2009MSC MalaysiaAnnual Industry Report

MSC Malaysia Client Contact Centre (CliC)Multimedia Development Corporation Sdn Bhd (389346-D)

MSC Malaysia Headquarters2360 Persiaran APEC63000 CyberjayaSelangor Darul Ehsan, Malaysia

Tel: +603-8315 3000Toll Free No: 1-800-88-8338Fax: +603-8315 3115

www.mscmalaysia.my

Email: clic@mdec.com.my

1

Message from CEO of MDeC 2

Message from Vice President of Industry Development Division, MDeC 4

MSC Malaysia – Giving You the Edge through ICT 7

MSC Malaysia Status Companies Growth 9

Survey Methodology 15

Financial Performance 21

Employment Performance 29

Intellectual Property Performance 35

Conclusion 38

Contents

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2

We are most delighted to share the results of the MSC Malaysia

Industry Report results with you, which concluded in April 2010

and has thus seen its 11th consecutive year of implementation. The

MSC Malaysia Industry Report takes into consideration active and

operational MSC Malaysia Status Companies as of 31st December

of the previous year.

We are proud to announce that MSC Malaysia is now home to 2,520

local and multinational technology companies which are involved

in various segments of the Information and Communication

Technology (ICT) Industry. The MSC Malaysia Industry Report

results serve as valuable indicator of the MSC Malaysia Status

Companies’ progress, and thus aids in the assessment of their

impact on industries and the Malaysian economy as a whole, which

in turn enables MDeC to identify and review the current benefits

and assistance provided to them. MSC Malaysia Status companies

are segregated into four technology clusters - the Information

Technology (InfoTech), Shared Services & Outsourcing (SSO),

Creative Multimedia Cluser (CMC) as well as Institutions of Higher

Learning and Incubators. The report encompasses respondents

from all four clusters and represents a good cross-section of the

companies’ demographics.

The results obtained through the MSC Malaysia Industry Report

Message from CEO of MDeC

Mdec_01_Nov_2010.indd 2 11/2/10 3:05:38 PM

3

Datuk Badlisham GhazaliChief Executive OfficerMultimedia Development Corporation (MDeC)

2009, clearly show that the Malaysian ICT Industry

has continued to grow despite the challenging times

faced by the global economy in general and the

industry specifically. As at 31st December 2009,

2,520 ICT companies had obtained the MSC Malaysia

Status, a marked increase of 13% with 284 companies

awarded in 2009 alone. MSC Malaysia Companies

generated more than RM24.83 billion in local and

overseas revenue in 2009, marking an increase of

14% from the RM21.75 billion of total revenue

achieved in 2008. The report furthermore indicates

that MSC Malaysia revenue has rapidly grown from

2005 to 2009, expanding at a Compounded Annual

Growth Rate of 26%. With regards to the employment

indicators, a total of 99,590 jobs were reported in

2009, compared to 92,201 jobs in 2008, which

recorded an increase of 8%.

We would like to take the opportunity to express

our gratitude for the commitment shown by all the

respondents in ensuring the accuracy and success

of the MSC Malaysia Industry Report over the last

decade. The time and commitment has been fruitful

in aiding MDeC to provide valuable feedback to the

Government on policies, incentives and initiatives

that are required to further develop the country’s

ICT industry and attract more investments to further

enhance Malaysia’s transformation into a knowledge

based, innovation led economy.

Mdec_01_Nov_2010.indd 3 11/2/10 3:05:38 PM

4

Message from Vice President of Industry Development Division, MDeC

Since the announcement of SCORE+ in 2008, there has been another

significant change in the way we obtain MSC Malaysia industry data.

Beginning in the first quarter of 2009, the frequency of obtaining key

data is now quarterly. This helps increase the granularity of our trends

analysis, as well as to meet the demand by other government agencies

for quarterly data on MSC Malaysia. However, to make it easier on

the respondents, these quarterly surveys cover only a basic but highly

pertinent set of company performance data. The rest of the detailed

information on MSC Malaysia companies will still be collected via our

ongoing SCORE+ exercise.

Even though the global economy was in a crisis in 2009, the aggregate

revenue of MSC Malaysia companies showed a 14% growth over

the previous year – an unexpected double-digit growth rate that also

outperformed the growth rate of the economy as a whole – due to

continuing investments made in ICT by the local user communities.

This in turn translated into an increase in GDP contribution for 2009

(RM 6.1 billion) when compared to 2008 (RM 5.0 billion). However,

growth in exports was almost flat, as expected mainly due to the

economic crisis that affected many of our export markets.

Of the three MSC Malaysia industry clusters, the InfoTech cluster

remains the largest in terms of the number of companies, representing

76% of the MSC Malaysia total, providing for almost 28,000 jobs, and

the highest generator of intellectual property.

Mdec_01_Nov_2010.indd 4 11/2/10 3:05:38 PM

5The Shared Services & Outsourcing or SSO cluster,

representing only 9% of the total number of companies,

leads in the export ratio area (with 61% of the cluster’s

revenue coming from export of services) as well as job

opportunities, supporting over 38,000 out of the total

99,590 jobs in MSC Malaysia in 2009. Thus when it

comes to generating export revenue and creating job

opportunities, the SSO cluster leads the charge for

MSC Malaysia.

The Creative Multimedia Cluster or CMC, although

small in number of companies (10% of the MSC

Malaysia total), went against the general 2008/09

trend in exports showing a significant 41% year-on-

year growth, from RM 132 million in 2008 to RM 186

million in 2009. This jump in exports reinforces the

government’s viewpoint of the creative multimedia

industry as an area of high opportunity and a new

source of growth. Supported by our on-going CMC-

related programmes such as the MAC3 Co-production

scheme, this cluster is the one to watch over the next

few years in terms of export growth rates.

On SCORE+, the information we have obtained so

far has allowed us to start implementing a portfolio-

based system of managing value-added programmes

for MSC Malaysia companies, based on their profiles,

i.e. their products, target markets, strengths and gaps.

Selected programmes, chosen from a comprehensive

list of approved MSC Malaysia programmes, will be

applied to each portfolio based on relevance. We

should be able to see the portfolio-based practice gain

momentum as we enter Phase 3 of MSC Malaysia (and the

10th Malaysia Plan) from 2011 onwards.

By shifting our work focus from being capacity-driven to

market-driven, we are changing the way we do our work

to be more accurate in applying the right assistance to

the right companies and ultimately towards getting better

returns on incentives.

We would like to thank all the MSC Malaysia companies

that have put in time and effort in responding to our

surveys and enquiries. This information has become a

critical component in our efforts to constantly increase the

value of MSC Malaysia for all stakeholders and to reach

our shared goals.

SAIFOL BAHRI MOHAMAD SHAMLANVice President, Industry Development

Multimedia Development Corporation Sdn Bhd (MDeC)

Mdec_01_Nov_2010.indd 5 11/2/10 3:05:38 PM

6

MSC Malaysia – Giving you the Edge through ICT

Mdec_01_Nov_2010.indd 6 11/2/10 3:05:39 PM

7

MSC Malaysia – Giving you the Edge through ICTMSC MalaysiaMSC Malaysia is a national initiative spearheaded by the Malaysian Government

to promote both the national Information and Communication Technology

(ICT) industry and provide a test-bed for the global ICT industry. MSC Malaysia

provides an enabling environment designed to facilitate companies to harness

the full potential of ICT and multimedia technologies. With its ideal business

environment coupled with availability of talent resources, MSC Malaysia has

attracted participation from major global ICT companies to develop and host their

leading-edge technologies in the designated MSC Malaysia Cyber Cities. MSC

Malaysia also provides the ideal growth environment for Malaysian ICT SME’s to

transform themselves into world-class companies. Driving the development of its

initiative is Multimedia Development Corporation.

Multimedia Development Corporation(MDeC)Multimedia Development Corporation (MDeC) is a unique high-powered

government –owned corporation, established to facilitate the development and

promotion of MSC Malaysia, the premier Malaysian initiative. MDeC is tasked to

advise the Malaysian Government on ICT legislation and policies, develop MSC

Malaysia as a key growth driver of the economy and set breakthrough standards

for ICT and multimedia operations. MDeC also promotes MSC Malaysia locally

and globally, as well as supports companies which are located within the MSC

Malaysia designated areas.

MDeC works closely with various parties and government agencies to ensure that

MSC Malaysia offers an enabling environment for companies to harness the full

potential of ICT and multimedia technologies.

Mdec_01_Nov_2010.indd 7 11/2/10 3:05:39 PM

8

MSC Malaysia Status Companies Growth

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9

A total of 2,520 companies have been certified as MSC

Malaysia Status as of 31st December 2009.

MSC Malaysia Status entails within it four technology

clusters, representing the four categories of the most

prevalent company ICT focus’s, and thus the major activities

to be found within the Malaysian ICT Industry. These

prevalent categories are namely the Information Technology

(InfoTech) cluster, Shared Services & Outsourcing (SSO)

cluster, Creative Multimedia cluster (CMC) as well as

Institutions of Higher Learning and Incubators.

The MSC Malaysia Industry Report encompasses

respondents from all four clusters and represents a good

cross-section of the company demographics.

Of the total, most of the companies verified with MSC

Malaysia Status are still active and the remaining attrition

rate was consistent with the normal rate recorded in any

other Malaysian industry.

MSC Malaysia Status Companies Growth

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10

The total number of companies awarded MSC Malaysia status has increased at a Compounded annual growth rate (CAGR) of 15% from 2003 to 2009, and has more than quadrupled since 2000. As of 31st December 2009, 284 new companies have been awarded the MSC Malaysia Status.

Highlighted below are insights in the growth of MSC Malaysia Status Companies

MSC Malaysia Status Companies

94 197300

429621

812973

1,163

1,421

1,728

1,994

2,236

2,520

2009200820072006200520042003200220012000199919981997

CAGR of 15 %

Mdec_01_Nov_2010.indd 10 11/2/10 3:05:40 PM

11

MSC Malaysia Status Companies by Technology ClusterOperational as at 31st December 2009

SSO

9%

98IHLs & Incubators

5%

Creative Multimedia

10%Information Technology

76%

181

2001,477

Total

Mdec_01_Nov_2010.indd 11 11/2/10 3:05:40 PM

12

MSC Malaysia Status Companies by Equity Ownership

As at 31st December 2009, 77% or 1,497 of Malaysian-owned companies, 20% or 399 of Foreign-owned companies are still active and operational. Over the years almost 20% of the Malaysian-owned companies have become inactive from the total of 1,879 companies awarded. Meanwhile, 30% of the Foreign-owned companies have been inactive from the 566 companies awarded.

50-50 JV

3%

Foreign-Owned

20%Malaysian-Owned

77%

60

399

1,497

Operational as at 31st December 2009

Mdec_01_Nov_2010.indd 12 11/2/10 3:05:41 PM

13

MSC Malaysia Status Companies by Bumiputera Participation

As at 31st December 2009, 66% or 315 of Majority Bumi owned companies, 18% or 87 of 30%-50% Bumi participation companies and 15% or 72 of <30% Bumi participation companies are still active and operational.

Bumi Participation <30%

15%

Bumi Participation 30%-50%

18%Majority Bumi Owned

66%

72

87

315

Operational as at 31st December 2009

Majority Bumi Owned

Bumi Participation 30%-50%

Bumi Participation <30%

Equity Ownership

374

118

106

Awarded

598

315

87

72

474

Operational

Total

Mdec_01_Nov_2010.indd 13 11/2/10 3:05:41 PM

14

Survey Methodology

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15

Highlighted below is the methodology utilized for the MSC Malaysia

Annual Industry Report 2009. The MSC Malaysia Annual Industry

Report 2009 was conducted online at industryreporting.msc.com.

my. The MSC Malaysia Annual Industry Report 2009 commenced

on 4th January 2010 and ended on the 15th April 2010.

The Report consists of four sections, namely:

• Financial Performance

• Employment

• Intellectual Property

In order to ensure a higher completion rate for the MSC Malaysia

Annual Industry Report, a dedicated Project Management Team was

set up to assist participants that encounter unexpected difficulties

in completing the report and answering all relevant questions

regarding the report.

Upon receiving any questionnaire data in the designated database,

each questionnaire set was again filtered and checked by the

system and also manually by the team to ensure data accuracy and

consistency.

The survey of 2009 data had a response rate of 82% from the total

active MSC Malaysia companies that were targeted. The result

shown in this report is based on four-tier weighted extrapolation (by

cluster) to arrive at the 100% estimates for the entire community. This

was done to provide a more accurate picture of the community’s economic performance.

Survey Methodology

Mdec_01_Nov_2010.indd 15 11/2/10 3:05:42 PM

16

MSC Malaysia Status CompaniesA total of 1,876 companies were targeted for the MSC Malaysia Industry Report 2009.

1,500

1,125

750

375

0

No. of companies

190

98

1,420

168

A total of 1,537 or 82% out of 1,876 companies sampled have completed the survey.

IHLs &Incubators

CreativeMultimedia Information

TechnologySSO

Mdec_01_Nov_2010.indd 16 11/2/10 3:05:42 PM

17

MSC Malaysia Status CompaniesProfile of Respondents by Technology Cluster

Among 1,537 companies responded, 1,144 companies or 74% of respondents were from the Information Technology (InfoTech) cluster, followed by 164 or 11% from the Creative Multimedia cluster (CMC), 157 or 10% were from the Share Services and Outsourcing (SSO) cluster, and 72 or 5% from Institutions of Higher Learning and Incubators (IHLs and Incubators).

No. of companies

0

1,500

1,125

750

375

164

72

1,144

157

IHLs &Incubators

CreativeMultimedia Information

TechnologySSO

Mdec_01_Nov_2010.indd 17 11/2/10 3:05:43 PM

18

Profile of Respondents by Joint Venture Classifications

MSC Malaysia Status Companies

In the same sample, 1,169 or 76% of the respondents were Malaysian-owned companies, followed by 328 companies or 21% of respondents which were foreign-owned companies, and 40 or 3% of respondents had Joint Venture 50-50% ownership.

Foreign-Owned

%Malaysian-Owned

40

1,169

3%50-50

76%

21

328

Mdec_01_Nov_2010.indd 18 11/2/10 3:05:43 PM

19

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20

Financial Performance

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21

Financial Performance

RevenueThis year’s report indicates that both the MSC Malaysia Status Companies’ local and export sales reported an increased of 14% from 2008 to 2009 causing total revenue to rise to RM24.83 billion in 2009.

The biggest contributor to overall revenue for 2009 was the Information Technology cluster with 51% of total revenue of all MSC Malaysia Status Companies.

Research & Development ExpenditureTotal R&D expenditure experienced a slight increased of 16% in 2009 compared to the same period in 2008. Total R&D for 2009 is recorded at RM1.512 million. The largest contribution to total R&D expenditure came from the Information Technology cluster with 69% or RM1.04 million in 2009.

The biggest year-on-year R&D expenditure growth was however registered by the cluster at an increase of 174% from the previous year total of RM34.7 million to RM95 million in 2009.

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22

Total SalesYear-on-year growth was reported for total sales in 2009.

MSC Malaysia revenue has achieved year-on-year growth of 14% from 2008 to 2009. In 2009, total local sales contributed 71% valued at RM17,652 million and total export sales contributed 29% valued at RM7,174 million.

RM Million

7,500

15,000

22,500

30,000

21,750

14,658

17,059

11,48612,989

8,0767,188

9,838

7,0925,570

4,0352,650

20092008200720062005

24,826

7,174

17,652

Local Sales Export Sales Total Sales

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23

Total Sales by ClusterInformation Technology cluster emerged as the top revenue contributor in 2009.

Information Technology was the biggest contributor to MSC Malaysia revenue for 2009, accounting for RM12,581 million or 51% of total MSC Malaysia revenue in 2009. This is followed by the Shared Services and Outsourcing cluster which accounted for RM6,394 million or 26% of total revenue respectively.

While all other clusters displayed larger local sales contribution to total revenue than export sales, in the Shared Service & Outsourcing cluster export contributed the most to the clusters total revenue at 61% compared to 39% contribution of local sales.

RM Million

0

3,750

7,500

11,250

15,000

Local Sales Export Sales Total Sales

9,611

12,581

2,9702,466

3,928

6,394

186

3,842 4,028

1,822

91

1,731

IHLs &Incubators

CreativeMultimedia

SSOInformationTechnology

Mdec_01_Nov_2010.indd 23 11/2/10 3:05:45 PM

24

Total Sales by OwnershipMalaysian-owned companies accounted for the majority of local sales in 2009 while Foreign-Owned companies accounted for the majority of export sales.

RM14,682 million or 59% was contributed to total MSC Malaysia revenue by Malaysian-owned companies, while RM8,223 million or 33% was contributed by foreign-owned companies. While 88% of Malaysian-owned company revenue was attributable to local sales, foreign-owned companies attributed 66% of their revenue to export sales.

Malaysian-OwnedForeign-Owned

50/50 JV

13,012

14,682

2,822

5,401

8,223

1,819

102

1,9211,670

RM Million

15,000

11,250

7,500

3,750

0

Local Sales Export Sales Total Sales

Mdec_01_Nov_2010.indd 24 11/2/10 3:05:46 PM

25

R&D Expenditure

In 2008, total R&D expenditure fell -7.05% from 2007, however, 2009 have shown an increased of 16% or RM1,512 million. This has shown that the MSC Malaysia status companies are recovering from the impact of the 2008 global financial crisis (GFC).

2005 20062007

20082009

574

1,512

1,3051,404

815

RM Million

1,600

1,200

800

400

0

Mdec_01_Nov_2010.indd 25 11/2/10 3:05:47 PM

26

R&D Expenditure

The Information Technology Cluster contributed the most to total R&D Expenditure in 2009 at 69%, followed by the Shared Services and Outsourcing and Creative Multimedia clusters with 17% and 8% respectively. IHLs and Incubators contributed the least to R&D Expenditure with RM95 million, representing 6% of total R&D Expenditure for 2009.

RM Million

1,100

825

550

275

0IHLs &Incubators

CreativeMultimedia Information

TechnologySSO

12595

1,039

253

Mdec_01_Nov_2010.indd 26 11/2/10 3:05:47 PM

27

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28

Employment Performance

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29

The total number of jobs contributed by the MSC Malaysia Status Companies has been on an upwards trend from 2005 to 2009 at a CAGR of 31%, with an increase from 2008’s 92,201 jobs to 2009’s 99,590 jobs, representing a year-on-year growth of 8%.

The Shared Services and Outsourcing cluster was the biggest contributor to overall employment at 38% of total employment with 38,032 jobs in 2009. This is followed by the Information Technology cluster with 27,686 jobs or 28%.

In the same period, Malaysian-owned companies contributed the most to employment at 65% with 64,388 jobs, followed by foreign-owned companies which made up 34% or 33,547 of total employment. The least contribution came form joint ventures with only 2% of employment contribution.

Employment Performance

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30

Employment PerformanceThere has been a general increase in Jobs created by MSC Malaysia Companies since 2005

The total number of jobs contributed by MSC Malaysia has increased at a compounded annual growth rate (CAGR) of 31% from 2005 to 2009. Year-on-year growth of 8% was registered from 2008 to 2009.

In 2009, a total of 99,590 jobs were created, accounting for a substantial amount of the overall ICT workforce in Malaysia.

20092008200720062005

33,851

63,907

79,005

99,590

92,201

No. of Jobs

100,000

75,000

50,000

25,000

0

Mdec_01_Nov_2010.indd 30 11/2/10 3:05:48 PM

31

The Shared Services & Outsourcing cluster contributed to the highest number of jobs in 2009

The Shared Services & Outsourcing cluster contributed to the highest number of total jobs, at 38,032 jobs in 2009. This was followed by the Information Technology cluster and the IHLs and Incubator cluster, with 27,686 and 26,844 jobs in 2009 respectively.

Employment Performance by Cluster

No. of Jobs

40,000

30,000

20,000

10,000

0IHLs &Incubators

CreativeMultimedia Information

Technology SSO

7,028

26,84427,686

38,032

Mdec_01_Nov_2010.indd 31 11/2/10 3:05:49 PM

32

Employment Performance by ClusterShared Services and Outsourcing companies contributed to the majority of total jobs as well as local workers.

Shared Services & Outsourcing companies contributed the most to MSC Malaysia Status companies’ employment at 38%. This was followed by the Information Technology and IHLs & Incubators with 28% and 27% respectively. Local workers made up 92% of the total workforce in 2009, with 8% of all workers being foreign workers. SSO cluster contributed the most to local worker at 38% whiles InfoTech contributed the highest for foreign knowledge employment at 43%.

7,028

26,844 25,885

9593,351 3,055

27,68624,335

6,690

339

No. of Jobs

40,000

30,000

20,000

10,000

0

Total Jobs Total Local Worker Total Foreign Worker

Creative Multimedia Information

Technology SSOIHL & Incubators

38,032

34,977

Mdec_01_Nov_2010.indd 32 11/2/10 3:05:49 PM

33

Employment Performance by Company OwnershipJobs created by MSC Malaysia Status Companies as reported in 2009 largely stemmed from Malaysian-owned companies, with a total job contribution of 64,388 jobs.

Malaysian-owned companies contributed 64% of total jobs in 2009, while foreign-owned companies contributed 34% of total jobs in 2009. Foreign-Owned companies experience an increased of 64% in jobs from 2008 to 2009 whilst Malaysian-owned companies experienced a declined by 9% in jobs from 2008 to 2009.

50-50 JV

2%

Foreign-Owned

34%Malaysian-Owned

64%

64,388

1,655

33,547

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34

Intellectual Property Performance

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35

Intellectual Property PerformanceThe total number of new Intellectual Properties (IPs) registered has experienced a growth of 44% or 1,752 new IPs registered in 2009.

Information Technology cluster contributed the highest with 722 or 41% of IP registered in 2009.

Locally registered IPs outnumbered those registered abroad for all clusters.

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36

A cumulative total of 5,721 IPs have been registered by the MSC Malaysia Status Companies to date, with 1,752 IPs being contributed in 2009 alone.

Intellectual Property Growth Performance

20092008200720062005

1,072

1,815

2,600

3,969

5,721

No. of IP Registered

0

6,000

4,500

3,000

3,000

Mdec_01_Nov_2010.indd 36 11/2/10 3:05:51 PM

37

Intellectual Property Growth Performance by ClusterInformation Technology cluster contributed the highest IP registered in 2009.

Shared Services & Outsourcing

%

Creative Multimedia

22%

IHLs & Incubators

28%

Information Technology

41%

722

146

390

494

9

Mdec_01_Nov_2010.indd 37 11/2/10 3:05:51 PM

1

Overall, the MSC Malaysia Annual Industry Reporting 2009 indicates that the companies performed very well during the year under review compared to previous years. This is reflected by the amount of total sales recorded, increase in total revenue and export figures as well as number of jobs created. It also indicates that the MSC Malaysia ICT Industry continued to grow as of December 2009, with 284 new companies having been awarded MSC Malaysia Status in 2009. MDeC continues to work closely with various parties and government agencies to ensure that MSC Malaysia offers an enabling environment for companies to harness the full potential of ICT and multimedia technologies.

Conclusion

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