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Outsource magazine: thought-leadership and outsourcing strategy | August 22, 2017

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Malaysia: truly Asian

Malaysia: truly Asian
Martin Conboy

There is no doubt that the Malaysian tourism sector has benefited massively from the brilliant tourism campaign “Malaysia – Truly Asia”. Sometimes the brilliance of an advertising campaign is its inherent simplicity as the entire tourism sector has united behind the marketing message.

On the other hand the ICT-BPO sector has struggled to coalesce behind a single united branding message that the sector can rally behind.

Malaysia, a middle-income country, has transformed itself since the 1970s from a producer of raw materials into an emerging multi-sector economy. Under current Prime Minister Najib, Malaysia is attempting to grow its economy by attracting investments in Islamic finance, hig- technology industries, biotechnology, and ICT-BPO services.

The population is 28 million of which 12 million make up the country’s workforce.

As a former British colony it’s hard not to see the British colonial influence, which is mixed with a fusion of Islamic modernism. The mix is spectacular and impressive and a credit to the vision of the country’s leadership; moreover with its multicultural mix of Indian Chinese and native Malays the country is able to boast a peaceful and harmonious existence.

During the 22-year term of Prime Minister Mahathir, Malaysia was successful in diversifying its economy from dependence on exports of raw materials to the development of manufacturing, services, and tourism. The current government has continued these pro-business policies.

As an oil and gas exporter, Malaysia has profited from higher world energy prices, the oil and gas sector supplies more than 40 per cent of government revenue. The central bank maintains healthy foreign exchange reserves, and a well-developed regulatory regime has limited Malaysia’s exposure to riskier financial instruments and the global financial crisis.

In order to attract increased investment, the current government has raised possible revisions to the special economic and social preferences accorded to ethnic Malays under the New Economic Policy of 1970, but he has encountered significant opposition, especially from Malay nationalists and other vested interests.

According to The Malaysian Minister of Human Resources Dr. S. Subramaniam the ICT-BPO sector is growing at eight per cent per annum and is the second-fastest sector in the economy. There are about 200 foreign-owned companies and sixty local companies in the sector. The country boasts over 200 contact centres.

Looking specifically at the BPO sector according to ValueNotes – an India-based BPO analyst firm – about 15 per cent are captives in the shared services space and of the balance only about 20 per cent are servicing the international market. The sector is skewed towards the ITO sector with about half of the businesses represented in that area and 35 per cent in pure BPO. The sector is seriously underweight in KPO service offerings with less than five per cent of companies offering KPO services. Moreover it has not leveraged its tech-savvy Gen Y population and looked to position itself and a get a slice of the fast-growing social media BPO segment.

Malaysia has one great asset that few other Asian countries share and that is its multicultural population. Its fortuitous geographic position combined with its multicultural makeup has put it in a position to exploit its assets by positioning its self as a connection into Asia. It makes sense when one thinks about European and US companies looking to get a toe-hold in China and the expanding SE Asian economies as the economics of the world shift progressively eastwards.

I see the ICT-BPO sector coming together under a marketing slogan like “Malaysia – Your Asian Connection”. Clearly Malaysia needs to look at collaboration with other countries specifically around language skills and that brings into play the fast-growing South American players and niche players like Mauritius. Moreover Malaysia is constrained in that it cannot scale its BPO business quickly and will need to consider sharing BPO opportunities with other economies if it wants to play on the world stage.

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