Pathways to sustainable growth

Malaysian business leaders display optimism in their prospects for revenue growth in the next 12 months (90% say they are somewhat confident or very confident), and 55% are looking to increase their investments globally. 

These sentiments are also bolstered by recent announcements in Malaysia’s Budget 2020, which clearly highlights the government’s focus on driving economic growth in the digital and high-technology economy to achieve shared prosperity for all.

In spurring domestic investments, the government has announced customised packaged investment incentives of up to RM1 billion annually over 5 years for Malaysian businesses that export globally. And to encourage foreign investment, customised package incentives targeting Fortune 500 companies and global unicorns in high-technology, manufacturing, creative and new economic sectors are aimed at encouraging investments of at least RM5 billion in Malaysia. These incentives are expected to result in the creation of thousands of new jobs. 

For Malaysia to live up to its ambitions, increased productivity is a priority. Organisations recognise the need to embrace and adopt technological disruptions brought about by the Fourth Industrial Revolution. 57% of respondents are significantly increasing their budget in expanding automation into new areas of their business, to meet the opportunities and challenges of the digital age.

The recent Budget has also made allowances for this - the Smart Automation matching grants (up to RM2m per company to automate business processes in manufacturing and services) sends an important signal to the market that automation is equally important to the services sector, as it is for the manufacturing sector. 

Automation may end up being less cost-intensive to businesses than expected. By reskilling and redesignating the workforce to perform higher value-add activities, this would lead to an increased productivity in both the manufacturing and service sectors.

However, advanced automation and artificial intelligence is still seen as a remit of organisations’ IT functions. 

63% of respondents view it as an IT priority, while only 14% see it as a division priority and 12% see it as a C-suite or organisation-wide priority. PwC’s Digital IQ survey supports this, highlighting the correlation between the leadership’s digital acumen and the organisation’s financial success. 

Clearly, organisations would find it hard to succeed in being truly digital if this is not viewed as an overall business strategy.

For job creation to be sustainable, it’s important that the skills of talent are able to keep up with the pace of development. Malaysian organisations are accelerating digital skills development with 39% of Malaysian CEOs increasing the budget in this area. 

While automation is a key focus, Malaysian employers are not looking to replace human resources with that of technology. 37% said there has been no change to headcount but substantial change to employees' roles. This indicates that organisations are eliminating redundancies in work that can be automated, and are taking steps to reskill employees to meet the new demands of the changes. 

Findings from PwC’s upskilling survey among more than 22,000 workers across 11 countries show that while graduates tend to be more optimistic about technology and their future employment prospects, over a third (34%) of adults without education or training beyond secondary school say they are not learning any new digital skills, compared with just 17% of college or university graduates. 

And bringing our focus back to Malaysia, with 20% of Malaysian CEOs reducing headcount as a consequence of increased automation, it's clear that there is a strong imperative for employees to accelerate their learning and anticipate new areas of development and upskilling to remain competitive.

Human capital development is also a matter of national priority, as reflected in recent policy announcements to mainstreaming Technical and Vocational Education Training (TVET) to create more skilled workers towards becoming a high-income and developed nation.

Technology can help companies shore up trust. 

While employees remain wary of their role in the workforce with the advent of automation (44% said adoption of technology has improved trust with the workforce), Malaysian CEOs believe that the adoption of advanced technologies e.g. artificial intelligence, nanotechnology, data mining, and autonomous robots, are helping them improve trust with customers (75%) and the public (56%).