Overview of Digital Economy sector

The Digital Economy is a rapidly growing area of opportunity in Malaysia and around the world, and one which incorporates a wide range of diverse sectors and operational areas. Under Malaysia’s MyDIGITAL Blueprint, Digital Economy is defined as economic and social activities that involve the production and use of digital technology by individuals, businesses, and governments.

Digital Economy is a much broader and interconnected area of the economy compared to more traditional sectors. In the New Investment Policy, a digital technology stack view has been adopted to segment the various components for analysis

Citizens & Communities

The foundational infrastructure required to ensure digital connectivity across Malaysia. A critical enabler that needs frequent enhancement to ensure infrastructure can support the advancement of digital platforms, applications, and services. Includes data centres and broadband provision.

Mainly consuming/Increasingly producing


Applications & Services

Sector-agnostic digital technologies that are used as a base upon which other applications, processes, or technologies can be developed. Includes technology like blockchain and artificial intelligence.

Digital Commerce

Digital Education

Digital Health

Digital Fin. Svcs.

Digital Transport & Tourism

Digital Real Estate

Digital in Industrial

Digital Media/Ent.

Digital Agri. & Fisheries

Digital Govt

Digital Platforms

Digital solutions and services that leverage a variety of digital technologies to be applied across economic sectors. Includes sectors such as Digital Health and Digital Financial Services

Digital ID

Authentication & digital Signing

Unified & Interoperable Data


Big Data & AI




Security & Encryption

Digital Procurement, Billing & Payment

Open Govt & Industry

Connectivity & Infrastructure

Users of applications and services, and a key source of innovation to drive advancements in digital technology

Post, Parcels & freight

User access devices (smart phones, PCs, notebooks, televisions, media boxes etc.)



Cloud computing
Infrastructure-as-a-service (Iaas)

Network infrastructure (Fiber, copper, HFC, satellites, wireless towers), facilities and spectrum

Broadcast transmission Infrastructure

Aspirations across each NIA for the sector

Moving forward the sector-level initiatives outlined in the New Investment Policy focuses on enabling the sector to grow moving forward, with specific target outcomes across each National Investment Aspiration.

Where we are today
Where we want to be

Increase economic complexity

Digital Economy contributed 15.6% of GDP in 2020. Sector remains at nascent stage, with unequal distribution of capabilities across sectors and company size.

Ambition to expand Digital Economy’s economic contribution to 22.6% of Malaysia’s GDP by 2025, with efforts to boost digital transformation to enhance Malaysia’s competitiveness, empowering all industries and local MSMEs to participate in complex activities with higher value-add.

Create high-value job opportunities

High-value job creation hindered by shortage of skilled digital talent. Only 4.8% of respondents believe that existing labour market can fully meet their digital talent needs.

Goal to accelerate creation of high-value digital jobs, matched with agile and competent local digital talent pool, aligned with MyDIGITAL’s ambition to create 500,000 new jobs by 2025, with an emphasis on high-value jobs.

Extend domestic

Net exports grew at 18% CAGR between 2015 and 2020, but share of GDP remains low at 5%. Good foundations of enabling infrastructure such as networking, connectivity, and data centres, but digital services dominated by foreign players.

Malaysia will emerge as one of the regional leaders in Digital Economy, with an increased proportion of exports coming from digital content and services. MSMEs will have access to greater global opportunities based on digital transformation and connectivity, and be empowered to build and expand locally, regionally, and globally through digital revenue streams and channels.

Develop new & existing economic clusters

Digital capabilities deployed unevenly, with more mature capabilities in areas such as retail and financial technology. More than 489,000 MSMEs adopted ecommerce, with 378,000 SMEs trained in ecommerce. Malaysia’s first USD1 billion ‘unicorn’ business emerged in 2021, but still lags significantly behind regional peer Singapore which boasts 10

Industries are widely empowered by digital technologies and connectivity, and leverage these capabilities as an enabler to support cross-sector integration and collaboration.

Targeted 875,000 MSMEs adopt e-commerce channels, empowered by digital tools which reinforce their position in a global marketplace. Malaysia will be home to two unicorns by 2025, either home-grown or foreign players attracted by the national ecosystem.


Good mobile broadband access with ~100% penetration rate for all states other than Sabah. Prominent gaps persist in accessibility to fixed broadband, varying from 18.5% in Sabah to 70.5% in Kuala Lumpur.

Inclusive digital society, with full 4G coverage across 100% of populated areas. Connectivity will enable universal access to the internet and provide complete access to digital services through mobile broadband and satellite connectivity

Enhance ESG

Environmental risk focused in infrastructure, with data centres creating energy intensity challenges. Social risks focused in areas of data privacy and security. Over 50% of SMEs in Malaysia suffered cyber incident in 12 months preceding September 2021, and 67% lost some customer information due to incidents.

Industry operates with reduced carbon emissions driven by greater adoption of renewable energy and innovative and efficient technologies to support data centres in Malaysia.

Cybersecurity capabilities significantly strengthened in an environment with enhanced data privacy and protection systems.

Key Investment opportunities for Digital Economy sector

Multiple initiatives have been launched to attract high-quality investment into Malaysia, while recognising the intra-connected nature of Digital Economy as a sector rapidly evolving beyond traditional ICT-related roots. These include Malaysia Digital, an enhanced successor to MSC status; include the Digital Investment Office (DIO), a collaborative platform between MIDA and MDEC entrusted to charge towards attracting and facilitating digital investments (foreign and domestic) into Malaysia; and MyDIGITAL Corporation, an established to deliver the MyDIGITAL Blueprint.

Malaysia is also home to a robust digital content hub, boasting a rapidly maturing digital creating industry which includes animations, movies, and video games, which is proving to be a significant growth driver to the nation. MDEC has introduced initiatives to boost Malaysian digital content creators, allowing its digital content market to provide significant revenue, export sales value, and create a large number of jobs . As the Malaysian digital content market continues to grow, the local industry continues to expand, hosting a large number of animation, VFX, games and interactive media as well as new media & platforms companies.

Additional investment opportunities are identified in this report which can act to complement existing efforts, propelling Malaysia’s Digital Economy forward in alignment with efforts to achieve the goals of the NIA. For the purposes of this report, the opportunities that have been evaluated and focused on are those that develop the enablers within the digital economy tech stack.

Due to the dynamic nature of Digital Economy, there are two distinct types of investment opportunities for consideration:



Drive growth beyond the domestic market, serving regional or global market(s) while enabling the development of local market potential.



Build essential enablers to propel development of digital capabilities across sectors in Malaysia.

Given the finite nature of resources, opportunities are categorised into short-term and medium-term priorities, assessed against the right-to-win, criticality to Malaysia, and alignment to NIA.

  • Short Term Opportunities (opportunities for the next 5 years)
  • Medium Term Opportunities (opportunities beyond 5 years)


Global Services
Software and automation applications on cloud
Development Hub for IoT and AI


Data Centre and Cloud
Edge computing
Industry use case

Initiatives to unlock Digital Economy sector

The New Investment Policy identifies six key initiatives to drive investments towards the four identified short-term Digital Economy opportunities—three opportunity-specific and three sector-wide initiatives.


Global Service

Global hub with consumer centric, digitised end to process flow across functions and geographies

Development Hub for IoT and AI

Centre of development for advanced IoT, empowered by AI


Data centre and Cloud

World class location for digital economy with advanced data infrastructure

Government-led industry use case

Catalyser for innovation and private sector participation for nascent digital platforms

Unified investment strategy to drive laser-focused delivery on NIA & ESG
Accelerated innovation ecosystem to nurture high quality investments
Streamlined business environment for improved ease of doing business
Agile and forward-looking incentive packages that meets needs of investors
Expanded measurement of
Digital Economy impact
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Co-innovation hub for IoT and AI
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Enhanced industry collaboration for business-friendly DC operating environment
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Enhanced cross border collaboration through Digital Economy Agreements
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Enhanced cross border collaboration through Digital Economy Agreements
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Enhanced cross border collaboration through Digital Economy Agreements
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  • Sector-wide
  • Opportunity specific