Malaysia - Country Commercial Guide
Information & Communications Technology

This is a best prospect industry sector for this country. Includes a market overview and trade data.

Last published date: 2020-08-19


Malaysia is strategically situated in the heart of the region, with easy access to other growing markets and robust infrastructure, connectivity, and economic stability. The ICT sector is one of the fastest-growing sectors in the Malaysian market, currently contributing 18.5% of the country’s GDP (2018) and is expected to reach 20% of GDP by 2020.

Based on a report from GlobalData Market Opportunity Forecasts, ICT spending in Malaysia will reach US$25.2billion by 2023. This spending will be supported by a growing rate of digital adoption and cloud computing in Malaysia. The leading growth areas in ICT include cloud computing, data analytics, storage, cybersecurity, business process outsourcing, and mobility with the highest CAGR of 21% during the forecast period


  1. Department of Statistics Malaysia
  2. GlobalData Market Opportunity Forecasts

Overall, the manufacturing sector in Malaysia continues to be the highest contributor to total ICT spending. This trend is expected to marginally increase from 18.4% to 18.5% of the total ICT revenue between 2018-2023.

Government policies, such as the
Industry4WRD policy, play an essential role in promoting digitalization throughout all economic sectors and industries.  Industry4WRD  aims to transform the manufacturing sector and related services in the next five years.

Leading Sub-Sectors

The best prospects in Malaysia’s ICT sector are Cybersecurity and Data Systems Integration (which can include Internet of things, Big Data Analytics, Cloud computing, Artificial Intelligence). Malaysia is also focused on 5G implementation to improve the country’s connectivity. U.S. companies are well-positioned to compete in the market by exporting ICT products and services that offer quality and innovation in these areas.

The Government of Malaysia (GOM) budget for 2020 and the Economic Stimulus Package 2020 provides strong incentives in digital transformation, connectivity, security, satellite broadband, digital infrastructure for buildings, 5G ecosystems, and smart automation.

For more information:

  1. Malaysia ICT Policy and Guidelines
  2. Malaysia Budget 2020 for the ICT Sector
  3. Malaysia Economic Stimulus Package 2020


Malaysia’s cybersecurity industry is ranked high in the ASEAN region. Malaysia’s cybersecurity is third-best globally and is ranked third among 193 countries in terms of its commitment to cybersecurity, according to the Global Cybersecurity Index (GCI) 2018. The estimated value of Malaysia’s security services market in 2021 is US$ 636.6 million. The top 10% of job opportunities in Malaysia are related to cybersecurity.

Cybersecurity is identified as one of the top priorities for the Government of Malaysia due to the drastic increase in cybersecurity threats. In 2019 alone, Frost & Sullivan reported that the potential economic loss in Malaysia due to cybersecurity incidents equals US$12.2 billion. This loss is more than 4% of Malaysia’s total GDP of US$296 billion. 

Malaysian companies know the importance of cybersecurity but don’t prioritize it due to tight IT budgets.  However, now that the global pandemic is pushing more companies to go digital, demand for cybersecurity protection has dramatically increased . Cybersecurity is required to keep organizations safe as they move to digital platforms, and organizations are encouraged to embrace new technologies to address the risks. One unique opportunity is the use of Artificial Intelligence (AI) as the next platform in Cybersecurity Defense.

The Malaysian Government introduced an stimulus package of grants and loans to encourage the adoption of cybersecurity solutions by SMEs and mid-tier companies. The stimulus package includes three programs: the SME Digitalization Matching Grant (US$23 million), the SME Technology Transformation Fund (which distributed US$116 million in loans so far), and the Smart Automation Grant (US$23 million).


  • IDC Security Products & Services Market Forecast 2H16
  • Global Security Index

For more information:

  • Malaysia Cybersecurity Overview
  • Cybersecurity News in Malaysia

Cybersecurity Policies

The GOM developed the National Cybersecurity Framework (approved by Parliament and pending announcement) to guide industry and provide support for digitalization across many sectors, including government services, energy, healthcare, finance, and defense.

There has yet to be stand-alone cybersecurity legislation. As the primary cyber law in Malaysia, the Communications and Multimedia Act 1998 (CMA) provides for and regulates the converging areas of communications and multimedia. Other sporadic laws in this area to counter cybercrimes include Computer Crimes Act 1997, Penal Code, Copyright Act 1987, Personal Data Protection Act 2010, Digital Signature Act 1997, Strategic Trade Act 2010, Sedition Act 1948.

National Cybersecurity Framework

The National Cybersecurity framework is a guide for industries and provides support for digitalization across government services, energy, healthcare, finance, and defense. The hope is that when amendments to the data protection act are introduced, these will include clear guidelines on cybersecurity.

For more information: Malaysia Cybersecurity Framework

Data localization policies

Data Localization in Malaysia presents challenges to foreign investors.   It complicates the management of technology infrastructure, it limits a company’s ability to transfer data from place to place, and adds operational costs as businesses are suddenly mandated to build expensive local data centers. 

Malaysia is part of the ASEAN Framework on Digital Data Governance, which is an initiative that is intended to enhance data management, facilitate harmonization of data regulations among the ASEAN Member States and promote intra-ASEAN flows of data. This framework helps to ensure that ASEAN, collectively, realizes the potential benefits, even with the recognition that the ten ASEAN Member States are currently at different levels of maturity.

For more information:

  1. ASEAN Framework on Digital Data Governance
  2. Data Localization Policy
  3. Risk Management in Technology (RMiT) by Bank Negara


Data Systems Integration

Data systems integration is a critical tool in driving the GOM vision to accelerate digitalization across all industrial sectors through the implementation of digital technologies such as artificial intelligence (AI), the Internet of Things (IoT), Big Data Analytics (BDA), and cloud computing.

Cloud Computing

Cloud adoption is primarily concentrated among Malaysia’s larger enterprises, while adoption among SMEs is relatively low. However, Microsoft’s Digital Transformation Study found 79% of businesses in Malaysia acknowledging cloud computing as essential for digital transformation. According to 81% of companies in Malaysia, cloud computing, and the decreasing cost of devices have made it more affordable for companies of any size to transform digitally. To encourage the adoption of digital technologies,  GOM  is offering a wide-ranging incentives.  These incentive include tax breaks for the E&E sector and related IP, automation equipment capital allowance for services, provision of incentives for digitalization, and innovation efforts as well as the US$465 million billion Industry Digitalization Transformation Fund.

Internet of Things (IoT)

Gartner estimated that the IoT sector will grow at a rate of 34.1 percent per year in the Asia Pacific region to US$47billion by 2020. The IoT industry is expected to contribute US$2.2 billion to the gross national income of Malaysia by 2020 and US$9.8 billion by 2025. Malaysia is in an excellent position to seize the economic opportunities generated in IoT due to the country’s high penetration rates in mobile and internet, an established E&E sector, and strong support from various Government initiatives.

A major challenge in the growth of the national IoT industry is the lack of a comprehensive IoT ecosystem with no standards in technology, and concerns on the level of security and privacy in the country. To tackle this issue, the GOM established The National IoT Roadmap, which aims to drive Malaysia to be the Premier Regional IoT development hub in the region, with the objective of creating a national ecosystem that enables the use and industrialization of loT as a new source of growth for the national economy.


  1. Malaysia IoT Industry Overview
  2. Malaysia National IoT Strategic Roadmap

Big Data Analytics (BDA)

The BDA software market in Malaysia is forecasted to reach US$138 million by 2021. MBDA revenue is expected to achieve a compound annual growth rate (CAGR) of 8.8% over the year 2016 to 2021 forecast period.

BDA can become an essential tool for the growth of businesses, through the improvement of customer experiences and the expansion of product and service offerings.  To support this growth, there will be a need for better customization, options for deployment method, consultation, and incorporation of cognitive computing capabilities in software solution offerings to guide enterprises in their journey to adopt BDA technology. Software vendors and their channel ecosystem play an essential role in driving the adoption of big data technology among enterprises of various sizes and industries in Malaysia.


  1. Big Data Analytics Forecast
  2. Malaysia BDA Framework

Data Centers

The data center industry in Malaysia is expected to grow over the next five years, after strong growth from both local and international providers. Malaysia’s data center market size is likely to reach revenues of over US$800 million by 2025.

Malaysia is becoming a regional hub for many businesses, and this is driving more organizations to invest in cloud systems, which are, in turn, driving the need for more local data centers. The high concentration of international cloud service providers in Singapore will often choose Malaysia as a secondary market location for business continuity and disaster recovery, and to support their primary sites in Singapore.

The primary drivers for data center services include an increase demand for cloud services, a higher focus on digitalization of businesses, and government expansion on digital policies. IBM,  Microsoft, and Amazon Web Services, among others, and local participants (TM One and AIMS) are some of the cloud vendors that are expanding their infrastructure and availability in Malaysia.

Software-as-a-service (SaaS) has the highest adoption in cloud computing subsequently Infrastructure-as-a-service (IaaS) and Platform-as-a-Service (PaaS). Hybrid Clouds remain the dominant form of deployment by enterprises, and service providers have identified this model as an important contributor to the growth of the market.


1. Malaysian Data Center Services Size & Market

2. Malaysia Data Center Overview

Digital Service  Taxation

Effective 1 January 2020, a service tax at a rate of 6% will be charged on any digital service provided by a foreign-registered person to any consumer in Malaysia.  The Royal Malaysian Customs Department (RMCD) defines digital services as any service that is subscribed or delivered over the internet or other electronic networks with minimal human intervention from the service provider.

Foreign Service Provider (FSP) is defined as any person residing outside Malaysia that provides a digital service to a consumer.  It also includes any person who is outside of Malaysia operating an online platform for the buying and selling of goods or providing services, and who makes transactions for the provision of digital services behalf of any person. 

The RMCD guide defines a consumer as any business or individual that fulfills any two of the following criteria: 1. Makes payment to an FSP through a credit card or debit facility provided by a financial institution under the country’s Ministry of Finance or 2. Resides in Malaysia or acquires the digital service through an internet protocol (IP) address registered in Malaysia.  To determine whether the consumer lives in Malaysia, the guide advises FRPs to consider the consumer’s billing address in Malaysia and the consumer’s home address in Malaysia. 

For more information:

  • Malaysia Digital Tax 2020  
  • Royal Malaysian Customs Department  - Guidelines of Digital Service Tax

Market entry

For U.S. companies to penetrate the Malaysian ICT market, there are two possible market entry strategies to consider. The first and the most common practice is through partnership, distributorship, or joint-venture agreements with a local partner. The local partner usually would be responsible for handling customs clearance, dealing with established wholesalers/retailers, marketing the product directly to major corporations or the government, and handling after-sales service. Exporters of services generally also benefit from using a local partner. The second potential strategy is to establish an in-market presence. This  enables U.S. companies to build a greater understanding of the Malaysian market, and use Malaysia as a launching pad to strengthen regional relationships.

Smart Cities

Smart Cities is an important Government initiative that incorporates various leading industry sectors (e.g., ICT, Greentech, Smart Grid, Transportation, Infrastructure) and touches on key policy issues (e.g., 5G, cybersecurity, renewable energy) currently being discussed in the private and public sectors. The three main pillars of Smart Cities are:

  • Smart & Sustainable  Solutions
  • Clean environment
  • Environmental protection
  • Green development
  • Green infrastructure
  • Green economy
  • Smart Planning
  • Economic growth and value creation
  • Innovative economic growth
  • Equitable wealth distribution
  • Entrepreneurship
  • Public participation
  • Efficient public and social services
  • Private public partnership
  • Transparent governance
  • Smart Infrastructure & Technologies
  • Efficient road accessibility
  • Efficient public transportation
  • Non motorized accessibility
  • Availability of ICT infrastructure
  • Economic growth and value creation
  • Innovative economic growth
  • Equitable wealth distribution
  • Entrepreneurship

U.S.-ASEAN Smart City Network (ASCN)

Based on the ASCN goals of facilitating cooperation on smart city development, catalyzing bankable projects with the private sector, and securing funding and support from ASEAN’s external partners, the United States established the U.S.-ASEAN Smart Cities Partnership to develop and explore activities and programs that will benefit the ASCN.  For more information check the  Concept Note for the ASCN.

For more information:

  • ASEAN Smart Cities Network (ASCN) Ebook
  • East Asia Summit Leaders’ Statement on ASEAN Smart Cities

The U.S.-ASEAN Smart Cities Partnership is intended to be a flexible, responsive, and multiyear commitment to ASEAN.  The Partnership will be able to help address smart city challenges across a range of sectors, especially in the areas of infrastructure, energy, and information and communications technology.  The Partnership will take into account the ASEAN Smart Cities Framework and also draw upon individual Smart City Action Plans (SCAPs) to inform specific programming and activities.

There are 26 pilot cities in the ASCN, and 4 of the 26 cites are in Malaysia:

  • Kuala Lumpur
  • Kota Kinabalu, Sabah
  • Kuching, Sarawak
  • Johor Baharu, Johor

Other Smart Cities in Malaysia are:

  • Selangor - Smart Selangor Blueprint
  • Cyberjaya & Putrajaya – Malaysia’s first cities to be presented with 5G technology
  • Melaka - Smart metering for electricity monitoring and the state government set up a Smart City Advisory Council for Smart City policies in that state.
  • Penang - Smart City Blueprint for Penang by the year 2022.

5-G in Malaysia

The Malaysian Communications and Multimedia Commission established a national 5G Task Force in November 2018 to study and recommend a holistic strategy for 5G deployment in Malaysia. A collaborative effort with relevant stakeholders, the Task Force comprises members from the private sector, Ministries, and agencies representing the demand and supply side of the ecosystem. The Task Force completed its study and produced the National  5G Task Force final report for the Malaysian Communications and Multimedia Commission and Minister of Communications and Multimedia.

However, the business potential of 5G technology is extensive. Its ability to support more devices and at more rampant use will be the backbone of tomorrow’s smart cities. Malaysia’s government recognizes mobile technology as a global trend and aims to provide accessibility to a secure 5G infrastructure. The lack of awareness amongst businesses concerning 5G technology could potentially set smart cities back. So, companies need to learn about the use and potential of 5G as well as precautionary measures.

Web Resources

  • Tenaga Nasional Bhd
  • Energy Commission
  • Malaysia Green Technology Corporation (Greentech Malaysia)
  • Sustainable Energy Development Authority Malaysia (SEDA)
  • Smart Cities Malaysia Overview
  • Malaysia’s 5G Taskforce