EXPLOSIVE GROWTH

Region rapidly moving up value chain

ZAIDI ISHAM ISMAIL KUALA LUMPUR bt mediaprima.com.my

THE Association of Southeast Asian Nations (Asean), with a population of 622 million and a projected gross domestic product (GDP) of US$2.5 trillion (RM10.7 trillion) last year, is the seventh largest global economy.

The region is rapidly moving up the value chain with significant growth in the use of digital and Internet technologies.

According to the Malaysia Digital Economy

Corp (MDEC) vice-president

(enterprise development) Gopi Ganesalingam, Southeast Asia is the fourthlargest Internet market in the world, with a base of 260 million users.

“Asean’s Internet economy is expected to grow to US$200 billion over the next decade, and Internet users will almost double to 480 million by 2020. That’s great news for B2C (business-to-consumer) players. These estimates often indicate trends; in this case, business done on the Internet is going to explode across Southeast Asia.”

The challenge for businesses trying to gain market access was the heterogeneity of Asean, added Gopi.

Gopi pointed out that unlike the European Union, Asean was essentially a loose political association with little in the way of a common set of regulations allowing firms to operate freely across borders.

“Unlike most Asean countries, both the customer base and human resources are easily accessible within Malaysia.”

Many internationally-recognised semi-conductor manufacturers and support companies have established themselves in various free zones throughout the nation. The animation industry has also found it convenient to operate from Malaysia.

“Pinewood Studios is a world-class facility located in Iskandar Malaysia, where the Marco Polo TV series is being filmed. We also have Les Copaque of Upin & Ipin fame and KRU Studios, as well as several other animation companies operating in Cyberjaya, including Animasia Studio, Animonsta Studios, Giggle Garage, and many others.” Gopi noted that Malaysia hosts several hundred technology and service companies out of Cyberjaya.

“Many such firms serve clients around the world. Scicom, with over 1,800 Kuala Lumpur-based call-centre staff, serves 18 countries in 19 languages and dialects apart from English and Bahasa Malaysia.

These firms and others like them were comfortable operating in the fragmented regulatory environment that made up Asean, said Gopi.

“In recent times, we have firms such as CXS from Norway, specialising in profiling analytics, re-domiciling their operations to Malaysia. This makes it a natural partner for “one-size-fits-all” global companies that are seeking to tap the region’s potential.”

Malaysia’s regional experience has led to several merger and acquisition exercises, as international firms seek to build up their Asean presence.

Gopi pointed out that, in 2010, Facebook acquired local developer Octazen Solutions.

He added that Malaysia, via MDEC, will introduce several new programmes to attract regional talent and entrepreneurs.

Asean’s Internet economy is expected to grow to US$200 billion over the next decade.