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5.1_Ramasamy_Malaysia

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									Dynamics of ICT Sector
    in Malaysia
           by

 Ramachandran Ramasamy




          Seminar on ICT Statistics, 
           Seoul, 19­21 July 2010
About Malaysia
Commands 80 % of ICT industry




                                About PIKOM
Partnerships
• Department of Statistics Malaysia  (DOSM)
      Provided the requisite ICT data (2000­2007)

• ORBICOM ­ Network of United Nations Education, Scientific and 
Cultural Organization (UNESCO) Chairs in Communication
       Provided strategic content planning , financial , 
    administrative and logistic support

Objectives
• Statistical Compilation of ICT Sector and Policy Analysis 
        Malaysian Economic Outlook and its Transitions
        ICT Definition, Scope and Coverage
        ICT Sector Data
        ICT as an Enabler of Society & Economy
• Challenges & Issues



                                                 Introduction 
                                            Partnerships  and Objectives
GNI Per Capita                                                              2010 GNI per capita:
                   1970      2009
   (USD$)                                                                 RM26,420 (USD8,256)
    Korea          260       21,530                                        2009 Household Income:
  Malaysia         380       6,760                                        RM4,025 (USD 1,183)
                                           1995 GNI per capita:
                                                 RM5406
                                         1995 Household Income:                                                2020 Target:
                                                RM2020                                                        USD21,834
              1980 GNI per capita:                                                                      10th MP (2011-2015)
                   RM1820                                                                                    USD12,139
             1980 Household Income:                                                                     Developed Economy
                    RM692                                                                                  Benchmark:
                                                                                                           USD14,818
                                                                            Info-structure (ICT), science, R&D,
                                                                            knowledge capital, innovation skills, XY
                                                                            Generations, entrepreneurship and
                                                                            globalization
                                      Infrastructure, Capital, Factory,
                                      Technical Skills and Semi-                 HIGH INCOME –
                                      skilled Workforce
              Land, labour and low
                                                                              INNOVATION DRIVEN
              skills                     MIDDLE INCOME –                           ECONOMY
                                       INVESTMENT DRIVEN
   LOW INCOME – FACTOR                      ECONOMY
     DRIVEN ECONOMY
                                                                                                    Source: DOSM /10th Plan /PIKOM




                                                          New Economy Model:
                                                      High Income Migration Towards 
                                                                  2020 
  Liberalization, New 
   Economic Model 
    and 1Malaysia:
    30th June, 2009
                                    High Income Drivers
(Datuk Seri Najib Razak)


            High Value Innovation                        High Value Creativity

        Non‐
                                                                        Non‐
         ICT 
       Enabled
                                  ICT Enabled                            ICT 
                                                                       Enabled
                           ICT ubiquitously and pervasively used 
                                    by ALL and for ALL:
                           (Business / Government / Consumer)
                                  B2B, B2C, G2B, G2C, C2C 

                                                                      Source: PIKOM, 2009




                                               ICT as a Strategy:
                                                Towards High Income 
ICT Production




   ICT Telecommunications




  ICT Computer




                            ICT Definition in MSIC 2000: 
                                  Structure and Scope
                                    Motion picture, video,        Programming and
Publishing Activities (58):         television, sound and         broadcasting activities (60)
                                    music productions (59)
• Publishing of books,              • Motion picture, video and
periodicals and other publishing                                  • Radio broadcasting (601);
                                    television programme
activities (581);                   activities (591);
                                                                  • Television programming and
• Software publishing (582)         • Sound recording and         broadcasting activities (602);
                                    music publishing (592);



    INFORMATION AND COMMUNICATION ( Section J, ISIC Rev. 4 )

    Information Activities(63)      Computer programming,              Telecommunications (61)
                                    consultancy and related
• Data processing, hosting and      activities (62)                  • Wired telecommunication
related activities; web portals                                      activities (611);
(631);                              • Computer programming,          • Wireless telecommunication
• Other information service         consultancy and related          activities (612);
activities (639)                    activities (620);                • Satellite telecommunication
•                                                                    activities (613)



                                   Pending implementation
                                          in 2011



                                                    ICT New Definition : 
                                                                  MSIC 2008
        VARIABLES                PRODUCTION                       SERVICES SECTOR                                    REMARK
                                   SECTOR
                                 Manufacturing           Computing           Telecommunication
                                  Industries              Services                Services
Number of                                √                    √                         √               Source:
establishments                                                                                          Services Statistics:
                                                                                                        Information Communications
Value of gross output                    √                    √                         √               Technology


Cost of input/                           √                    √                         √
intermediate
                                                                                                        For computing and tele communication
Value added                              √                    √                         √               sub-sectors cross-tabulations are
                                                                                                        available by:
Number of persons                        √                    √                         √
employed by type                                                                                        • Legal status;
                                                                                                        •Ownership status;
Salaries & wages paid                                                                                   • Output size
                                         √                    √                         √               • Employment size;
                                                                                                        • Asset size;

Value of assets owned                    √                    √                         √

Export                                                                                                  Balance of payment and national
                                         √                    X                         X               accounts records – estimated from
                                                                                                        “other services”.
Import                                   √                    X                         X
Sub-sectors of computing services include : Hardware consultancy, software consultancy & supply , data processing , database, maintenance
and repair of office accounting and computing machinery and other computer related activities;
• Sub-sector of telecommunications services include: Telephone , television and radio transmission, data communication and other
telecommunication services,


                                                                         DOSM Publication : 
                                                                                            ICT Scope
                            REVENUE                                                     EXPENDITURE
Computer Services             Telecommunication Services      Computer Services & Telecommunication Services

  Packaged software             Telephone services              Cost of materials used           Advertising and promotion

  Professional computer         Television and radio            Value of supplies consumed       Other services
  services                      transmission services
  Data processing services      Data communication services     Utilities                        Postage

  Database activities           Value of sales of goods and     Cost of goods sold               Financial charges
                                related services
  Maintenance and repair        Rental income                   Payment for current repairs      Insurance premiums
  of computers                                                  and maintenance on fixed         except worker’s
                                                                assets                           compensation insurance
  Other Services                Other income                    Research & development           Rent/ Rental payment

  Value of sales of goods                                       IT related services              Current depreciation on
  and related services                                                                           costs
  Rental income                                                 Telecommunication related        Royalties and other indirect
                                                                services                         taxes

  Other income                                                  Professional services            Employment cost :
                                                                                                  + Salaries & wages
                                                                                                  + Payment in kind to
Both computer and telecommunication services                                                        employees
have similar expenditure variables, while sources                                                 + Gratuity / retirement
of revenue differ


                                                                 DOSM Publication : 
                                                                                  ICT Scope
                         REVENUE                                                          EXPENDITURE
                                                                  Cost of raw material/components/parts used
Sales of manufactured/processed/assembled (market price)
                                                                  Cost of goods sold                   Payments for processing
Income from              • Fee received for processing work       (goods/materials purchased           work done by others on
industrial rendered        done for other establishments’ on      for resale without                   materials supplied by this
                           their materials                        undergoing further                   establishment
                         • Income from repairs & maintenance      processing
                           work done on other establishments’     Packing materials &                  Utilities (water, electricity)
                           machinery & equipment                  containers
                                                                  Materials used for repairs           Factory requisites (tools,
                                                                  and maintenance                      consumables)
Value of sales (from goods/materials purchased for resale
without further processing)                                       Fuels, lubricants & gas              Research & development

Value of other industrial work done (e.g. construction, quarry,   Payment for current repairs          Employment cost :
etc.                                                              and maintenance on fixed              + Salaries & wages
                                                                  assets done by others                 + Payment in kind to
Income from other output n.e.c. (e.g. scrap, electricity, waste                                           employees
product, etc.                                                                                           + Gratuity / retirement
                                                                                                        + Other labour costs
Professional fees received (e.g. accounting, management,                                                 (training cost, wearing
engineering, legal services, research & development (R&D)                                                 apparel provided)
                                                                  Indirect taxes (excise duties, sales tax, export tax, quit rent,
Rental income               Commission & brokerage earned         road tax and etc.)
                                                                  Payments for non-industrial services (carriage outwards,
                                                                  travelling expenses, advertising & promotion, IT expenses,
                                                                  bank/postal charges, telephone/internet fees, etc.
                                                                  Stationery & office supplies         Other expenses



                                                                  DOSM Publication : 
                                                                                    ICT Scope
                                                            ICT SECTOR
Economic
 Sector
                               Manufacturing                                               Services


                               ICT Production
Sub-Sector                                                           Telecommunication                Computer Services
                                 Sub-Sector
                                                                     Services Sub-Sector                 Sub-Sector
 Industry
  Group
(MISC 2-     30           31                   32             33              64                              72
  Digit)

                                                    32101
                                                                                     64201
                                                                                                                   72100
  Industry
Sub-Group
 (MISC 5-                                           32102                                                          72200
                                                                                     64202
    digit)
                  30001           31301
                                                                                                                   72300
                                                    32109                            64203

                                                                   33120
                                  31302                                                                            72400
                                                    32200
                                                                                     64204
                  30002
                                                                                                                   72500
                                                                   33130
                                  31309

                                                    32300                            64205
                                                                                                                   72900




                                          Structure of ICT Analysis:
                                Sector / Sub­Sector / Industry Group / Sub­Group
                                                                                                                                Share of
                                                                                                  Share of      Share of ICT                      Share of
                                         Year                                                                  Production to   Computer      Telecomm unication
                                                 Share of             Share of      Share of         ICT                       Services to
1) Share ICT value added to                     ICT Value
                                                Added to
                                                                         ICT
                                                                     Production
                                                                                       ICT
                                                                                    Ser vices
                                                                                                  Services
                                                                                                   to GDP
                                                                                                               Manufacturing      GDP         Services to GDP

   GDP declining due to                           GDP                  to GDP        to GDP       Services

   declining importance of                         %
                                                                  
                                                                         %             %             %              %              %                 %

   ICT production sector;                2000
                                                  11 .4                      8 .1           3.3          6.6            26.3           0.3                  2.9 
                                                                  
                                         2001
                                                  10 .0                      6 .5           3.6          6.8            22.1           0.4                  3.1 
2) But, share of ICT services            2002
                                                                  
                                                  10 .1                      6 .2           3.8          7.4            21.3           0.5                  3.3 
   component is continuously             2003
                                                                  

   increasing
                                                  9 .9                       6 .3           3.5          7.1            21.2           0.5                  3.0 
                                                                  
                                         2004
                                                  9 .4                       6 .2           3.2          6.8            20.5           0.6                  2.7 
                                                                  
3) Share of computer services            2005
                                                  9 .5                       5 .7           3.8          8.1            19.2           0.7                  3.1 

   kept increasing, faster than
                                                                  
                                         2006
                                                  9 .0                       5 .2           3.9          8.3            17.5           0.7                  3.2 
   telecommunications;                   2007
                                                                  
                                                  9 .0                       5 .3           3.7          8.0            18.8           0.8                  2.9 
                                      

                                                                       Share of ICT: 
                                  GDP/Manufacturing/ Services/Sub­sectors
1) Share of Value added in ICT production declined from 55% to 41% between
   2000 and 2007; the share of telecommunication increased from 40% to 47%;
   and computer services registered much higher increase in the share from 5%
   to 12%;
2) The ICT Services components (computer and telecommunications)
   substantial increase attributed to MSC flagship applications, e-government,
   online and mobile banking;

3) 278 e-government services e-payment enabled by 2009

                       Structural Changes in ICT Sector : 
                         Distribution of Value Added Services by Sub­sector
Increase in the share of ICT services sector 
     attributed to significant growth of 
     telecommunication and computer 
  services; telecommunication registered 
      prolific growth rate following its 
 liberalization in the –nineties ; computer 
 services growing exponentially due to e‐
        services, including MSC role




                                                ICT Services Sector: 
                                                   Growth Patterns
 MSC ICT Services Sector: 
GDP / By Type/ Export / Local Sales
1)    Main sources of revenue in the telecommunication sector comes from telephone services (62.2%),
     followed by data communication services (24.4%) and TV & Radio transmission services (8.8%);

2)    Information technology services account for 15.8% of the total expenditure incurred, followed by
     salaries and wages and asset depreciation;

3) R&D and training, attributing to human capital development gaining increasing attention in the
   telecommunication expenditure pattern



                           Sources of Revenue & Expenditure: 
                                                 Telecommunication
1)    Main sources of revenue in the computer sector comes from professional computer services
     (software consultancy, hardware consultancy, solutions etc) and packaged software (enterprise
     application, system infrastructure, enterprise resource management, consumer relationship
     management application etc.) and data processing services; all accounting for 73%;

2) Information technology services account for 23% of the total expenditure incurred, followed by
   salaries & wages (18.9%) and cost of materials consumed;

3) R&D gaining increasing attention but staff training did not;


                           Sources of Revenue & Expenditure: 
                                                 Computer Services
Seminar on ICT Statistics, 
 Seoul, 19­21 July 2010
ICT Value Added at Sub­Sector: 
       Growth Rate & Share
Cost of Input at Sub­Sector: 
     Growth Rate & Share
Output Value at Sub­Sector: 
     Growth Rate & Share
Employment at Sub­Sector: 
     Growth Rate & Share
Salaries & Wages at Sub­Sector: 
       Growth Rate & Share
Fixed Assets at Sub­Sector: 
     Growth Rate & Share
Seminar on ICT Statistics, 
 Seoul, 19­21 July 2010
   ICT Productivity Indicators:
Production / Telecommunication / Computer
ICT Productivity Indicators:
    Example at 5­Digit Level
     El ectri cal , pl umbi ng and other cons tructi on i ns tal l ati on acti vi ti es  (Group 432)
1                  e.g. Tel ecommuni cati ons  (43212) and computer (43213) wi ri ng;
     Whol es al e trade, except of motor vehi cl es  and motorcycl es  (Group 46)
2                 e.g.  Whol es al e of computer‐control l ed machi ne tool s  (46593);
     Retai l  s al es  of i nformati on and communi cati ons  equi pment i n s peci al i zed s tores  (Group 474)
3                  e.g. Internet bas ed retai l  s al es  (47912) and aucti on s al es  (47914) 
     Publ i s hi ng of books , peri odi cal s  and other publ i s hi ng acti vi ti es  (581).
4                  e.g. Publ i s hi ng  i n pri nt or el ectroni c form (58130) , i ncl udi ng Internet
     Software Publ i s hi ng (582)
5                  e.g. Computer games  of al l  pl atforms  (58202)
     Moti on pi cture, vi deo and tel evi s i on programme acti vi ti es  under the Group 591
6                  e.g. producti on and di s tri buti on of moti on pi ctures
     Sound recordi ng and mus i c publ i s hi ng acti vi ti es  (59200)
7                  e.g onl i ne mus i c publ i s hi ng
     Other i nformati on s ervi ce acti vi ti es  (639)
8                 e.g Tel ephone bas ed i nformati on s ervi ces ;
 9 Credi t card s ervi ces  (64922)
10 Res earch and devel opment on Informati on Communi cati on Technol ogy (ICT) (72106)
11 Leas i ng of i ntel l ectual  property and s i mi l ar products , except copyri ghted works  (77440)
     Photocopyi ng, document preparati on and other s peci al i zed offi ce s upport acti vi ti es  (8219)
12                  e.g. Typi ng, word proces s i ng or des ktop publ i s hi ng (82192),
13 Acti vi ti es  of cal l  centres  (82200)
14 Energy, tel ecommuni cati on and pos tal  affai rs  (84136)
     Educati on (Di vi s i on 85)
15                 e.g. Computer Trai ni ng (80909).



                              Gaps in the MSIC 2000 & MSIC 2008: 
                                                         Industry Perspective
         Other ICT Indicators
1) Merchandized  trade (DOSM)
2) Trade­in­Services (BOP / BNM)
3) ICT Workforce Estimation at household level (MLFS)
4) Regulatory records on telecommunication (MICC/MCMC)
5) Administrative records on supply of ICT graduates  (MOHE) 
6) R&D records (MOSTI / MASTIC)
7) Administrative records on Internet Domain Registration (IDR)
8) Administrative records on Cyber Security 
9) Intellectual Property Rights (IPR) records (MyIPO)
10) Internet / Mobile banking (BNM)
11) Private sector data (PIKOM/IDC/Gartner)
12) Global benchmarking (various international organizations) 




                     Other ICT Data Sources:
              Sector & enabler of society & economy
Thank You



   Seminar on ICT Statistics, 
    Seoul, 19­21 July 2010

								
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