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Malaysia Information Technology Report Q3 2010

Description:
Malaysia Information Technology Report provides industry professionals and strategists, corporate analysts, information technology associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Malaysia's information technology industry.

Malaysian IT spending is expected to grow to U$4.5bn in 2010 from US$4.1bn in 2009 as demand recovers from the impact of a difficult economic and political situation. The market has strong growth fundamentals, including low PC penetration, rising incomes and a hi-tech-focused national development plan.

There will be increasingly attractive opportunities in the IT services area as the government implements measures to make Malaysia a regional services hub. There are several potential PC market growth areas, including netbooks and entry level servers for small businesses. The government has a number of longterm initiatives with favourable implications for demand for IT products and services, including investment in broadband infrastructure.

The authors expect a return to growth in 2010, driven by a pickup in business spending on hardware and applications. The market has strong growth fundamentals and key sectors will include government, telecoms and finance, including Islamic banking.

Industry Developments

In 2010, the Terengganu state government plans to expand a pilot e-books project that delivered about 25,000 laptops to Year 5 students at a cost of MYR25,000 in 2009. The state plans to deliver 50,000 notebooks in 2010 with a budget of MYR50,000. Other states, such as Sarawak and Malacca, have expressed interest in the project and a wider rollout is likely.

The most recent national budget contained a number of initiatives related to developing ICT for schools, including a pledge to spend MYR45mn on providing internet services to rural schools. This builds on a government drive to increase the use of computers and ICT in schools through expansion of the Smart School programme. In 2009, despite the economic crisis, the government continued to make progress in e-tax and other elements of its e-government plan.

In November 2009, the government called for ministries and agencies to give preference to local software and solutions. Prime Minister Najib Razak said a circular would be sent out informing all government institutions to use local ICT solutions wherever possible, provided that local products were costcompetitive and high quality.

Competitive Landscape

US multinational HP is currently ahead of its Taiwanese rival Acer in the Malaysian PC and notebook markets. Multinational brands currently outside the top-three in the PC market have announced plans to take advantage of growing demand for consumer notebooks to increase their share. Taiwanese vendor Asus is aiming for a segment share of 14% and a top-three ranking within three years, rising from less than 3% in 2009.

One focus for Microsoft and other software vendors is to make products more affordable to the key small and medium-sized enterprises (SME) segment. Microsoft said in Q110 that it plans to accelerate cloud computing solutions for Malaysia SMEs as this model is regarded as having high potential for its partners. In the first quarter of its FY10/11, Ramco Systems from Chennai, India, launched a campaign to sign deals with channel partners in Malaysia to offer enterprise resource planning (ERP) solutions to local companies.

Indian IT services players have a growing presence in the Malaysia market. Wipro has established a Global Service Management Centre in Cyberjaya, its third such facility worldwide. HCL’s 12-country infrastructure management contract with consumer electronics company Electrolux will be managed from Malaysia. HCL is also working with the Indonesian government on an application that supports all government e-procurement activities.

Computer Sales

The authors forecast that the addressable Malaysian computer hardware market, including notebooks and peripherals, will have a value of US$2.3bn in 2010, up from US$2.2bn in 2009. Economic recovery and a potentially IT-friendly budget in 2010 have created the conditions for an upturn in spending, which should grow stronger in H210.

PC sales will be supported by the government’s push for greater broadband penetration, for which an optimistic target of 50% by 2010 has been sent. Other factors include ICT in education programmes and a number of e-government initiatives. The government is determined to tackle the digital gap beyond the Klang Valley and is rolling out an extensive network of community PC centres. One of the target groups of the plan is middle-income potential computer owners who have the ability to afford a PC. Such initiatives, alongside falling prices, are opening up the market to lower income tiers.

Software

Malaysia’s addressable software market is expected to growth to US$752mn in 2010, following a deceleration in 2009 due to the global economic headwinds. The authors expected a mild pickup in sales in H209, but with longer sales cycles as businesses remained cautious and focused on return on investment (ROI). By 2014, we forecast software spending to have increased healthily to US$1.1bn, with a CAGR for 2010-2014 in the region of 11%.

E-business applications such as ERP and finance are finding increasing popularity in the business market as enterprises look to enhance productivity through automating accounting and other functions. Customer relationship management (CRM) is expected to be a double-digit growth opportunity despite the economic downturn. Software-as-a-service (SaaS) has achieved double-digit regional growth in Malaysia in the past couple of years but is still an early-stage market.

IT Services

IT services spending, excluding telecommunications-related spending, is forecast to reach a value of US$1.4bn in 2010, with high single-digit growth compared with 2009. Spending on IT services is expected to be a relative bright spot for the IT market in 2010, remaining in positive growth territory. Over 2010-2014, the most potential for large projects is likely to be in key sectors such as financial services, oil and gas, telecoms and agriculture. The government has accounted for about 15% of IT spending in recent years. The upgrade of core banking systems will drive bank spending on application services. The government also continues to try and create a more competitive environment in the telecoms sector, encouraging newly licensed WiMAX operators to roll out services.

E-Readiness

Malaysia is developing most ‘e-society’ indicators at a steady rate. The government is pursuing programmes to reduce the digital divide between urban and rural areas, with the Ministry of Rural and Regional Development cooperating with the Ministry of Science, Technology and Innovation and the national IT industry association on plans to establish more community PC centres in the country this year. Nearly 2,000 centres are already managed by the Economic Planning Unit.
 
Contents:
Executive Summary
SWOT Analysis
Malaysia IT Sector SWOT
Malaysia Telecoms SWOT
Malaysia Political SWOT
Malaysia Economic SWOT
Malaysia Business Environment SWOT
IT Business Environment Ratings
Asia IT Business Environment Ratings
Table: Asia Pacific IT Business Environment Ratings
Asia Regional IT Markets Overview
Malaysia Market Overview
Government Authority
Industry Developments
Industry Forecast Scenario
Table: Malaysia IT Sector Overview, 2007-2014 (US$mn, unless otherwise stated)
Country Context
Table: Rural/Urban Breakdown, 2005-2030f
Table: Consumer Expenditure, 2000-2012f (US$)
Internet
Table: Telecoms Sector – Internet Overview, 2007-2014
Macroeconomic Forecast
Table: Malaysia – Economic Activity, 2007-2014
Competitive Landscape
Company Profiles
IBM Malaysia
HeiTech Padu
HP Malaysia
Microsoft Malaysia
Country Snapshot: Malaysia Demographic Data
Section 1: Population
Table: Demographic Indicators, 2005-2030
Table: Rural/Urban Breakdown, 2005-2030
Section 2: Education And Healthcare
Table: Education, 2000-2003
Table: Vital Statistics, 2005-2030
Section 3: Labour Market And Spending Power
Table: Employment Indicators, 2001-2006
Table: Consumer Expenditure, 2000-2012 (US$)
Table: Average Annual Manufacturing Wages, 2000-2012
Methodology
How We Generate Our Industry Forecasts
 
Companies Mentioned
- IBM Malaysia
- HeiTech Padu
- HP Malaysia
- Microsoft Malaysia
 
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