More investment needed into internet potential

Source From (The Sun Daily): http://www.thesundaily.my/news/283149

Published: 2 February 2012 - 05:39am
EVA YEONG

PETALING JAYA (Feb 2, 2012): Malaysian businesses need to invest more in the internet’s potential to grow its contribution to the country’s gross domestic product (GDP), said McKinsey & Co and Google.
According to a joint research titled “Online and Upcoming: The Internet’s Impact on Aspiring Countries” by the two companies, the internet contributed 4.1% of Malaysia’s GDP or US$9.75 billion of the US$238 billion GDP (RM30 billion of RM738 billion) in 2010.
This places Malaysia among the highest of 30 fast growing countries in terms of internet GDP, surpassing the US and China.

McKinsey & Co principal Nimal Manuel said yesterday Malaysia derives a lot of money from exporting equipment that allows people to use and connect to the internet.
It believes that over the next three years Malaysia will see significant growth in the value that domestic activity on the internet delivers to the economy.
Speaking to reporters at a briefing, he said the trends are positive with a lot of activities which would result in increase in domestic consumption.

However, in order to grow the 4.1% contribution to GDP, Malaysian businesses need to tap into the internet’s potential.
Google Malaysia country head Sajith Sivanandan said while domestic consumption is high and set to increase further, Malaysian businesses today only spend 1% of their advertising budget on online mediums.
“The amount of time Malaysians spend on TV, print and radio is equivalent to the amount of time they spend on the internet,” he said, adding that there is a disparity between domestic consumption and private investment.

He said in the UK, companies spend between 25% and 30% of their advertising budgets online.
The research revealed that while Malaysian businesses sell more things online than many other countries with similar wealth, they have yet to invest in internet advertising to the same extent other countries do.
Deputy Information, Communication and Culture Minister Datuk Joseph Salang Gandum who was also at the briefing, said a lot more could be done to create an ecosystem that makes Malaysia a connected country.
“We need to bring more local companies and content onto the internet.

“This will show that we are confident that our companies, content and products can share an international platform,” he said.
He added that while internet penetration has increased to 62.3% as of early January, with a target of 75% by end-2015, only 100,000 out of 700,000 small medium enterprises (SME) have online presence.
“There are 600,000 SMEs without websites,” he said.

“If policies are put in place to support financial and human capital development, including raising venture capital and R&D spending, and lowering the cost of starting a business, the future of Malaysia’s internet ecosystem looks strong,” said Nimal.