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<h2 class="wp-block-heading" id="malaysia-digital-economy-landscape"><a href="#malaysia-digital-economy-landscape" aria-hidden="true" class="aal_anchor" id="malaysia-digital-economy-landscape"></a>Malaysia digital economy landscape</h2>



<p>The Malaysia digital economy has been rapidly transforming the business landscape, with significant growth and investment across diverse industries. Startups are the forefront of driving the digital economy, disrupting traditional markets with innovative technology and new business models.  </p>



<p>There are currently over 2,000 startups in Malaysia with e-commerce and marketplaces making up a significant 25% of that number. In 2022, startups in Malaysia managed to raise a total of USD 665 million in private funding with e-commerce and marketplaces taking almost half of that volume. A standout performer in this sector was Carsome, which raised a whopping USD 290 million. Fintech, on the other hand, was the second-largest sector to raise funds, accounting for 27% of the total private funding volume.</p>



<figure class="wp-block-image size-large"><a href="https://cdn.twimbit.com/uploads/2023/03/17131511/Picture11.png" target="_blank" rel="noopener"><img loading="lazy" decoding="async" width="1024" height="418" src="https://cdn.twimbit.com/uploads/2023/03/17131511/Picture11-1024x418.png" alt="" class="wp-image-55158" srcset="https://cdn.twimbit.com/uploads/2023/03/17131511/Picture11-1024x418.png 1024w, https://cdn.twimbit.com/uploads/2023/03/17131511/Picture11-300x122.png 300w, https://cdn.twimbit.com/uploads/2023/03/17131511/Picture11-768x313.png 768w, https://cdn.twimbit.com/uploads/2023/03/17131511/Picture11-1536x627.png 1536w, https://cdn.twimbit.com/uploads/2023/03/17131511/Picture11-20x8.png 20w, https://cdn.twimbit.com/uploads/2023/03/17131511/Picture11.png 1877w" sizes="auto, (max-width: 1024px) 100vw, 1024px" /></a><figcaption>Source: twimbit analysis, industry reports</figcaption></figure>



<p>By the end of 2022, the size of Malaysia digital economy had grown to RM 205 billion, representing 14% of the country&#8217;s GDP, with e-commerce and fintech serving as the primary growth drivers. Together, these two sectors accounted for 90% of Malaysia digital economy.</p>



<figure class="wp-block-image size-large"><a href="https://cdn.twimbit.com/uploads/2023/03/16144556/Picture4.png" target="_blank" rel="noopener"><img loading="lazy" decoding="async" width="1024" height="614" src="https://cdn.twimbit.com/uploads/2023/03/16144556/Picture4-1024x614.png" alt="Malaysia Digital Economy " class="wp-image-55036" srcset="https://cdn.twimbit.com/uploads/2023/03/16144556/Picture4-1024x614.png 1024w, https://cdn.twimbit.com/uploads/2023/03/16144556/Picture4-300x180.png 300w, https://cdn.twimbit.com/uploads/2023/03/16144556/Picture4-768x460.png 768w, https://cdn.twimbit.com/uploads/2023/03/16144556/Picture4-20x12.png 20w, https://cdn.twimbit.com/uploads/2023/03/16144556/Picture4.png 1260w" sizes="auto, (max-width: 1024px) 100vw, 1024px" /></a><figcaption>Source: twimbit analysis, industry reports</figcaption></figure>



<h2 class="wp-block-heading" id="key-highlight-1-e-commerce-is-still-b2c-focused-but-b2b-e-commerce-is-expected-to-accelerate"><a href="#key-highlight-1-e-commerce-is-still-b2c-focused-but-b2b-e-commerce-is-expected-to-accelerate" aria-hidden="true" class="aal_anchor" id="key-highlight-1-e-commerce-is-still-b2c-focused-but-b2b-e-commerce-is-expected-to-accelerate"></a>Key highlight 1: <strong>E-commerce is still B2C focused, but B2B e-commerce is expected to accelerate</strong> </h2>



<p>The e-commerce in Malaysia is primarily focused on B2C transactions and has reached an impressive GMV of RM68 billion. Despite impressive size of Malaysia’s B2C e-commerce market, the B2B e-commerce market remains largely untapped. It is only half the size of B2C e-commerce market. In most countries, it is typically twice the size of B2C e-commerce market. This is due to low digital adoption among businesses in Malaysia, with only around 20% of SMEs using IT systems to manage their back-end supply chain or inventory. </p>



<p>To remain competitive, B2C startups must focus on expanding their digital ecosystem, integrating end-to-end processes to deliver a seamless customer experience. This will help increase the customer lifetime value and accelerate the journey to profitability. B2B start ups on the other hand need to demonstrate the ROI and also seek growth via geographical expansion to achieve scale.  </p>



<figure class="wp-block-image size-full"><a href="https://cdn.twimbit.com/uploads/2023/03/22161013/Picture14.png" target="_blank" rel="noopener"><img loading="lazy" decoding="async" width="959" height="618" src="https://cdn.twimbit.com/uploads/2023/03/22161013/Picture14.png" alt="" class="wp-image-55490" srcset="https://cdn.twimbit.com/uploads/2023/03/22161013/Picture14.png 959w, https://cdn.twimbit.com/uploads/2023/03/22161013/Picture14-300x193.png 300w, https://cdn.twimbit.com/uploads/2023/03/22161013/Picture14-768x495.png 768w, https://cdn.twimbit.com/uploads/2023/03/22161013/Picture14-20x13.png 20w" sizes="auto, (max-width: 959px) 100vw, 959px" /></a><figcaption>Source: twimbit analysis, industry reports</figcaption></figure>



<h2 class="wp-block-heading" id="key-highlight-2-e-wallet-transaction-to-continue-drive-malaysia-digital-economy-with-microcredit-demand-on-the-rise"><a href="#key-highlight-2-e-wallet-transaction-to-continue-drive-malaysia-digital-economy-with-microcredit-demand-on-the-rise" aria-hidden="true" class="aal_anchor" id="key-highlight-2-e-wallet-transaction-to-continue-drive-malaysia-digital-economy-with-microcredit-demand-on-the-rise"></a>Key highlight 2: <strong>E-wallet transaction to continue drive Malaysia digital economy with microcredit demand on the rise</strong></h2>



<figure class="wp-block-image size-large"><a href="https://cdn.twimbit.com/uploads/2023/03/16145224/Picture7.png" target="_blank" rel="noopener"><img loading="lazy" decoding="async" width="1024" height="436" src="https://cdn.twimbit.com/uploads/2023/03/16145224/Picture7-1024x436.png" alt="Malaysia Digital Finance Service transaction value 2022 - 2025" class="wp-image-55038" srcset="https://cdn.twimbit.com/uploads/2023/03/16145224/Picture7-1024x436.png 1024w, https://cdn.twimbit.com/uploads/2023/03/16145224/Picture7-300x128.png 300w, https://cdn.twimbit.com/uploads/2023/03/16145224/Picture7-768x327.png 768w, https://cdn.twimbit.com/uploads/2023/03/16145224/Picture7-20x9.png 20w, https://cdn.twimbit.com/uploads/2023/03/16145224/Picture7.png 1033w" sizes="auto, (max-width: 1024px) 100vw, 1024px" /></a><figcaption>Source: Bank Negara, twimbit analysis</figcaption></figure>



<p>The digital finance service sector is the second-largest sector in Malaysia digital economy, driven primarily by e-wallet transactions which recorded a total of RM 69 billion transaction value in 2022. However, despite its growth, e-wallet transactions only accounted for 2% of the total e-payment transaction value in Malaysia. While Malaysia&#8217;s financial infrastructure is well-developed and supported by high internet penetration, Malaysian has long become accustomed to internet and mobile banking. </p>



<p>Nevertheless, e-wallet transactions have gained momentum since the COVID-19 pandemic and are expected to reach a transaction value of RM 95 billion by 2025. A significant proportion of Malaysians, around 70%, do not own a credit card, indicating potential demand for microcredit products like P2P lending or BNPL. Digital lending is expected to grow from RM 10 billion in 2022 to RM 14 billion by 2025.</p>



<h2 class="wp-block-heading" id="key-highlight-3-significant-opportunity-for-b2b-tech-startups-transforming-the-back-end-operation-to-facilitate-malaysia-digital-economy"><a href="#key-highlight-3-significant-opportunity-for-b2b-tech-startups-transforming-the-back-end-operation-to-facilitate-malaysia-digital-economy" aria-hidden="true" class="aal_anchor" id="key-highlight-3-significant-opportunity-for-b2b-tech-startups-transforming-the-back-end-operation-to-facilitate-malaysia-digital-economy"></a>Key highlight 3: <strong>Significant opportunity for B2B tech startups transforming the back end operation</strong> to facilitate Malaysia digital economy</h2>



<p>According to the World Bank, digitalization has mostly been applied to the front-end business processes among enterprises in Malaysia. Only around 30% of business establishment has adopted digital technology in back-end operations, especially the SMEs are lagging behind. Business establishment transformation could be the key driver of Malaysia digital economy as it helps businesses to optimize internal processes and improve efficiency, develop new business models, and drive innovation, all of which can contribute to the growth of digital economy. There is a potential of RM 7-14 billion in IT spending for tech startups to unlock by facilitating the digitalization of businesses&#8217; back-end operations.</p>



<figure class="wp-block-image size-full"><a href="https://cdn.twimbit.com/uploads/2023/03/16150507/Picture8.png" target="_blank" rel="noopener"><img loading="lazy" decoding="async" width="773" height="507" src="https://cdn.twimbit.com/uploads/2023/03/16150507/Picture8.png" alt="Malaysia IT Spending 2023" class="wp-image-55039" srcset="https://cdn.twimbit.com/uploads/2023/03/16150507/Picture8.png 773w, https://cdn.twimbit.com/uploads/2023/03/16150507/Picture8-300x197.png 300w, https://cdn.twimbit.com/uploads/2023/03/16150507/Picture8-768x504.png 768w, https://cdn.twimbit.com/uploads/2023/03/16150507/Picture8-20x13.png 20w" sizes="auto, (max-width: 773px) 100vw, 773px" /></a><figcaption>Source: twimbit analysis</figcaption></figure>



<h2 class="wp-block-heading" id="key-highlight-4-5g-to-supercharge-malaysia-digital-economy"><a href="#key-highlight-4-5g-to-supercharge-malaysia-digital-economy" aria-hidden="true" class="aal_anchor" id="key-highlight-4-5g-to-supercharge-malaysia-digital-economy"></a>Key highlight 4: 5G to supercharge Malaysia Digital Economy </h2>



<p>As of today, there are approximately 10 million 5G enabled smartphones in Malaysia but <a href="https://content.twimbit.com/insights/malaysia-telecoms-update-2022/" data-type="post" data-id="50351">extremely low 5G penetration of 1%</a>. The adoption is anticipated to soar with the government commitment to deliver the target of 80% of population with 5G coverage by end of 2024. </p>



<p>The implementation of 5G could supercharge the Malaysia digital economy of rural populations as they enjoy stable and high-speed internet access with potential to double the rural e-commerce market size by 2025, growing from RM 7 billion to RM 14 billion in 2025. Gaming industry is one of the sectors that will benefit from 5G. It is estimated to drive an additional RM 1.2 billion revenue impact for gaming industry by end of 2025.  </p>



<p>5G plays a more significant role at industrial level. Government expects 70% of 5G deployment is for industrial purposes to drive Malaysia&#8217;s digital transformation. Malaysia Institute of Economic Research (MIER) forecasted GDP to increase by RM 110 billion to RM 321 billion in the next decade, contingent upon investment in 5G technology. </p>



<figure class="wp-block-image size-large"><a href="https://cdn.twimbit.com/uploads/2023/03/20152502/Picture13.png" target="_blank" rel="noopener"><img loading="lazy" decoding="async" width="1024" height="427" src="https://cdn.twimbit.com/uploads/2023/03/20152502/Picture13-1024x427.png" alt="" class="wp-image-55345" srcset="https://cdn.twimbit.com/uploads/2023/03/20152502/Picture13-1024x427.png 1024w, https://cdn.twimbit.com/uploads/2023/03/20152502/Picture13-300x125.png 300w, https://cdn.twimbit.com/uploads/2023/03/20152502/Picture13-768x320.png 768w, https://cdn.twimbit.com/uploads/2023/03/20152502/Picture13-1536x640.png 1536w, https://cdn.twimbit.com/uploads/2023/03/20152502/Picture13-20x8.png 20w, https://cdn.twimbit.com/uploads/2023/03/20152502/Picture13.png 1547w" sizes="auto, (max-width: 1024px) 100vw, 1024px" /></a><figcaption>Source: twimbit analysis, MIER</figcaption></figure>



<h1 class="wp-block-heading" id="key-highlight-5-budget-2023-guided-by-malaysia-madani-aims-to-accelerate-enterprise-digitalization-and-automation"><a href="#key-highlight-5-budget-2023-guided-by-malaysia-madani-aims-to-accelerate-enterprise-digitalization-and-automation" aria-hidden="true" class="aal_anchor" id="key-highlight-5-budget-2023-guided-by-malaysia-madani-aims-to-accelerate-enterprise-digitalization-and-automation"></a>Key highlight 5: Budget 2023 guided by Malaysia Madani aims to accelerate enterprise digitalization and automation </h1>



<p>As Malaysia continues to chart its course through 2023, the government has announced a significant allocation of nearly RM 30 billion (including various funds and loans) to support businesses in accelerating their digitalization and automation efforts. This move, outlined in the Budget 2023 and guided by Malaysia Madani&#8217;s vision of sustainability and innovation, is expected to boost the country&#8217;s economic growth and competitiveness by enabling businesses to harness the power of digital technologies. </p>



<figure class="wp-block-image size-large is-resized"><a href="https://cdn.twimbit.com/uploads/2023/03/16152139/Picture10.png" target="_blank" rel="noopener"><img loading="lazy" decoding="async" src="https://cdn.twimbit.com/uploads/2023/03/16152139/Picture10-1024x423.png" alt="Malaysia Budget 2023 to help business transformation" class="wp-image-55041" width="800" height="330" srcset="https://cdn.twimbit.com/uploads/2023/03/16152139/Picture10-1024x423.png 1024w, https://cdn.twimbit.com/uploads/2023/03/16152139/Picture10-300x124.png 300w, https://cdn.twimbit.com/uploads/2023/03/16152139/Picture10-768x317.png 768w, https://cdn.twimbit.com/uploads/2023/03/16152139/Picture10-1536x634.png 1536w, https://cdn.twimbit.com/uploads/2023/03/16152139/Picture10-20x8.png 20w, https://cdn.twimbit.com/uploads/2023/03/16152139/Picture10.png 1808w" sizes="auto, (max-width: 800px) 100vw, 800px" /></a><figcaption>Source: Malaysia Budget 2023</figcaption></figure>


Malaysia digital economy landscape The Malaysia digital economy has been rapidly transforming the business landscape, with significant growth and investment across diverse industries. Startups are the forefront of driving the...