Not The Wish List, But A Step In The Right Direction Nonetheless
28 Oct 2013
Kuala Lumpur, 28 October 2013 – Although the 2014 Budget is not a complete fulfillment of ICT industry needs, it does appear to provide good opportunities to spur the growth of ICT. The biggest question now is not if this is the best budget for the nation’s ICT future; the question is will Malaysia’s ICT ecosystem be able to leverage it for Malaysia’s growth in the 3rd platform of ICT and move more aggressively into areas such as Cloud, Mobility, Social and Analytics.
"While it doesn’t fully meet all items on the “wish list”, the presence of both direct and indirect ICT initiatives within this budget is a step in the right direction. At present, IDC anticipates Malaysia’s ICT spending to achieve US$22.2 billion by 2017, from a forecasted base of US$19.4 billion in 2014. In 2017, the nation’s ICT spending will make up 15.9% of the aggregated ICT spending of the 6 key ASEAN economies, down from 17.2% in 2013,” says Roger Ling, ASEAN Research Manager, Software & Services, IDC Malaysia.
“With the focus of ICT spending edging more towards IT spending, the technology foundation for Malaysia to enter into the 3rd platform is being ramped up; this budget further solidifies the technology foundation but does not provide the necessary boost to transform the nation to capitalize on the 3rd platform of ICT “added Roger.
IDC has selected two (2) crucial initiatives announced within the budget, which will have an eventual direct or indirect impact to the Malaysian ICT sector. Key to the review is the understanding that IDC sees the budget as merely providing the foundation for possible growth in the 3rd platform as opposed to actually securing the success and growth in the 3rd platform:
1. Expanding Internet Access
Being clearly ICT focused with an investment amounting to RM5.75 Billion, there is a balanced approach to address both the urban and rural areas. With the focus on improving broadband infrastructure, broadband is expected to be more affordable if the savings are passed through to end-users. IDC sees this as a growth platform that presents the opportunity to drive mobile, broadband and IPTV penetration across Malaysia, as well as the e-Commerce industry and local content development. Improved infrastructure will also lay the foundation for M2M and cloud services adoption.
2. Goods and Services Tax (GST)
As the nation moves towards the new taxation system, a key stabilizer to support continued IT spending for corporations will be the extension of the Accelerated Capital Allowance until year of assessment 2016. IDC sees this as important as continued investment in ICT will be the necessary fabric for the 3rd platform. Given that expenses incurred for training in accounting and ICT related to GST will also be given tax deductions for years of assessment 2014 and 2015 further creates opportunities for related ICT vendors to address.
For the last 40 years, the global IT industry has periodically refreshed itself on new solutions, business models, and industry structures, but has always been rooted to a platform for ecosystem, solutions creation, and delivery. Looking at the big picture, what separates each era is a shift in platform and what really defines each growth platform is not so much the technologies but the scale and scope of users and uses the technologies enable. As the global ICT arena transitions into the 3rd platform with Cloud, Mobility, Social and Analytics as its 4 pillars, IDC sees the budget as a step in the right direction, even if it is an unfulfilled wish list. Key to growth will be the ICT ecosystem capitalizing on the initiatives drawn from the budget.
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