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Commentary by KPMG in Malaysia: Budget 2020: A modest piece of the pie for the technology sector

Budget 2020: A modest piece of the pie for the technol


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PETALING JAYA, 16 October 2019 – Following the tabling of the 2020 Budget by the Finance Minister YB Tuan Lim Guan Eng on 11 October 2019, it appears that the Government intends to make good of its promises on the nation’s transition into Industrial Revolution 4.0. 

We heard the Finance Minister announce RM21.6 billion to be channelled into the telecommunications sector with the National Fiberisation & Connectivity Plan (NFCP), RM500 million matching grants for SME digitalization, RM550 million for smart automation grants, establishments of 14 one stop Digital enhancement centres, and so on. One area which has garnered much attention and buzz is 5G. 

The Government will introduce a 5G Ecosystem Development Grant worth RM50 million. The 2020 Budget also included a RM25 million allocation to set up a contestable matching grant fund to spur more pilot projects related to emerging technologies such as artificial intelligence, blockchain, and autonomous vehicles that leverage on the fibre optics and 5G infrastructure. 

I was buoyed when the 2020 Budget Proposals included an allocation towards building a 5G ecosystem. In fact, I believe that the onus is on Malaysia to take the lead in 5G in the Asia Pacific region. We certainly have the ecosystem and enough aspirations to propel us towards the top of the 5G technology leaderboard. Now, whether the allocated RM50 million grant will be sufficient to enable this is certainly worth pondering. 

5G, the fifth generation of wireless technology, will see connectivity evolve to a level which is unseen before in terms of connectivity speed, less latencies, higher number of connections and of course bigger capacity. 5G will, to a large extent, be the backbone of our intentions in making it big as a digital economy. With the 5G infrastructure in place, Malaysia will eventually experience download speeds of many gigabits per second and significantly lower rate of latency. In turn, these will lead to Malaysia seeing exponential change.

Based on the initial stages of 5G implementation in other countries like China and South Korea, we observe immediate improvements in communication between people that, in return, enable them to interact with the growing ecosystem of connected machines around them. 

KPMG’s view is that 5G implementation is industry-neutral and can be deployed in many ecosystem environments such as manufacturing plants and healthcare facilities. In these environments, 5G can deliver private, secure and reliable communications, massive communications, real-time data transmission, and enhanced tracking of assets. 

Whilst we discuss the direct benefits to consumers such as you and I, many key sectors such as logistics, transportation, and agriculture will undoubtedly benefit from 5G implementation in the country. 5G offers the opportunity to secure the internet-enabled products and processes of Industrial Revolution 4.0, where equipment and sensors are communicating directly with each other and making decisions independently of humans. 

5G's benefit of improved connectivity would also mean we will quicken the momentum to bigger concepts like smart cities and digital government. I believe that 5G offers a significant opportunity to greatly improve the rakyat and country as a whole that will have a profound impact in the future of Malaysia. 

I am cautiously optimistic with the Government’s move to take the lead in 5G, but I think it must be acknowledged that this is only the first step out of many more that needs to be taken. That said, all the players in the ecosystem have to move in tandem with the government. Based on KPMG’s observations, a number of factors suggest that unlike past wireless technology advancements where adoption was driven by consumers, the adoption of 5G will be enterprise led.

Hence, Malaysia as a country needs to think about the avenues and platforms to be deployed as part of the 5G implementation, and more importantly reap the value created as a result of early adoption. Without a doubt, the RM50 million 5G Development Grant allocated by the government is a positive step forward to get this off the ground!

For media queries, please contact:

Syazlina Nasir
Executive, Marketing & Communications
KPMG in Malaysia
Direct: +603 7721 3728
Mobile: +012 2901743
Kimberly Sammy
Manager, Marketing & Communications
KPMG in Malaysia 
Direct: +603 7721 3924
Mobile: +6012 312 5373

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