JUNE 29 — Have you ever ordered food using Grab, paid with Touch ‘n Go, or watched a YouTube video? Malaysia has been great at using other people’s digital tools. Now, we need to learn how to build some of our own. First, what actually makes up the digital economy? Think of it like a car. The hardware is the physical stuff you can touch — the engine, the wheels, the body. In the digital world, that means: Fibre optic cables that carry internet traffic, data centres, 5G towers, and the chips inside your phone or laptop The software is the brains — that tell the hardware what to do. That means: Apps like Grab, WhatsApp, or Netflix, Cloud platforms to store data, AI models (like ChatGPT), and payment systems.
The problem is most developing countries, including Malaysia, only focus on the cheap, low-value parts. We assemble hardware for foreign companies. We buy software licenses from Silicon Valley. We are like a factory worker while the boss owns the factory. We need to move up. So what should Malaysia do?
First, stop trying to beat Taiwan or South Korea at their own game. We are already good at testing and packaging computer chips. Instead of trying to build the world’s most advanced chips, which would cost billions, we should become the best in the world at packaging them. The government should give tax breaks to chip companies that do their advanced packaging here. Next, build software for real problems, not just fancy apps. Silicon Valley makes apps for rich people — ordering overpriced smoothies or renting electric scooters. Malaysia should make software for our own industries. For example: Software to track palm oil supply chains, apps to help small factories manage their machines, tools for farmers to check weather and soil conditions. If we build these well, we can sell them to our neighbours. That means real export income, not just data centre rentals.
Data centres are good — but not enough. Yes, many data centres are being built in Johor. That’s fine. But right now, we just rent out the physical space and electricity. It’s like owning an apartment building but never running a hotel. We need to attach services to those data centres: AI analysis for banks, backup storage for hospitals, green computing for eco-conscious companies. Otherwise, we are just landlords — not partners.
The government should create simple, recognised digital badges or certificates that say: “This person knows how to use e-commerce, digital payments, and basic data tools.” Make it short, practical, and recognised by employers. Otherwise, all our fancy infrastructure will only benefit the already-educated in big cities.
The hard part is about making brave decisions. Here’s where we usually fail. Participating in the global digital economy means allowing data to flow across borders — but also having the guts to tax foreign tech companies fairly. We need to stop treating digitalisation as a replacement for factories. It’s not. It’s a booster. Every ringgit spent on good software for a glove factory or a solar panel plant brings back three ringgit in exports. And we must shift our budget. Instead of giving blanket fuel subsidies to everyone, put some of that money into helping small shops and factories buy better computers and software.
Why Malaysia has a real shot. We are not America which invents the software. We are not China with their massive factories. But we have something special: we are neutral. We speak multiple languages. We are right in the middle of South-east Asia. The global digital world is breaking into rival camps — US vs China on chips, Europe on privacy rules. Malaysia can be the neutral meeting point. Host Chinese cloud servers for South-east Asia. Host American AI tools for Islamic finance. All under our own laws.
For 40 years, we have been users of digital technology — watching YouTube on American servers, messaging on Chinese apps, ordering food on Singapore-owned platforms. The next 10 years must be different. We need to become makers. Write our own software. Package our own advanced chips. Run our own green data centres. Sell these services to Bangkok, Jakarta, and beyond. The internet cables are landing on our shores. The data centres are humming. The question is: Will we just flip the switch, or will we build something of our own? The answer isn’t another government committee. It’s whether our next great Malaysian success story is a chip packaging firm or an industrial software company — not just another food delivery app.
Let’s build. Not just browse. Use less, make more. Specialise, don’t just assemble. And make sure every Malaysian — not just the rich and educated — gets a seat at the digital table.
* Professor Datuk Dr Ahmad Ibrahim is affiliated with the Tan Sri Omar Centre for STI Policy Studies at UCSI University and is an Adjunct Professor at the Ungku Aziz Centre for Development Studies, Universiti Malaya. He can be reached at [email protected].
** This is the personal opinion of the writer or publication and does not necessarily represent the views of Malay Mail.
