In January, the International Monetary Fund projected that the global economy will grow just 0.5% this year. World Bank’s president Robert Zoellick rubbed salt into the wound by saying: “These are serious and dangerous times; dangerous because of the lack of visibility and great uncertainty.”

The global economy is already in the throes of a recession and the frightening thing is, no one knows where the bottom is and when it will be reached. Deputy Prime Minister and Finance Minister Datuk Seri Najib Razak, when tabling the mini-budget, said with the fiscal boost, economic growth this year is projected at between -1% and 1%. This means Malaysia is in real danger of slipping into recession.

Late last year, Pikom (Association of the Computer and Multimedia Industry) forecast ICT growth in 2009 to be at 5% compared to its forecast of 7% in 2008, which is in negative contrast to the double-digit growth achieved in 2007 and prior. However, coming to the end of 1Q2009, Pikom is seriously considering revising this downwards as it foresees organisations revaluating their ICT spending and budgets and deciding on a conservative path.

Pikom is thankful to the government for adhering to its call to address issues of unemployment, reskilling of workers, innovation and broadband— which have topped Pikom’s agenda since last year— in its mini-budget.

The association’s call to make broadband more efficient and easily accessible has been answered in the mini-budget via the RM3 billion allocated to Khazanah Nasional to facilitate and improve broadband infrastructure through its subsidiary. Additionally, RM2.4 billion has been provided to the Malaysian Communications and Multimedia Commission to facilitate broadband community centres and the provision of basic telephony services in rural areas. This will certainly help in achieving the 50% penetration rate by end-2010 and acculturate Malaysians to e-commerce and drive demand for the content industry— both key elements of a knowledge-based economy.   

Reducing unemployment and increasing employment opportunities, especially in the ICT industry, has been a top priority of Pikom since late last year. It lauds the government’s initiative in encouraging companies to employ retrenched workers by giving them double tax incentives; it sees this benefiting shared services and outsourcing (SSO) companies as they gear themselves to recruit 300,000 workers by 2012.

Collaboration between the government and the private sector on providing training and job placements and the creation of Jobs Malaysia Centres and opportunities for post-graduate education will certainly help address the shortage of skilled ICT workers. This will enhance knowledge and enable ICT companies to move up the value chain. In this respect, Pikom will continue to work with the Ministry of Human Resources to ensure that reskilling and the right skills are focused on.

Another piece of positive news for the industry is the fact that government procurements will be made through open tenders except in specific cases. This will encourage competitive bidding and strengthen the value-for-money concept in government procurement and tenders. Pikom strongly supports the government’s call to use e-Perolehan to enhance transparency in the management of government contracts. This is certainly seen as a step forward in leveraging technology for better results, efficiency and productivity.

Basically, the mini-budget is a step in the right direction. However, it seems to lack a “big bang” impact. It does not address short-term needs, especially with regard to putting more money into the pockets of Malaysians to immediately boost consumer spending.

The toughest time for the economy may manifest itself between 3Q and 4Q2009 and depending on how worse things get, the government may need to come up with further pump-priming measures. Therefore, it is important to speed up the implementation of the mini-budget for it to be impactful unlike the first RM7 billion stimulus package.

For the small and medium enterprises— which are what most of Pikom’s members are— the biggest problem is the slowdown in the export sector and domestic demand. Having funds but no demand— this will be the problem that will have to be dealt with sooner rather than later.

Moving forward, Pikom anticipates several sectors to grow, especially SSO, banking— particularly Islamic finance— telecommunications through the rollout of high-speed broadband and government initiatives in developing the corridors. It will continue to get involved in industry dialogues and activities with the government and other industry players to ensure positive growth in the ICT industry and voice and share all the concerns of the players.

Pikom will also push for the reinstatement of the EPF’s personal computer (PC) scheme— it estimates such a scheme will generate sales of about 600,000 PCs (including peripherals and broadband subscription) that will add about RM1.4 billion to the ICT industry by the end of 2010. This, in turn, will see the industry grow at about 7% instead of the 5% projected in early 2009— a 40% increase.

Pikom’s efforts also include creating demand for its members in the export market. Its most recent mission was to Hong Kong in December last year, the objective of which was to create awareness and showcase capabilities.   

Pikom will also play host to the inaugural Asia-Pacific Outsourcing summit from May 12 to 13. The regional summit will bring together the world’s foremost outsourcing practitioners and business leaders to define and determine the future of outsourcing in Asia.

Furthermore, for the first time, Pikom will organise the National ICT Month (NIM)— from July 20 to Aug 20— to increase awareness and the pervasive use of ICT. NIM will showcase a major conference — the Pikom Leadership Summit; exhibitions like the Pikom Software and Services Showcase (PS3); PC fairs; corporate social responsibility events like the launch of an eWaste campaign; online eShopping; the release of a major ICT strategic research report; and major networking events.

Pikom strongly hopes ICT will be the way forward for Malaysians and continue to be the key enabler and strategic tool for cost savings and productivity improvement during these challenging times. Organisations should take this opportunity to upgrade and improve their process and service delivery infrastructure to operate with high efficiency and low costs.

David Wong is the chairman of Pikom and CEO of SnT Global

This article appeared in Netvalue2.0, the technology section of The Edge Malaysia, Issue 748, March 30-April 5, 2009