Dato’ Yasmin Mahmood, Chief Executive Officer of MDEC

Growing local MSC companies and focus areas are key MDEC objectives for 2017

After a year of positive growth for MSC companies in 2016, Malaysia Digital Economy Corporation’s (MDEC) objectives are focused on growing local companies and expanding the growth of niche focus areas.

“A big objective of MDEC is to grow local companies. The Billionaire Tech Club helps to increase the footprint of these companies in other countries and restructure their business,” said Dato’ Yasmin Mahmood, Chief Executive Officer of MDEC.

The Billionaire Tech Club is part of the GAIN programme that MDEC started to foster the globalisation of local companies. Through this programme, which began in 2015, MDEC successfully connects local technology companies to the growth ecosystem by focusing on market growth, mentorship, funding and visibility.

“The domestic market is only around RM30 million and [local companies] have difficulties crossing the RM40 million mark. They need a very strong globalisation strategy to make RM1 billion,” said Dato’ Yasmin.

Currently there are around 150 companies in the GAIN programme focused in the areas of IoT, Big Data, Cloud, Security, E-commerce and Fintech. According to Dato’ Yasmin companies are vetted before being asked to join the programme. Some companies are happy with the local market, while others have larger ambitions.

Some of the companies that have benefitted from MDEC’s intervention are subscription video on demand service provider iFlix, N2N Connect – a provider of stockbroking solutions and IX Telecom – a local establishment that provides service management to Fortune 500 companies in over 200 countries.

Despite uncertain economic conditions, 2016 witnessed a tenfold increase in investments for niche focus areas such as eCommerce, Internet of Things (IoT), Cloud & Data Centre, Big Data Analytics (BDA) and Security. These focus areas contributed RM3.7 billion to the total export sales last year, a 38 percent growth from 2015.

It was lead by e-commerce and followed by big data analytics in second place, said Dato’ Yasmin. “eCommerce saw favourable growth last year which brings us a step closer towards our vision of doubling the eCommerce growth rate and reach a GDP contribution of RM211 billion by 2020. With the eCommerce roadmap in place, we believe that we can achieve this goal. MDEC surely is not sitting on our laurels; instead, we will continue to drive the numbers and grow the nation’s economy through eCommerce” she stated.

The ASEAN Data Analytics Exchange (ADAX) is an MDEC initiative in the big data analytics area. A more detailed announcement is expected in the coming days.

MDEC reported a significant growth for the year 2016. Total revenue generated by MSC companies for 2016 stands at RM47.1 billion. MDEC recorded new investments of RM16.3 billion of which RM6.43 billion were from new investors and RM9.84 billion from existing investors.

“We are very proud of the achievements last year. Our strategy to lead the Digital Economy is paying off and we have seen a positive, healthy year from MSC-status companies in Malaysia with record new investment and strong investment numbers from new investors” said Dato’ Yasmin.

Malaysia saw a steady increase in export sales from MSC companies with an 18 percent growth from 2015, with a contribution of RM19.1 billion. Export made up 40 percent of the total revenue generated by MSC companies for 2016. Asia Pacific was the main export destination, followed by Europe.

The Creative Content and Technology (CCT) cluster recorded the highest growth in export sales with a contribution of RM1.17 billion to the total export sales in 2016. Local MSC companies recorded a 21 percent increase in export sales, outstripping the overall growth in exports.

“It is encouraging to see a positive growth across all clusters. Not only did the CCT cluster exceed the RM1 billion mark, Infotech’s growth surpassed the Global Business Services (GBS) cluster with a 26 percent growth, recording the highest contribution to growth yet,” said Dato’ Yasmin.

Some of the successful companies in the CCT cluster include Giggle Garage – creators of Origanimals and DD Animation who created the cartoon characters Didi and friends.

With 2017 being dubbed the Year of the Internet Economy, MDEC will continue to drive a sustainable digital economy built upon a vibrant domestic IT industry. This will be done by adapting and diversifying MSC Malaysia Cybercentres, through the setting up of new Digital Hubs. Malaysia Digital Hub will act as a catalyst to build a robust startup ecosystem in the nation. It seeks to optimise locations to attract and maintain startup ecosystems with the necessary hard infrastructure offerings such as high speed broadband to enable growth of the internet economy.

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