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Securing Malaysia’s Digital Future 20

these factors, among others, have (AAEC) and other trade-facilitation
contributed to a substantial rise in initiatives would enable greater
online spending. According to estimates, cross-border e-commerce transactions,
Indonesia’s e-commerce transactions are improve consumer trust and enable
expected to increase with GMV at US$83 capacity building initiatives that will help
billion in 2025, up from US$32 billion in increase digital adoption in the country.
2020. 22

Indonesia’s digital economy is also 2) R&D and Innovation
propelled by the presence of five unicorns
which harness innovative technologies – There are gaps in Malaysia’s R&D
Gojek, Tokopedia, Bukalapak, Traveloka ecosystem, among which is the linkages
and OVO. The growth of these tech between R&D, industry, innovation and
companies has been bolstered by commercialisation. Malaysia’s research is
government’s initiatives to encourage concentrated in Higher Learning
digitalisation of firms, particularly the Institutions , however the papers produced
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SMEs. These include support measures for may not necessarily result in a
firms to establish digital presence such as commercialised product. There may need
Pasar Digital (PaDi), Belanja Pengadaan to be a paradigm shift needed to
(BELA) and Laman UMKM (MSMEs Page), understand the lifecycle of research to
subsidised soft loans and reformed production, inclusive of the support
venture capital regulations, and needed to support the process such
pro-innovation policies like 1001 Digital as further awareness on patents,
Startup Movement. shorter funding cycles with monitoring
mechanisms to support the long period of
Policy Recommendations research in addition to identifying specific
niche areas and pairing approaches
1) Deepening regional integration and with the knowledge-base and sandboxes
cooperation for a shared digital future needed.

Malaysia is amongst the most 3) Digital Diplomacy
export-dependent and open economies in
the region. As such, it is crucial that The advancement of technologies is
Malaysia continues to deepen regional critical to drive digital transformation and
integration and cooperation on areas the digital economy. As such, developing
related to cross-border digital trade and Malaysia’s digital economy would be
digital connectivity. This includes ratifying dependent on the ability to have access to
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existing free trade agreements with strong or develop technologies critical for
digital trade rules like the Comprehensive Malaysia’s future. This might mean access
and Progressive Agreement for to the hardware, the components or
Trans-pacific Partnership (CPTPP) and education exchanges needed to nurture
pursuing digital economy partnership Malaysia’s knowledge bases and talent.
agreements like the existing one between However, major power rivalry impacts the
Singapore, Chile, and New Zealand. At the way such technologies are researched,
ASEAN level, accelerating implementation created and developed. As alliance-build-
of the ASEAN agreement on e-commerce ing for future technologies occur between