Digital Economy Surges Ahead Contributing RM427.7 Billion to Malaysia’s Economy

By The Malketeer 

Malaysia’s Digital Economy is Proving to be a Formidable Force

The Department of Statistics Malaysia recently unveiled data that underscores this momentum, revealing that the Information and Communications Technology (ICT) and e-commerce industries contributed a staggering RM427.7 billion to the nation’s economy in 2023.

The Digital Economy’s Dominance

Contributing 23.5% to Malaysia’s Gross Domestic Product (GDP), the ICT and e-commerce sectors have shown resilience amidst a challenging global economy.

The growth was driven by two major factors:

GVAICT: Contributed 13.8% to the GDP.

E-commerce from non-ICT industries: Accounted for 9.6%.

While these figures reflect moderate growth of 3.9% compared to 14.3% in 2022, the long-term trajectory remains optimistic, thanks to Malaysia’s evolving digital infrastructure.

ICT Services: Building the Digital Backbone

The ICT sector has been a bedrock of Malaysia’s digital economy.

As of 2022, 18,903 establishments were operational in this subsector, marking a dramatic rise from 8,008 in 2015—a compound annual growth rate (CAGR) of 13.1%.

Key highlights include:

• Gross Output: Grew to RM190.1 billion in 2022, a leap of RM65.5 billion since 2015.
• Employment Growth: The sector employed 250,509 individuals in 2022, up from 203,017 in 2015, with salaries increasing by 7.5% annually to RM19.3 billion.
• Fixed Assets: Valued at RM114 billion in 2022, reflecting a 4.7% annual growth.

The ICT sector’s growth isn’t just about numbers; it’s a testament to the sector’s ability to adapt, innovate, and thrive.

E-Commerce: The Trillion-Ringgit Trailblazer

E-commerce is not just a trend; it’s a cornerstone of Malaysia’s economy.

In 2023, the e-commerce income by establishments reached RM1.2 trillion, growing 4.9% year-on-year.

Notable drivers included the manufacturing and services sectors, with quarterly income in Q3 2024 hitting RM307.9 billion.

Other significant milestones:

Establishments Engaged: From 47,556 in 2015 to 78,236 in 2022.

• Transaction Income: RM1,126.9 billion in 2022, up from RM398.2 billion in 2015 (16% annual growth).
• Expenditure: RM531.6 billion in 2022, compared to RM195.1 billion in 2015, with a CAGR of 15.4%.

These figures highlight the insatiable appetite for digital commerce among Malaysian consumers and businesses.

The Rise of Connectivity

The foundation of Malaysia’s digital economy lies in widespread ICT adoption. In 2022, nearly all establishments—95.9%—used computers, and 93.3% had internet access. Urban hubs like Kuala Lumpur and Putrajaya led the charge, with near-universal adoption.

For individuals, the numbers are equally impressive:

• Internet Access: 97.7% of Malaysians were online in 2023.
• Computer Usage: 80.4% of individuals were tech-savvy.

These statistics highlight Malaysia’s progress in bridging the digital divide, ensuring both businesses and individuals are equipped for the digital future.

What’s Next? Opportunities and Challenges

Growth in the ICT and e-commerce sectors has slowed compared to the previous year, signaling the need for innovation and policy support.

Key opportunities include:

• Expanding Digital Infrastructure: To sustain long-term growth.
• Talent Development: Addressing the demand for skilled ICT professionals.
• Green ICT: Emphasising sustainable practices in the digital economy.

Malaysia is at a turning point where strategic investments and innovative policies can unlock new heights for its digital economy.

As Malaysia’s digital economy continues to evolve, its contributions to GDP underscore its pivotal role in driving national growth.

The journey ahead is one of potential and promise, as Malaysia cements its position as a digital leader in the ASEAN region.