The Malaysian government is cracking down on red tape through the use of technology.

This was among the commitments made by Malaysian Prime Minister and Minister of Finance YAB Dato’ Seri Anwar Ibrahim, during his Budget 2023 speech delivered last February 24 before the Dewan Rakyat, or Malaysia’s House of Representatives.

The Budget Statement, which has 12 main measures, included a focus on public sector reform.

“We can no longer tolerate outdated work cultures, unreasonable regulations, and procedures that delay. There are still many government services that utilise agents, which has led to the systemic practice of corruption,” Ibrahim said.

To solve these issues and better serve the public, government services must be agile in adapting to technology and digital means. The Prime Minister stressed that a shift in mindset is also necessary to effectively implement this change.

Specifically, the government has formed a Special Task Force on Agency Reform (STAR) to spearhead such initiatives. Under STAR, funds shall be allocated to implement pilot projects that can improve the delivery of government services to the public. Successful ministries will receive full allocation for project implementation at the national level.

Moreover, the Malaysian Administrative Modernisation and Management Planning Unit has upgraded the MyGovCloud service to ensure effective cloud computing services in the public sector. Currently, the service functions on a hybrid mode, combining public cloud services by cloud service providers appointed by the government.

The Prime Minister also announced that the government will provide suitable tax incentives, security infrastructure, green energy facilities, and locations to enable the establishment of more data centres in the country.

Digital agenda on track

“Prioritising the Digital Agenda” — another measure laid out during the Budget 2023 Statement — aims to advance internet connectivity for the people and fast-track the digitalisation of businesses.

The government is allocating 725 million MYR to accelerate the implementation of its JENDELA project, which aims to improve internet connectivity. This funding will be used to roll out digital connectivity to 47 industrial areas and around 3,700 schools.

The JENDELA (Jalinan Digital Negara) project was created to provide wider coverage and better quality of broadband experience for the public, in preparation for 5G.

The 5G initiative, spearheaded by Malaysia’s previous administration, via the Digital Nasional Berhad (DNB), has achieved 50% coverage of populated areas by the end of 2022. It is expected to reach 80% coverage by the end of 2023.

In terms of business digitalisation, the government will strengthen the role of the Digital Economy Centre (PEDi), in support of small entrepreneurs with ICT and e-commerce knowledge. The target is to establish at least one PEDi facility in every DUN (state legislative assembly) before the end of 2023.

To encourage automation in the plantation sector, the government has set aside an additional 50 million MYR, which will be used to implement AI and robotics technologies that can provide employment opportunities for skilled local workers.

The Prime Minister used the example of Sime Darby Plantation, wherein locals showed willingness to work in palm oil plantations, given that the salary is no lower than 3,000 MYR, and there is an agile working environment assisted by mechanisation and automation.

“They target to employ 100% local workers by the end of 2027,” Ibrahim revealed.

SME focus

Recognising that there are still businesses that have yet to recover from the effects of the COVID-19 pandemic, the Prime Minister announced a tax reduction of 15% for MSMEs from assessment year 2023 forward. The 15% rate shall apply on taxable income for the first 150,000 MYR. Currently, the tax rate stands at 17%.

“Government agencies will continue to provide various financing facilities and guarantees for the benefit of MSME (micro, small and medium enterprise) entrepreneurs with a total value of up to 40 billion MYR,” he said.

Micro and small businesses will be provided access to financing, through Bank Negara Malaysia (BNM) and other agencies, with available funding totalling 1.7 billion MYR.

Further, under the SME Digitalisation Grant Scheme, a total of 100 million MYR shall be allocated to support business automation and digitalisation activities. Small hawkers, according to the Prime Minister, qualify for the scheme.

Meanwhile, a matching grant of 5,000 MYR shall be paid to SMEs when they subscribe to business digitalisation applications, such as POS sales systems, accounting, or inventory management.

“A financing fund of 1 billion MYR is allocated under BNM to support MSMEs in automating their business processes and digitising their operations,” the Prime Minister added.

Cybersecurity concerns

With people and organisations increasingly reliant on the internet, cases of online fraud in Malaysia have become rampant.

In 2022, over 25,000 incidents of online scams and fraud were recorded, resulting in losses equivalent to 850 million MYR.

Despite the establishment of the National Scam Response Centre (NSRC), Ibrahim admitted that “there is a lack of consistent policy in managing this issue due to differing guidelines amongst the banking institutions.”

To strengthen the role of the NSRC, the government has therefore set aside a 10 million MYR operational grant.

“Bank Negara will also enforce a kill-switch policy to all banking institutions, to enable users to freeze their accounts immediately, including ATM cards, to prevent unauthorised use,” the Prime Minister disclosed.

Moving forward

Although Malaysia’s economy is now in a period of recovery after the COVID-19 pandemic, the Prime Minister warned against complacency and emphasised the need to prepare for future challenges.

“Sustainable economic development is essential as a future-proofing element that is ready to serve as a shield against any potential risks that may arise,” he said.

According to Ibrahim, leaders can no longer afford to continue with the wrong practices inherited from the past. Instead, a significant shift is needed towards combating corruption, promoting good governance, and empowering all segments of society to achieve socio-economic mobility. The Prime Minister stressed that these changes are necessary to provide people with the opportunity to enjoy a more meaningful life.