Digital Transformation Shaping the Future of Industries

By Dr. Cheong Jia Qi.

Public organisations and industries have made digital transformation, including adopting artificial intelligence (AI), a top priority. Emerging technologies have heightened the importance of this trend, prompting companies to rethink their business models to remain competitive. The application of AI holds significant potential to enhance productivity and a nation’s Gross Domestic Product (GDP), necessitating strategic investment in various AI technologies.

Malaysia's digital industry plays a crucial role in its economy. It contributes 23.2% of the country's GDP and is expected to rise to 25.5% by 2025, potentially creating 500,000 jobs. Malaysian businesses are increasingly focused on digitalisation and automation, shifting the emphasis from whether to adopt AI to how quickly it can be implemented and its benefits realised.

Malaysia and other Asean nations can gain insights from China's extensive resources in the digital economy, enhancing their digital transformation efforts. Collaboration with Chinese counterparts, including educational and business exchanges, is pivotal for Malaysia's advancement.

The Malaysian government has implemented Malaysia Digital, a national strategic program to boost the country's digital capabilities and overall ecosystem value. Under the Regional Comprehensive Economic Partnership (RCEP) Innovation and Digital Ecosystem Madani initiative, companies from RCEP nations and China are set to invest RM100 billion in Malaysia over the next five years. This includes significant contributions from Kairous Capital, Comcom International, and RunJian Corporation, which are poised to drive digital and sustainable economic transformation.

These collaborations are essential for Malaysia's information and communication technology (ICT) sector, supporting the nation's digital ambitions and environmental sustainability targets. Recognising the transformative potential of digital technologies, the Malaysian government is fostering an environment conducive to innovation. Investments from China in Malaysia spanned information and communication, electrical and electronics, and machinery and equipment sectors.

Malaysia's strategic position in Southeast Asia positions it as a gateway to the expansive Asean market. At the Auto China 2024 exhibition, Chang Lih Chang, Minister of Science, Technology, and Innovation, observed the signing of a memorandum of understanding between Gigafactory Malaysia Sdn Bhd, BAIC International Development Co. Ltd., and BAIC Bluepark New Energy Technology Co. Ltd., to foster innovation in the electric vehicle industry and encourage EV uptake in the Asean region.

Chinese companies like Huawei, Alibaba, and BYD are crucial for Malaysia's digital and green economic growth. BYD, the largest EV manufacturer in China, has already secured over 10,000 orders in the Malaysian market, significantly influencing the local electric car market and related industries.

At the China Electronics Technology Group (CETC) Corporation, the minister observed the signing of a Memorandum of Understanding between the Malaysian Institute of Microelectronic Systems (MIMOS) Berhad and CETC, highlighting their shared dedication to advancing innovation in important areas like advanced packaging, broadband semiconductors, and system design. This collaboration holds substantial promise for promoting technological progress, stimulating economic development, and improving global competitiveness.

China's advanced AI technology and innovation can benefit Malaysia through investments and technological support. Collaborations between Malaysian companies and Chinese tech giants such as CelcomDigi, China Unicom, and Huawei aim to meet the digitalisation needs of Malaysian businesses with Intelligent Digital 5GtoB solutions. These partnerships will bolster economic connections with China, aligning with China's RM170 billion investment pledge over five years. This strategic alliance aims to provide Malaysian enterprises with cutting-edge 5G offerings, facilitating digital transformation and promoting efficient, sustainable operations.

China continues expanding its investment in Malaysia's high-tech sectors, with upcoming exhibitions and forums fostering cooperation in science, technology, and innovation. These events, hosted by the China Entrepreneurs Association in Malaysia (PUCM), will enable dialogue among experts to exchange knowledge on high-tech advancements.

Malaysia can learn from China's approach to increasing investments in research and development (R&D) and commercialising these activities. China's AI industry has a substantial investment scale and a significant number of related enterprises, positioning it as a global leader in AI innovation and commercialisation.

Anticipated developments in the Malaysian market include the rapid growth and focus on telemedicine, as well as an expected rise in AI and predictive healthcare. Moreover, there is projected to be an increase in wearable devices with tracking capabilities and a growing use of telemedicine services. Additionally, China’s comprehensive directives for AI medical device classification and data security offer valuable insights for Malaysia, which lacks specific legislation for digital healthcare.

Currently, healthcare providers offering telemedicine services do not need special licenses or authorisation. Introducing new technologies like data analysis, artificial intelligence, and machine learning could lead to legal responsibility for different parties. The allocation of liability is expected to depend largely on the cause of the injury, reasonableness of conduct and medical device usage, as well as adequacy of training in using such technology. However, specific liabilities in this area have not been established yet.

Strengthening bilateral collaboration between Malaysia and China in the digital economy sector is crucial for improving incomes and reducing living expenses. The pandemic underscored the need to update Malaysia's Telemedicine Act 1997 and Personal Data Protection Act 2010 to better regulate telemedicine. The rise of telemedicine has brought legal issues concerning governance, digital platform accountability, medication prescription, and medical service promotion.

Effective coordination among industry players, government agencies, and universities is essential. Engaging relevant entities to develop AI talent, attract foreign investments for AI research centres, and foster partnerships with industry leaders are vital components of Malaysia's strategy to position itself as an innovative AI development hub.

Dr Cheong Jia Qi is a Senior Lecturer at Universiti Teknologi MARA Sri Iskandar; Research Fellow at Centre for Economic Development and Policy; and Research Fellow at Malaysian Inbound Tourism Association (MITA). The views expressed here are entirely the writer’s own.

The SEARCH Scholar Series is a social responsibility programme jointly organised by the Southeast Asia Research Centre for Humanities (SEARCH) and Tunku Abdul Rahman University of Management and Technology (TAR UMT), in conjunction with the 10-year anniversary of the Belt and Road Initiative.