Sarawak, being an open economy, is constantly being challenged to operate in an increasingly volatile environment of the global market, which is characterised by dramatic transformation as a result of rapid technological advancement and the fast emergence of digital economy. Obviously, business can no longer be done as usual with the digital revolution becoming an unstoppable force in development. Hence, Sarawak, like the rest of the country, must embrace digital transformation or face the risk of being left behind.
The State must be mindful of the global economic scenario, the performance and overall outlook. The International Monetary Fund (IMF) in the World Economic Outlook July 2017, anticipated that the world economy would firm up at 3.7 per cent in 2018 from the projected growth at 3.6 per cent in 2017 Growth in world trade, which has been picking up, is expected to grow by 4.2 per cent in 2017 while inflation in advanced economies and several emerging economies such as Brazil, India and Russia remain subdued.
Emerging and developing economies are projected to see a sustained pick – up in activities with growth forecast to expand from 4.6 per cent in 2017 to 4.9 per cent in 2018, which reflects a recovery in commodity-exporting countries.
China is expected to see a strong growth, underpinned by the continued support in policy for strong credit growth and public investment while the pick – up in India is anticipated due to strong Government spending and recovery in private investment.
Malaysia expects a stronger GDP growth for 2017. Its performance in the first half of the year expanded by 5.7 per cent supported by stronger domestic demand, particularly from the private sector expenditure, coupled with improvement in export demand. The Chief Minister, Datuk Patinggi (Dr) Abang Johari Tun Openg, who is also the Minister of Finance, in his Budget speech during the last sitting of the State Legislative Assembly, said Sarawak’s economy, supported by a strong growth in both domestic and external demands driven by recovery in the world economy, performed favorably during the first half of 2017.
Hence, the projected economic growth for the year would be around 4.0 per cent. The growth in the supply side is expected to be broad based supported by the services, manufacturing and construction sectors. Growth in the manufacturing sector is driven by higher production of export-oriented industries, particularly from LNG and petroleum products. Further growth expansion is anticipated in 2018 in line with global economic recovery.
Production of the main agriculture products has shown significant improvement in the first half of 2017. A double-digit production growth of crude palm oil at 20.8 per cent and palm kernel at 21.0 per cent were registered in the first half of 2017.
A further upward trend is projected for 2018 to be supported by the expansion in output and a more encouraging price of palm oil. The cons t ruc t ion s e c tor is expected to grow with the implementation of Pan Borneo Highway, Batang Lupar Bridge, rural Transformation projects and construction activities in both the residential and non-residential sub – sectors. Higher construction activities are expected for 2018 as the State continues to push for more infrastructure projects to speed up its development. The inflation rate averaged at 3.1 per cent in the first nine months of 2017, mainly attributed to higher domestic fuel prices which impacted the transport segment. The inflation rate for 2017 is anticipated to remain manageable.
Johari said the growth prospects for 2018, given the current encouraging improvement in the global economy, are anticipated to be more favorable at 4.0 per cent to 4.5 per cent. Growth will be broad based across the industries.
Higher external demand is projected to further boost the State economy. He said Sarawak, in the light of challenges and global economic scenario, ought to strengthen and reshape development approach to further accelerate growth. This is imperative particularly with the emergence of digital economy driven by the rapid explosion of technological advancement and the pervasive force of digital revolution. Digitalisation is impacting economic development, social life of the people as well as the way business has to be done.
Hence, the State must embrace the new era of digitalisation and embark on digital economy in order to stay ahead, to thrive and to prosper. He believed that Estonia, after a visit to the small East European country, is a good digital model which could offer a workable solution for Sarawak to provide fast internet connectivity and penetration crucial for the development of a digital economy.
As a matter of fact, the world is also acknowledging Estonia as an incredible digitalisation success story, grown out of a partnership between a forward-thinking Government, a proactive ICT sector and a ‘switched-on, techsavvy’ society.
Dubbed “e- Estonia”, it is one of the most advanced e-societies in the world. Some of the notable statistics that can be shared: 100 per cent of Estonia schools and Government organisations are connected to the Internet ; 99 per cent of banking transactions are conducted through the internet; 99 per cent of medical prescriptions are issued electronically. 98 per cent of under – 35s are frequent Internet users. 98 per cent of Estonian residents have digital ID-cards.
Every Estonian is provided with mandatory national ID-card, a digital identity and access card. It is a secure way of authentication in its electronic environment and provides ease and convenience for e-transactions including signing of legal documents. Each digital signature saves an Estonian at least 5 business days each year.
Estonia has by far the most highly-developed and advanced national ID-card system in the world. An Estonian is able to enjoy such a remarkable e-society mainly attributed to its exceptionally high penetration of digital infrastructure. Fibre optic cables cover the entire country, while direct undersea connections to its neighboring countries enable it to provide high standard communications.
Hence, Estonian households, businesses and institutions in the cities can connect to a 100-Mbps fibre optic network. It is reported that all larger initiatives and most of the e- Government development in Estonia have been undertaken in close cooperation with the private sector or the relevant NGOs. Today, Estonia is preparing to make all public data machine readable and widely available in order to encourage the development of new e-services jointly with the private sectors.
It has reaped tremendous benefits both socially and economically from its 15 years of investment and concerted effort in digital journey towards e- Estonia, which by IMF definition, is an advanced economy. It has enjoyed admirable GDP growth for the past 15 years. Estonia is among the few countries in EU with the fastest growing real GDP with the improvement in living standard, growth in income and a leading Eastern European country in foreign direct investment particularly in the sectors of telecommunication and banking.
Its Science Park in Tallinn has more than 200 technology based companies contributing to its GDP and innovation that drive value creation. Information technology and communication accounted for 7 per cent of its GDP. It is one of the fields that recorded the fastest growth in the last 10 to 15 years supporting economic progress and prosperity.
The service sector, which includes ICT sector, employs more than 60 per cent of workforce. Estonia is seen as a remarkable success story in the context of e-Government, which has contributed to higher efficiency, transparency, productivity and creating a positive impact to boost overall economy, which is anticipated to catch up with Sweden, Finland, Norway and Denmark as the more developed countries in Scandinavia.
Johari said the State, taking cognisance of various challenges both in the domestic and external fronts would focus on strategies that could help Sarawak to achieve a more balanced economic development that can stimulate a desirable level of economic activities and sustain growth during the year.
In this regards, a sum of RM5.745 billion or about 70 per cent of the total budget is proposed for development while an amount of RM2.481 billion, or 30 per cent is proposed for operating expenditure. He said a total of 53 per cent allocation amounting to RM3.062 billion will be provided for rural areas in 2018.
This provision is higher as compared to RM2.65 billion in 2016 and RM2.982 billion in 2017. He believed the continual effort in rural development would be able to achieve the development objective in opening up greater opportunities for the economic prosperity of the rural community.
He said the Digital economy, which will become the key thrust of the State’s future economy, is included as a new economic strategy in Budget 2018. The digital economy is a forward looking strategy and the technologies that underpin it will be fundamental for success and prosperity.
The Digi tal Economy ini – tiatives include Digital infrastructure; Digital Government ; Digital Talent Development ; Research and Development ; Smart City, Agriculture, Tourism and Manufacturing sectors and Digital Entrepreneur.
The allocation of about RM1.0 billion is proposed for the implementation of the following key projects namely to Create a new backbone from Kuching to Miri/ Brunei leveraging on Sarawak Energy fibre asset to raise bandwidth and gain access to international connection; improve 3G and 4G performance, namely backhaul transmission within cities so Johari said the State would leverage on MCMC’s fibre lines to expand 3G and 4G to rural areas to provide wireless coverage to strategic rural areas; establish direct link with neighbouring countries such as Kalimantan, Indonesia, Singapore and Brunei so that the State can connect to international gateway.
He believes this will enhance volume and achieve lower cost of communications; Increase access to fixed line broadband (100mbps) for business in cities to enable pioneering of digital initiatives in business; Kick start Internet of Thing (IoT) application by setting up Low Power Wide Area Network (LP WAN) in cities to support smart cities, power IoT and sensor networks; The State will also collaborate with MCMC and Telco service providers to construct 150 new fiberized towers with minimum 3G technology to expand high speed mobile services to urban and sub-urban areas.
More importantly, the State must set up Ready Big Data Portal applications, analytic tools and Application Programming Interface (APIs) to promote sharing and utilisation of data for value-added transactions for the benefit of the economy and to enhance the quality of life of citizens Sarawak must also be able to provide physical infrastructure and up skilling for community and the education system to improve the number and quality of Science, Technology, Engineering and Mathematics (STEM) and Technical and Vocational Education and Training (TET) students.
In this regard, it must collaborate with world class technology experts to build world recognised digital training facilities to create local talent pool to drive digital economy in the State and establish a digital village to provide facilities, services, incentives and programmes to accelerate the development of techno-preneurs and encourage start ups and innovations.
Budget 2018 allocated RM409 million to build more roads, bridges and jetties to further improve the connectivity of the State. It should be able to support Sarawak’s vision to maximise the potential of digital technology and digitalisation to bring Sarawak to the global digital playing field. Johari said: “It is his dream that Sarawak will one day be known as “S-Sarawak” where “S” stands for Smart Sarawak.”
In this connection, the State Government is committed to develop the digital infrastructure and programmes to accelerate growth.
The development of digital infrastructure would also be to reduce socio-economic divide; generate employment and business opportunities through ecommerce; harness talent and create value through innovations and entrepreneurships and achieve e-Government for efficiency, transparency, trust and confidence. In addition, the State will establish Sarawak Multimedia Authority (SMA) to be the highest governing body on the development of Digi tal Economy and Sarawak Digital Economy Corporation to drive the initiatives and ensure cyber security.
He said the State will continue with the agenda of Sarawak Transformation in areas of social economic transformation, rural transformation and performance and service delivery transformation. For 2018, the allocation will be provided to ensure the continual implementation of various projects of Key Result Areas (KRA) under the transformation initiatives.
He pledged that the State would continue to accelerate economic development through further broadening investment that will create sustainable longterm economic growth. Greater investment will focus on key and targeted investment that will contribute to economic growth of industries and business sectors particularly ICT and basic infrastructure.
Besides, more investments will also be made in manufacturing, energy, oil and gas, technologies base including digital and other service sectors, which in the longer term will generate income and revenue stream; develop talent and skill; promote innovations and entrepreneurial ship; create the much-needed job opportunities for yout..
