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Malaysia has embarked on a number of measures to ensure that information and communication technologies (ICTs) play a vital role in that society. The nation was selected as one of the case studies in the prestigious Report of the Digital Opportunity Initiative1. The Report notes Malaysia's comprehensive policies that are being developed to encourage ICT use in various sectors of the economy, as well as to accelerate the growth of the ICT sector. Trade and investment policies, such as financial and non-financial incentives, a fair trade system, and import and export duties, promote local and foreign investment. With the privatization of the government telecommunications department in 1987, and the formation of the National Telecommunications Policy (NTP) in 1994, the market has now been fully liberalized. The Malaysian Government's Master Plan for the telecommunications industry provides guidelines for competition, interconnection charges, tariff rates and network development. At the end of 1995, all operators signed interconnection agreements with Telekom Malaysia to provide seamless communication regardless of carrier, though most carriers have not signed agreements among themselves.

The computer and software markets have also been fully deregulated, though restrictions exist on participation in government bids, and there are equity requirements for setting up manufacturing facilities. These barriers do not pose an insurmountable barrier to competition, but encourage the establishment of joint ventures and local distributorships with Malaysian companies.


The Malaysian Government has invested heavily in world-class infrastructure. Malaysia's Multimedia Super Corridor (MSC) is designed to create an ideal environment for ICT-related production as well as provide the backbone for an information superhighway. The network contains a high-speed link (10 Gb/s network) that connects the MSC to Japan, ASEAN, the US and Europe, and is capable of supporting extensive public administration, education and business applications. The intent of the superhighway is to provide quality access to global information as quickly and easily as possible. Simultaneously, the Demonstrator Application Grant Scheme (DAGS) is intended to facilitate social and economic progress through the innovative use of ICT. It provides funds for citizens to access the opportunities associated with the MSC and to be involved in multimedia development.

The telephone penetration rate—as a measurement of the ICT readiness of the country—rose from 16.6 percent to 23.2 percent between 1995 and 1999, while fixed lines in the rural areas rose from 5.2 percent in 1994 to 11 percent in 1999. Malaysia is aiming to continue the establishment of basic telecommunications infrastructure, with plans for 250 Internet access points, 250 mobile phones and 500 fixed lines for every 1,000 people within the next 5 years. This is in addition to the development of other primary physical infrastructure, such as power supply, transportation, airports, office buildings and extended business areas.


As a result of fair trade and investment policies, foreign direct investment in Malaysia reached US$6 billion in 1997, but then dropped to US$3.8 billion in 1998 due to the Asian economic crisis. In 1999, flows of foreign direct investment again increased by 31 percent and GNP rose 5.4 percent—much faster than initially forecasted. This increase was led by manufacturing, particularly in ICT-related electronics (for export), and this sector is now the key driver of growth in the economy. In 1999, the contribution of the ICT sector to GNP was approximately 36.5 percent.

A number of incentives and projects are underway to foster entrepreneurship and business efficiency. The government provides both financial and non-financial incentives to Malaysian businesses. Financial incentives include zero income tax for a period of 10 years, R&D grants, and a 100 percent investment tax allowance on new investment in the MSC. Non-financial incentives include unrestricted employment of foreign knowledge workers, no restrictions on global capital, and limited restrictions on ownership.

Human Capacity

The growing economy has created a demand for skilled knowledge workers and professionals. Skilled labor is still in short supply, especially in the ICT sector and manufacturing industries. To address this issue, the Malaysian government is investing in a high-quality, comprehensive education system designed to meet the demands of the evolving workplace. At the Multimedia University, for example, new skills such as information and knowledge management, as well as programming applications, will be incorporated into the education and training curriculum. Several additional efforts have been made to increase ICT literacy. The Computer In Education (CIE) Programme has provided computer laboratories to 90 secondary schools and 20 primary schools. Between 1996 and 1998, about 1,230 teachers were trained to conduct the CIE course. Computer Aided Design and Computer Aided Manufacturing (CAD and CAM) courses were also taught in secondary technical schools.

Content and Applications

Malaysia has made a concerted effort to provide relevant content to technology users through a number of specific initiatives: for example, Agritani is developing a portal that serves agriculture communities, including farmers, agriculture agencies, consultants, and agriculture service providers; and Cybercare enables orphanage communities in Malaysia to share news, barter goods, train volunteers and increase administrative efficiency.

E-commerce initiatives are helping to provide Malaysian businesses with more efficient access to input and product markets, both locally and globally. For example, MyBiz, an e-commerce platform designed for small and medium enterprises helps facilitate collaborative marketing by linking 300 companies including 26,000 employees in a business community network. The same platform can be used to make procurement processes more efficient and effective.

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