KUALA LUMPUR: The COVID-19 pandemic has greatly accelerated digitalisation in the country, changing the ways Malaysians interact with digital platforms.

Rekha Reddy, Senior Financial Sector Specialist at the World Bank noted that nearly every Malaysian was now online, with 97 per cent of the population using the Internet compared to 84 per cent just two years ago.

“Malaysians are engaging differently in the digital economy,” she said when speaking to Astro AWANI.

“New World Bank data shows that five million adults in Malaysia, or 22 per cent of the population, made their first digital merchant payment after COVID-19 began.”

Malaysian businesses have also readily adopted digitalisation, causing a shift in customer interaction with new efforts such as digital marketing.

“It’s not just the private sector that is evolving–in 2021, most Malaysian government ministries reported that 70 to 90% of their services are end-to-end (E2E) online or fully digitalized,” said Rekha.



Despite substantial progress in recent years, the World Bank’s latest Malaysia Economic Monitor also found that the pandemic had exacerbated the country’s digital divide within key groups and across different geographic regions.

Rekha said disparities had been observed among those living in rural areas, adding that the costs of digital connectivity and speeds were higher in Malaysia as compared to its peers such as China and Thailand.

“Another example of this is the B40 and the elderly who are less likely to use digital payments, and that hinders their participation in the digital economy more broadly.”

She also said smaller businesses were less likely to invest in digital solutions compared to larger firms, due to lack of funds and limitations in digital skills.

To push the country’s digital frontier for more inclusive growth, Rekha suggested for Malaysia to begin developing “digital safeguards” for identification and authentication.



There is also an urgent need to strengthen the legal and regulatory framework for data privacy and consumer protection.

This includes amending and modernising the Personal Data Protection Act (PDPA) 2010 as well as enacting the Consumer Credit Act proposal (2022).

“These elements make it easier for consumers to make complaints and resolve disputes while they continue to grow their digital literacy,” said Rekha.

Another area for improvement is ensuring that Malaysia’s policy framework allows for a level playing field by strengthening the Competition Act 2010 to include merger control powers.

Rekha also called for the government to also look into creating entry points for people to engage in the digital economy.

“We saw that digital payments were a key entry point for people during the pandemic, and we need to continue to transition people towards digital payments.

“For example, so that they pay utility bills, school fees and receive their social transfers, not in cash, but through digital means.”