E-Readiness and Enabling Policies in Malaysia

EDICOM 2002PWTC, Kuala Lumpur

Ministry of Energy, Communications and Multimedia

31 October 2002

Malaysia’s Vision To transform itself from an

industrial economy into a knowledge economy with ICT as an enabler

Pre-requisites – e-Agenda To support the evolution of such a

society, Malaysia has developed an e-Agenda that incorporates the following thrusts areas: Multimedia Super Corridor Flagship Applications Communications Infrastructure Human Resource Development Content Development

Malaysia’s E-Agenda

Knowledge Based

Society 2020

MSCMSCFlagship

Application

Flagship Applicatio

n

•To spur Malaysia to be E-Ready to support Government of knowledge based society

•8th Malaysia Plan Funding – RM5.1 billion

MSC

Content Development

HRD Electronic Commerce

Communications Infrastructure

Flagship Applications

8th Malaysia Plan Allocation A total of RM5.159 billion has been

allocated to cater for the above components meant to spur the country towards e-readiness

DEVELOPMENT ALLOCATION FOR 2001-2005

100.05,159.1Total

5.5284.4Others

0.210.0Local Content

21.31,098.030.23.0

119.8945.0

Bridging the Digital DivideInfodesaRural Internet CentreUniversal Service ProvisionComputer Infrastructure for Schools

5.8300.0Research & Development

31.81,641.8Computerization

35.41,824434.8401.1400.0418.1

1.9169.0

MSC Flagship ProgramE-GovernmentSmart SchoolsTelehealthMultipurpose CardR&D ClusterCross Flagship

(%)ALLOCATION (RM MIL.)

What is E-Readiness? E-Readiness or Digital Readiness

is the degree to which a country is prepared to participate in the digital economy. It is gauged by assessing a country’s relative advancement in key areas

E-Readiness Measurements Worldwide, there have been effort to

measure e-readiness and among such measurements are: APEC Readiness Assessment Harvard Readiness Assessment McConnell International Assessment E-ASEAN Readiness Guide

E-Readiness Measurements In general, the measurements

incorporates the following indicators: Infrastructure E-Society E-Commerce E-Government Trade in ICT goods and services

This measurement is used for the e-ASEAN Readiness Survey

The measures in the revised readiness guide have been aligned with the Strategic Initiatives

e-ASEAN Framework

Goals

e-Societye-Society

Legal Framework for e-commerce

Trade in ICT Goods and Services

Trade in ICT Goods and Services

Measures

• Penetration

• Use Type

• Organization

• Promotion

Measures

• Communication Infrastructure

• Internet Access Services

• End User devices

• Affordability

Measures

• Communication Sector

• IT Sector

• ISP Sector

Measures

• Current Status

• Taxation

• Legal Framework

• Physical Distribution

Measures

• Workforce

• Localization

• Public Access points

Measures

• Home users

• Business Users

• Education

e-Government

Infrastructure

E-Readiness Survey Results 2001

E-ASEAN Readiness Survey In the last 3 years (2000 – 2002), 3

surveys have been conducted by MECM with assistance of MDC

Surveys conducted to monitor progress on key indicators and for comparison and benchmarking with other countries esp. the Asia Pacific and ASEAN Regions

The Methodology defines four stages in the development of an information economy. This

approach is used to assess ASEAN readiness levels and to develop recommendations

Emerging

•The basic infrastructure requirements for e-readiness are in place or are planned to be in place in the short term

•There is political commitment to positioning the country for the ICT revolution

Evolving

•A comprehensive infrastructure framework for ICT development has been established and is being updated and modified to work effectively within the political, economic, geographic, social and demographic characteristics of the country

Embedding

•There is general acceptance by citizens, business and the government of the dynamics in society caused by technology advances

•An embedding country will be incorporating e-business requirements into its policies, legislation and regulation and is using these to enhance its international standing

Extending

•An extending country has moved to world-class practice by inventing and re-inventing traditional ways of doing things in a way which improves productivity and standards of living

E-Readiness – Key Characteristics - Infrastructure

Emerging Evolving Embedding Extending

Low penetration of communication infrastructure and terminal devices

Generally closed market condition

Moderate to low penetration of communication infrastructure and terminal devices

Mostly liberalised market condition

High penetration of communication infrastructure and terminal devices

Mostly liberalised market condition

Very high penetration of communication infrastructure and terminal devices

Broadband Internet Services gaining popularity

Liberalised market condition

E-Readiness – Key Characteristics - E-Society

Emerging Evolving Embedding Extending

Very low Internet penetration among home and business users; usage limited to e-mail

Very low Internet penetration among schools/colleges

Almost no availability of local contents

Moderate to low Internet penetration among home and business users; usage limited to e-mail or info’ gathering & publishing

Moderate to low Internet penetration among schools/colleges with limited use of web/computer based tools

Moderate to low availability of local contents

Moderate Internet penetration among home and business users; usage limited to e-mail or info’ gathering & publishing

Moderate Internet penetration among schools/colleges with limited use of web/computer based tools

Moderate availability of local contents

Very high Internet penetration among home and business users; usage limited to e-mail or info’ gathering & publishing

Very high Internet penetration among schools/colleges with some use of web/computer based tools

Very high availability of local contents, INCL. In local language

E-Readiness – Key Characteristics – E-Commerce

Emerging Evolving Embedding Extending

Low or zero E-CommerceNo position on E-Commerce taxation

E-Commerce law does not exist

CA & payment gateway do not exist

Physical distribution infrastructure developed only in main cities

Customs has not incorporated ICT technology

E-Commerce transactions almost zero

Low or zero B2B & B2C E-Commerce

No position on E-Commerce taxation

E-Commerce law does not exist

CA & payment gateway do not exist

Physical distribution infrastructure developed in some parts

Customs yet to fully incorporate ICT in operations

E-Commerce transactions < 1% of GDP

B2B & B2C E-Commerce low

Taxation neutral to E-Commerce

E-Commerce law, CA and payment gateway exists

Physical distribution infrastructure moderately-developed

Customs yet to fully incorporate ICT in operations

E-Commerce transactions 1-5% of GDP

B2B E-Commerce moderate, B2C low

Taxation neutral to E-Commerce

E-Commerce law, CA and payment gateway exists

Physical distribution infrastructure well-developed

E-Commerce transactions > 5% of GDP

E-Readiness – Key Characteristics – E-Government

Emerging Evolving Embedding Extending

Very low PC & Internet penetration in govt.

Govt. uses Internet mainly for e-mail

Few govt. websites, with no/low proportion of services on-line

No separate ICT ministry/agency

Low/moderate PC & Internet penetration in govt.

Govt. uses Internet mainly for e-mail

Moderate proportion of govt. depts. have websites, with moderate proportion of services on-line

Separate ICT dept.

Moderate/high PC & Internet penetration in govt.

G2C services & internal work processing

High proportion of govt. depts. have websites, with moderate proportion of services on-line

Separate ICT ministry/dept.

Very high PC & Internet penetration in govt.

G2C services, internal work processing & E-Commerce

Very high proportion of govt. depts. have websites, with high proportion of services on-line

Separate ICT ministry

E-Readiness – Key Characteristics - Trade In ICT Goods & Services

In ICT sector, countries are at different levels in conforming to internationally agreed trade liberalisation treaties

Malaysia has signed the WTO Basic Telecom Agreement and IT Agreement and is in the process of implementation

E-ASEAN Readiness Survey Main findings are as follows:

Infrastructure - Embedding E-Society - Embedding E-Commerce - Embedding E-Government - Embedding Trade in ICT goods and services –

Signed WTO Agreements On Basic Telecom and IT and in the process of implementing

Findings of Survey

Infrastructure E-Society Trade in ICT Goods & Services

E-Commerce E-Govt

Emerging

Embedding

Extending

Evolving

Singapore Singapore SingaporeSingapore

Malaysia Malaysia Thailand

Malaysia PhillipinesThailand

Malaysia

Note : Emerging – Basic requirements in placeEvolving – Comprehensive infrastructure framework establishedEmbedding – Incorporation of e-business requirements into policies and programmesExtending – Moved to world-class practice

E-Readiness Survey – Conclusion Key Challenges

Infrastructure• Leverage existing infrastructure for broadband value

added Internet Access E-Society

• Encourage home users for on-line transaction• Encourage business users to adopt usage of e-

commerce particularly for transaction • Leverage the usage of ICT of education• Promote localisation of content in local language

E-Readiness Survey – Conclusion Key Challenges

E-Commerce• Improve physical infrastructure throughout

the country E-Government

• Develop roadmap to describe transformation strategies

• Increase govt. web presence & utilisation in service delivery

Targets For Telecommunications Indicators

Targets For Telecommunications Indicators

Source : 8TH Malaysia Plan Report (Nov 2001)

2001 2005

Population 23.5M 25.7M

Telephone Penetration1 20% 35%

Mobile Penetration2 29% 50%

PC Penetration3 9.91% 30%

Internet Dialup Per 100 population

10% 25%

Internet Users Per 100 population

21.5% 24

TV per household 81% 95%

Satellite Users % per household

13% 15%

E-Commerce1 USD Mil 1000 9400

Penetration of ICT in Government

*Online Government services refer to public services which can be delivered electronically involving a two-way online interaction. Excluded are the mere provision of online information and downloading of forms.

1 : 12

1 : 7.3

1 : 4.3

1 : 6.2

1 : 6.5

Ratio PC:Staff

1 : 6Average

Agency

PBT

BBN

BBP

State

Federal

Ratio of PC to Staff

80.2% of Government departments have information websites

8.6% of Government services* is offered online

Malaysia’s Initiatives to Enhance E-Readiness

Malaysia’s Initiatives to Enhance E-Readiness Policy Initiatives

Widening Access Building trust and confidence in electronic

transactions• Privacy requirements and Personal Data Protection• Information Security and integrity

Harmonisation of laws to facilitate e-transactions

Promoting positive use of the Internet

Widening Access

Strategies for Widening Access

4

Develop a sustainable Universal Service Program

Move towards cost-based tariff

More liberal licensing and reduce barriers to entry

Leverage on new technologies and promote broadband rollout

UNIVERSAL SERVICE PROGRAM

Past Policy Industry is responsible for all info-communications

infrastructure rollout including uneconomic areas

Implications Slow development as concentration is on

economic areas and limitation of USP fund

Affects our target for 2005, particularly for the rural areas

Digital gap may widen

UNIVERSAL SERVICE PROGRAM

Policy Review Government to finance communications

infrastructure for schools and other agencies

RM 1 billion has been approved to supplement and complement industry’s fund for 2001-2005

Sustainable USO Fund - industry to contribute

“Last Mile” Liberalization

Rationale Tomorrow's businesses require less complicated,

more flexible and exponentially more powerful environment

Malaysia recognises the importance of rolling out broadband services

Widening Access to ICT Services

200 schools to be connected in 2002

Balance of 2000 schools & clinics by 2005

All schools to be smart schools by

2010 All schools to be provided with electricity

Rural Internet Centres

Rural clinics, rural libraries and other

government agencies to be connected

under RMK-8

Rural Internet Programme

Rationale To bridge the digital divide between

the information rich and the information poor

To balance development between urban and rural/underserved

To compensate for low PC and Internet penetration

Leverage on New Technologies& Promote Broadband Rollout

Web-based and Internet-based applications

Wireless and satellites (eg. 3G, MMDS, VSAT, CDMA, etc.)

Voice-over-Internet Protocol Need to increase broadband

penetration

Building Trust and Confidence in

Electronic Transactions

Proposed Personal Data Protection Legislation Rationale

To provide a secure electronic environment in line with MSC objectives

To create confidence among consumers and users of both network and non-network industries

To accelerate uptake of e-based transactions Target implementation - 2003

Addressing the Security and Integrity Issue

Formulation of National Policy Framework on Security and Integrity

Certification of Security Systems - Towards a Malaysian Security Standard

Target Implementation - 2003

HARMONIZATION OF LAWS AND

PROPOSED NEW CYBERLAWS

HARMONIZATION OF MALAYSIAN LAWS

MSC ICM requested the Ministry of Energy, Communications and Multimedia (MECM) to study existing laws to ensure consistency and harmonization with the Cyberlaws.

HARMONIZATION OF MALAYSIAN LAWS The study covers

739 statutes. 22 Ministries and Federal Departments Proposed amendments and new laws

2 Major Findings Some of the existing laws are

inadequate or may impede dealings in the electronic environment in a variety of ways;

Some of the existing policies can be “fine-tuned”

Harmonisation ofMalaysian Laws

Types of Legal Inadequacies

Control & Regulate

Application

Interpretative

Procedural & Administrative

Administrative requirements for manual transaction e.g. Birth registration

Interpretation to include online activity e.g. stamping

Application not extendable to online activity e.g. Information Theft

Requirements for licensing of online activities e.g. Travel agents

Laws should be amended to enable the activity to be done electronically

Existing Policies Generally do not hinder e-Transactions

but can be fine tuned to promote e-business by creating conditions that are favourable for

entrepreneurship and innovation encourage knowledge acquisition promote investments moderate the digital divide and promote

participation in international forums

Legal Inadequacies & Recommended Solutions

Control & Regulate

Application

Interpretative

Procedural & Administrative

Enact the Electronic Government Activities Law

No change needed, but constant review to be done

Monitor case law development & address then

Remove licensing or change in policy in issuing licenses

Laws should be amended to enable the activity to be done electronically

In respect of the Control & Regulate Impediment – it is necessary to determine whether as a matter of policy, on-line activities should be licensed? If they are, then a change in licensing policy must occur - i.e. of granting new licenses.

Introduction of New Cyberlaws

Electronic Transactions Act Law of general applications that provides the

necessary legal certainty for e-transactions E-Government Activities Act

Law that enables the removal of all procedural and administrative impediments. Applicable to all interactions by individuals with the Government or vice versa

Electronic Transactions Act General Law such as Contracts Act Purpose:

Provide recognition Avoid risk of adverse findings by a court

of law Address key issues in electronic

transactions

Electronic Transactions Act Main Provisions :

Legal recognition of electronic communications Legal recognition of electronic signatures Legal recognition of electronic documents as

originals Attribution of electronic communications Record retention and management

requirement Formation, validity, time and place of

contracting Automated transactions and electronic agents Correction of errors

Advantages of Electronic Government Activities Act

Applies once an Agency is ready Consistent approach to public e-dealings. Avoids

inconsistency if laws were amended individually. Uniform Guidelines: easier and speedier

implementation Technology Neutral: gives Act a longer life-span State has flexibility: States have the option whether

to adopt this Act as part of State laws. Choice for public: no compulsion for public to deal

electronically.

Internet – Promotion of Positive Use

Awareness and educational programmes Potential benefits Negative aspects

Guidelines Users, Parents, Teachers

Increase positive website contents Preparation of the Content Code by

Content Forum/CMC Govt. Internet Centres and Cyber cafés as

learning centres

Conclusion Malaysia has a clear objective and

agenda towards achieving a knowledge-based society

E-Readiness is key towards achieving the objectives

Malaysia is positioned at Embedding level in e-ASEAN Readiness Assessment

Conclusion (cont’d) Policies are being formulated and

implemented towards enhancement of e-readiness in areas: Widening access Creating trust and confidence Harmonisation of laws Promoting positive use of Internet

Thank You