Making Malaysia Great Through Digital Transformation

By October 2018Uncategorized

Making Malaysia Great Through Digital Transformation

Making Malaysia Great Through Digital Transformation

ASEAN sees massive growth in breaking technology and data centre cloud / colocation centres. A strong trend across Singapore, Indonesia, Malaysia, Vietnam, South Korea and so forth has emerged. Malaysia is no different experiencing a dramatic change in data centre development and expansion over the last 10 to 15 years with the likes of Alibaba Cloud entering the Malaysia market.

There has been a notable big trend over the past five to fifteen years, with more than 50% of enterprises building next-generation data centres in Malaysia. As such older facilities are continually being re-evaluated.

MDEC Initiative 

As with Singapore’s Smart Nation initiative, Malaysia introduced its own initiatives through the Malaysia Digital Economy Corporation (MDEC). In association with the Ministry of Education (MoE), MDEC announced the return of #mydigitalmaker Fair 2018 to be held at the end of September. Part of the #mydigitalmaker Movement, this Fair is an initiative to prepare the next generation for the future of work. It is designed to provide students, teachers and parents a hands-on digital experience by featuring activities such as robotics, drone-making and racing, 3D printing, career talks and digital-based competitions.

MDEC is the holistic, government-owned agency launched in 1996 to pioneer the transformation of Malaysia’s digital economy. Its roots stemmed from Vision 2020, the plan to develop Malaysia into a fully-developed nation by 2020. According to the MoE, Malaysia wants to see the youth become producers and makers of the digital world; the first step is to equip them with the right skills and thinking approach.

To support a digital economy, MDEC rolls out initiatives that revolve around four key pillars. There guiding principles are:

1. Attracting investors, globalising local tech champions

2. Catalysing industry-driven digital ecosystem

3. Building critical enablers of the digital economy

4. Driving inclusive adoption of technology

Recently I spoke with a couple of local business leaders in Malaysia; Thyaga Rajan of the Malaysian Data Centre Alliance (MDCA) and Weng-Yew Wong, of the Johor Bahru Internet Exchange.

We discussed where Malaysia is heading, what of the available talent pool, where do some of the barriers lie around technology, talent and connectivity and how does Malaysia move forward.

About Connectivity

To start, I posed the question to Weng-Yew Wong, of the Johor Bahru Internet Exchange that connectivity can be one of the more expensive aspects. How does JBIX make this more cost effective?
Weng noted that JBIX, aims to attract regional and global players to Malaysia to partake in the creation of an open connectivity ecosystem. Content owners can exchange traffic with eyeballs owners easily, enterprises can connect to cloud infrastructure directly without going through the intermediary. sure did in a big way.

“Along with the abundant choices comes more competition and bigger demand for Telco services, all these will lead to lower prices for the end users.” - Weng-Yew Wong, JBIX

Weng commented. “We hope to create a connectivity ecosystem where all members of the value chain can co-exist and collaborate to making Malaysia the alternative hub in the region.”

By directly connecting non-ISP businesses to the internet exchange supposedly provides a much better experience. So I posed the question to Weng – Can you detail how this works?
Weng informed me that the Internet is made up of a network of networks. These networks need to connect to each other in order to exchange traffic. Now if there are 10 networks which needs to connect to each other, you will need many links to interconnect them. It will be a rather costly proposition for each of them to have one link to each others. The Internet Exchange is one of the options these networks can connect to.

“By connecting to an IX, a network can reach out to all the networks who are connecting to the same IX, hence saving the need to setup one connection to each of the many networks.” Weng stated.

He further went on to say that the key activity behind the Internet Exchange is called peering. When you connect your network to an Internet Exchange, you will need to setup peering with networks which are connected to the same IX.

Peering allows two networks to interconnect and to exchange routing information and then subsequently exchange traffic. By having networks to peer directly in to an Internet Exchange, the networks can exchange traffic directly between them, hence cutting out the need of an intermediary network.

“By cutting out the middle man, traffic can also be exchanged faster, hence improving on the speed and latency performance, and ultimately much better experience for the end users.” - Weng-Yew Wong, JBIX

Around Barriers

Obviously with any country that is rapidly emerging in this area there must be some barriers around communications and technology and, the talent pool.

Thyaga Rajan (MDCA) considered that there were not too many barriers to entry, as the previous government were generous enough by providing extra benefits to FDI’s willing to invest and set up regional offices in Malaysia, without even considering the impact to the local players by not providing a ‘level playing field’.

“We need the government and GLC’s to recognize local capability and use local players, change the mindset that foreign is not always better.” - Thyaga Rajan of the Malaysian Data Centre Alliance (MDCA)

However, there is no lack of talent, especially with knowledge workers noted Thyaga Rajan, but he did concede that the ‘brain drain’ has caused a vacuum in the talent pool and the best of these talents are exported to neighbouring countries like Singapore and Indonesia.

“These we need to attract back and provide incentives in order to fill the gaps in the country” he went on to say.

Looking at the current state of play with the Malaysian Data Centre landscape it was noted that with the consolidation of data centres, bigger players will acquire smaller ones and there will be foreign interest in these DC’s. Thyaga Rajan of the Malaysian Data Centre Alliance (MDCA) stated that drivers are more domestically focussed (DDI’s) rather than foreign interest (FDI’s). He further said that with the new Malaysian government, more local players will be willing to participate in government tenders as the new government is finding ways to cut operational costs by outsourcing theses services, including DC’s.

Compared to the neighbouring countries, Weng-Yew Wong explained, the cost of building connectivity infrastructure in Malaysia is much higher due to the local authority regulation which, for example, requires all cable to be buried underground with stringent policy on right of way and trenching technology.

With each telco laying their own infrastructure, this leads to the high cost of connectivity for each telco, which will in turn be passed on to the end users.

The ideal solution to this, of course, is to have a framework of infrastructure sharing among all the telcos. So far we have seen such infrastructure collaboration most apparent among mobile players. However between fixed line operators, infra collaboration is still rather limited.

Looking To The Future

As with Singapore, the location of Malaysia is very strategic in terms of its geographical position. Considering the technology market, a data centre hub and telecommunication hub would have clear advantages.

Firstly I asked Thyaga Rajan of the Malaysian Data Centre Alliance (MDCA) if looking to the future, where do you see Malaysia heading as a leading location for DC’s?

Thyaga Rajan stated that Malaysia is in a sweet spot now, as mentioned earlier, with the combination of the new government administration and the private sector working closely together to attract new businesses and investment to make Malaysia the leading location for data centres.

“The attractiveness are reducing broadband/bandwidth cost to compete with neighbouring countries and still be able to offer competitive and alternate real-estate solutions, ease of doing business, mature infrastructure, geographical advantage and economic stability to name a few.” - Thyaga Rajan of the Malaysian Data Centre Alliance (MDCA)

Having mentioned about broadband/bandwidth I then asked for a final comment from Weng-Yew Wong, of the Johor Bahru Internet Exchange about strategic positioning and posed this question about the strategy behind locating in Johor Bahru?

Weng replied that the main reason behind locating in Johor Bahru of course is due to its proximity to Singapore. “However there is also another reason, which is that there is a high proportion of Malaysian Internet traffic which is passing through JB destined to Singapore. Having an IX in JB will allow the service provider to offload portion of their traffic in JBIX before sending the rest to Singapore Weng went on to say that for many users this is a case of stopping by in JBIX on their way to Singapore. This is an easy manoeuvre and they stand to realise a great saving in their traffic cost.

For OTT players, instead of leasing expensive long haul bandwidth to KL, they can get a pair of dark fibre to connect to JBIX, and they can have a virtually unlimited capacity solution distributing their content to the eyeballs northbound from their data centre in Singapore.

Interested to know more about Malaysia’s digital market growth and opportunities? Join us at our upcoming Malaysia Convention: Cloud & Datacenters on 8 November 2018 at The Vertical, Connexion Conference & Event Center, Bangsar South. You will meet over 800 IT and business leaders and be part of an important growing ecosystem.

Email us at partner@w.media or call +65 3159 3210 and our concierge team will reach out to you

Author

Spencer Denyer

Chief Editor, W.Media

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