Aspiring nations gain more from Internet

By JO TIMBUONG
bytz@thestar.com.my

 

Manuel: "Malaysia derives a lot of income from exporting equipment that 

allows people to connect to and use the Internet." 

 

KUALA LUMPUR: Aspiring countries like Malaysia are gaining more from the Internet than developed nations.

The Web helps these countries improve gross domestic product (GDP), better their small and medium enterprises, and boost the creation of new jobs.

Going online helped Malaysian industries contribute 4.1% of the country's gross domestic product (GDP) in 2010, making Malaysia one of the 30 fastest growing countries in the world.

Some of the other aspiring countries are Argentina, Hungary, Mexico, Morocco, Nigeria, Taiwan, Turkey and Vietnam.

They were part of an online study - titled Online and Upcoming: The Internet's Impact on Aspiring Countries - by researchers McKinsey & Co.

McKinsey defines aspiring countries as those that are developing but are at the cusp of becoming a developed nation.



The study found that the Internet contributed US$9.75bil (RM29.7bil) out of a total GDP of US$238bil (RM723bil) for the aspiring countries in 2010. This is far more than what was contributed in the United States and China.

Nimal Manuel, principal at McKinsey, said a big chunk of the GDP contribution in Malaysia came from the IT industry.

"Malaysia derives a lot of income from exporting equipment that allows people to connect to and use the Internet," he said.

"The country will also see significant growth in the value that domestic activity on the Internet delivers to the nation."

Manuel was giving a briefing on the economic impact of the Internet on Malaysia.

Booster

Besides contributing positively to the country's economy, the Internet also helped its small and medium enterprises (SMEs) to make gains.

Manuel said the SMEs in Malaysia and the other aspiring countries that took their businesses online gained over 6% more in revenue than those with only brick-and-mortar stores.

"Thanks to the Internet, these businesses were able to reach new customers in different geographic locations. They also enjoyed a 10% increase in productivity (after embracing technology)," he said.

According to him, this increase in productivity (due to better efficiencies) does not mean decreased job opportunities in the aspiring countries.

"Our study found that for every job lost, 3.2 new jobs were created because of the Internet. And in comparison, for every job lost in developed countries, only 1.6 new ones were created," he said.

These aspiring countries must not rest on their laurels; they should be making an effort to improve their Internet ecosystems.

Manuel said they need to ensure a high quality and secure infrastructure to better capture the value of the Internet.

The governments need secure servers, in addition to basic infrastructure, such as electricity supply, as well as quality fixed and mobile Internet services, he said.

In response to the recommendations, Datuk Mohamed Sharil Tarmizi, chairman of the Malaysian Communications and Multimedia Commission (MCMC), said the Government is championing the quality of Internet services in Malaysia.

"This is an entry-point project under the Economic Transformation Plan, and that shows how serious the Government is on broadband services and issues," he added.

MCMC is the communications and multimedia industry regulator.