How Covid-19 Pandemic Accelerates The Performance of The Digital Economy?


Malaysia’s digital economy has grown rapidly since the beginning of the Covid-19 epidemic. These situations have forced people, business and the government to transform their activities online. The Department of Statistics Malaysia (DOSM) stated that the nation’s digital economy greatly exceeded the target for 2020 to reach 22.6% share of the national economy. It means Malaysians rely on digitalisation for their work and daily consumption requirements due to their isolation at home for lengthy periods during Covid-19 pandemic. Hence, it becomes a new normal for everyone.

Due to the growing number of digital consumers, organisations need to enhance the use of digital tools for front-end and back-end operations to keep up with the rapidly changing shopping and purchasing trend, particularly for organisations in the retail industry.

A rapid growth in digital avenues for business-to-consumer (B2C) engagement directly influences a growth in digital business-to-business (B2B) engagement. Thus, digital becomes the only way for organisations to expand their business broader.

 Chart 1: Share of Digital Economy to National Economy (%) 2017-2023

Chart 1 shows that the digital economy generated RM 320.0 billion to Malaysia’s gross domestic product (GDP) in 2020, resulting in a 22.6% share of the country’s GDP and exceeding the aspirational target of 20% set a decade ago.

As a result, the national GDP also exceeded the RM 300 billion achievement. It also indicates that digital tools, platforms and technologies in both work and living brings a significant changes to economy and society

Furthermore, the Economic Planning Unit (EPU) under the Minister’s Department has predicted that, even if the rest of the country’s economy recovers over the following few years, the percentage of the digital economy in GDP might reach 25.5% by 2025. However, PIKOM considered that this estimate is incredibly reasonable. In line with our projections, the proportion of the digital economy should gradually increase to reach an anticipated 25.4% in 2023.

Obviously, the Covid-19 epidemic served as the primary cause for this surge in digital. Meanwhile, the Government also acknowledged this situation as an opportunity to put greater effort to promote and develop the digital economy. Thus, the Government has implemented and amended a number of national projects with the goal of promoting digital usage, growing  homegrown capabilities, and luring investment into this sector.

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