Singapore and Malaysia Spearhead IT Investment Growth in S-E Asia

By April 15, 2015
Kuala Lumpur

IT expenditure in Southeast Asia is likely to exceed $60 billion in 2018. Led by Singapore and Malaysia, investment is expected to go mainly into the health and government services sectors.

US information technology research and advisory firm Gartner forecasts that expenditure on information technologies will reach $62 billion in south-east Asia by 2018. Among the eleven countries which make up the region, Singapore, Malaysia, Indonesia and Thailand will be the main growth drivers. In 2015 alone these four countries together are set to spend $52 billion on IT. “Gartner believes that Southeast Asia's economic development and growing consumer demand mean that its growth potential outweighs the risk. The growth of mobility and social media and the high percentage of younger people make this region suited to technology providers,” argues Venecia Liu, Research Vice President at Gartner. Meanwhile, the World Bank is predicting 5.5% growth for the region by 2017, mainly due to a recovery in exports, improved political stability and a boost to investment.

With $12.6 billion in IT investment in 2015 and 6.4% annual growth, Malaysia is ranked second among those countries which spend most on IT, just behind Singapore. The two most dynamic sectors in the country are health – with $294 million estimated spend in 2015 – and government services. "Nearly two decades of programmes and initiatives have helped to turn Malaysia into the second-largest enterprise spender on IT in Southeast Asia," points out Ms Liu, explaining: “The government's vision is to encourage foreign investment through tax incentives and other benefits, while also encouraging local businesses through venture capital funding and more."

Kuala Lumpur, 2ème centre de dépenses IT de l'Asie du Sud Est

Kuala Lumpur, the 2nd biggest centre for IT spending in Southeast Asia

However, in a report forecasting economic growth for Southeast Asia, entitled ‘Economic Outlook for Southeast Asia, China and India 2014 – Beyond the Middle-Income Trap’, the OECD highlights the vital need for structural reform in Malaysia’s education system. In addition, the Malaysian SME ecosystem needs strengthening, says the OECD. ‟SMEs, which contribute so heavily to employment, are especially hard-hit by difficulties in finding skilled labour”, the report underlines.

Recently two government institutions, one responsible for promoting MSC Malaysia (formerly known in full as the Multimedia Super Corridor) –  a ‘Special Economic Zone’ – and the other for modernising the public sector through the Malaysian Administrative Modernisation and Management Planning Unit (MAMPU) have been working on four major Big Data projects that will be run by a number of Malaysian ministries and public agencies. Other initiatives have also been launched to accelerate the move towards using digital technology for administrative procedures and to foster transparency.

It comes as no surprise that Singapore, which already holds the honour of being among the countries with the highest rate of digital progress in the world, is the region’s largest IT spender. In 2015, this Asian tiger is expected to spend $19.1 billion on information technology. This IT Investment will mainly be in the fields of communication, media, banking, government services, and also manufacturing and natural resources exploitation, say the Gartner experts.

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