC, about 3000
villages are not connected to the country's communication infrastructure.
The divide exists due to illiteracy, low incomes, amongst physically challenged people and
due to difference in ethnicity, gender marginalising people whose access to ICT services is
limited. Relatively low PC ownership has also been a reason for low access. The urban-poor of
the country are also disadvantaged digitally.
The country is a federation of 13 states and 3 federal states. According to estimates the
'Bumiputeras' have low incomes and low education levels and suffer the most due to
knowledge divide as well as digital divide. Data suggests that the states of Kedah, Sabah,
Sarawak, Terengganu, Kelantan, Perlis and Pehang have more than 50 percent people in
rural areas and also the highest percentage of 'Bumiputeras' in their population constitution.
Thus they lag behind the rest of the country in terms of ICT.
According to the available data, most of the states mentioned have had traditional
agro-economies and have had little development in terms of ICT industries. These states
currently have a mean GDP less than the mean GDP of the country. The percentage of people
below the poverty line is also higher than the national average in most of these states. More
number of people here have never been educated. Some of these states specifically
Kelantan and Terengganu consist of some socio-cultural and religious parameters causing
prominent gender divide, as has been observed in other South Asian and South-East Asian
countries as well. Some of these states, specifically Sabah and Sarawak have a large number
of ethnic groups, that sometimes causes difficulty in policy implementation as observed by
several studies. It is not only an issue in Malaysia but also an issue in most countries around

4. South Asia. Political instability is
also sometimes experienced,
especially in the states like Sabah which has the chief minister changing after every two years
(so that all ethnic communities are equally represented) and Kelantan which is the only state
not ruled by the BN party alliance. It is evident that political stability poses great hindrance
to the growth in most countries around the developing world. Also, according to sources,
Sabah has had an inequitable distribution of wealth between the state and federal
government, which has adversely affected progress. The state of ICT in these states is below
the national level. These states have low tele-density values and high number of undeserved
areas. Sabah and Sarawak are the poorest states in Malaysia with the highest unemployment
rates and have been the targets for many a development schemes.
'Vision' with ICT – mission for knowledge
In the recent past, there has been lot of arguments on how to close the digital divide, while
access to all is essential, it doesn't meet the purpose. Effectively, meaning that when people
on the wrong side of the digital divide will be able to use technology to their benefit in a
manner similar to everyone else, only then the gap will close.
Malaysia has taken a pro-active approach to solve the issue. This is especially evident in the
8th and 9th Malaysia plans wherein the government has taken policy initiatives and with the
help of private partners, several programmes for deploying ICT infrastructure have been
started in remote areas. To enable Malaysia's growth into a knowledge society, various plans-
NITA '96 and Vision 2020 have been initiated. ICT has been recommended as being strategic
for development.
The Vision 2020 plan envisions Malaysia as a developed country by 2020 with the
establishment of a K (knowledge)-community. Special emphasis has been given to
development of infrastructure and potential human capital by involving state, local
governments as well as the private-public community. ICT plans for universal access, content
development, affordability, lifelong learning have been started. RM 1098 million was
allocated for ICT- related activities for bridging the Digital Divide with RM10 million for local
content development in the 8th Malaysian plan.
A Strategic Thrust Implementation Committee (STIC) has been set up to monitor the
implementation of plans. 60 initiatives have been implemented upto 2002. Malaysian
Administration, Modernisation and Management Planning Unit (MAMPU) has been set up
within the Prime Minister's office as the lead agency in the public sector for ICT development.
MSC has also established some key projects: e-Governance, multipurpose cards, smart
schools, tele-health, R&D clusters, e-Business, etc.
Specific policy initiatives

5. • Universal Service Provision - It enables the creation of a USP fund, administered by
the regulator MCMC. The fund pays for capital expenditure and yearly operational
expenses incurred on providing services under the plan. The areas, which have a
penetration rate of less than 20 percent below the national rate, are categorised as
undeserving.
• Licensing – It has been made flexible keeping in mind the imbalance in the ICT
infrastructure through the country. Wireless technology has been promoted with
deployments being made easier by various spectrum allocation policies whereby the
spectrum has been made more affordable.
• The DAGS (Department Application Grant Scheme) – It is intended for facilitating
social and economic progress through innovative use of ICT.
Community kiosks in the rural areas have been established under programmes like the Rural
Internet Centre (Internet Desa), Community Communication Development Programme, etc.
The programmes have tried to involve the rural communities and helped to connect them to
the K-community. ICT training has been encouraged with economic training in relevant fields.
Free Internet access has been provided at post offices and petrol stations and in multipurpose
kiosks. Social and economic programmes through the use of ICTs have also been started.
e-Commerce and e-Communities have been encouraged especially in projects like the
AkisNet and TaniNet where e-Agriculture software applications have been made available to
help improve cost efficiency. Online ordering and auctioning systems have also been put in
place to streamline the supply and the demand chain.
Regional development has also been promoted with state-wise programmes. In Sabah, the
Resource Development and IT Ministry directed a grant of RM 33.6 million for ICT
development in the state. They would be given a further RM 1.38 billion according to the 9th
Malaysia plan. The state departments likely to be benefited are- forestry, land & survey dept.,
the state library, and public works. In Sarawak, which established the UNIMAS after Vision
2020 plan, projects like e-Bario and e-Bedian with active community involvement have
received awards. In Kedah, a project called KTOPIA has been initiated which is a
public-private partnership with open public infrastructure and multiple service providers,
aimed at bringing broadband to all. Terengganu has initiated a tripartite alliance for ICT
projects between Extremadura region Spain, State govt., and Mimos Bhd. for e-Learning,
e-Business and information security.
The road ahead

6. The Malaysian government has been very proactive
towards ICT development, and Malaysia was ranked 30th
in the world for Internet penetration. Various
dimensions characterise the state of ICT in a country. Absorption, connectivity infrastructure
and sophistication of use are the problem areas in Malaysia at present. The country is still
lagging behind in broadband development.
The issues and challenges Malaysia may be confronted with in an attempt to close the digital
divide are enormous. On one end it is looking towards competing globally in the ICT sector
while on the other hand, a large group of people is lagging behind. The country also faces a
dilemma in a trade off between devoting resources to MSC at the expense of ICT4D.
Definitive attempts thus are necessary for developing a strategy, which would ensure 'growth
with equity'.
Even though a number of ICT4D programmes have been initiated a lot is yet to be achieved.
Also, with a number of plans for ICT development, some clarity is needed in overlapping
areas. The division of responsibilities amongst various depart-ments, which manage various
projects, can sometimes prove difficult to discern.
Most of the states mentioned lagging behind have an agricultural base, so it would be
advantageous to bring in programmes like the 'AkisNet' and 'TaniNet' to these states. It is
imperative that the 'old' and 'new' economies are made to co-exist. Though there are
programmes with national coverage, which look into the above issues, they are based in
bigger cities and it would make sense to have a base in the rural areas too. It would be
sensible to have an independent agency to monitor the ICT activities in the states. A lot of the
websites are under-construction and inaccessible.
Malaysia is a multiethnic society and the knowledge and digital divide is multidimensional in
nature, this implies that great care has to be taken in the proper and fair implementation of
the projects. A better system of data collection and a feedback mechanism needs to be in

7. place for the same.
A tri-sectoral partnership involving the government, a private partner and the community
should be encouraged to instill the importance of learning and knowledge in the minds of the
Malaysians which would further help promote the concept of a K-based economy, with ICT as
the relevant tool to reach that goal. The adoption of private led initiatives can alleviate the
burden on the government and provide benefits to the private sector also. Several such
initiatives have had success and through the implementation of these policies, initiatives and
activities the role of ICT towards socio-economic development has been impressed upon the
Malaysian population, which is the driving motivation behind the country's huge effort in
bridging the digital divide. The future focus of the country thus will remain towards
strengthening the human capital, developing hard and soft e-Infrastructure, bringing
innovations through ICT in the small medium enter-prises and reducing the digital divide.
References available online (www.i4donline.net)
Source: http://www.i4donline.net/ 01/2007