Sarawak's ICT industry on the road for further growth

KUCHING: Sometimes overlooked in Malaysia’s burgeoning information technology (IT) sector, Sarawak has developed an impressive communications industry over the past decade, which is expected to lead to vast opportunities in the export market going forward.

With a bevy of well-resourced national and state programmes pushing for the growth of the state’s telecommunications infrastructure and a new wave of private investments on the horizon, the sector is poised for further growth.

National IT Association of Malaysia (Pikom) estimated the sector was likely to experience double-digit expansion over the next four years, putting it on target to achieve a value of RM80 billion (US$25.6 billion) by 2015.

This sector’s labour contribution had remained relatively smooth in the recent years accounting for 3.8 per cent of Sarawak’s total workforce in 2007, 4.2 per cent in 2008 and dipping slightly to 4.1 per cent of the state’s 977,500 employed in 2009.

Unlike many of the large, urban development areas being groomed for the development of the country’s information and communication technology (ICT) industry, Sarawak faces unique challenges in developing its communication infrastructures.

Two of the most obvious difficulties are the rugged geography and its diffused population which has previously discouraged independent service providers’ attempts to serve the less-profitable market segments.

As a result, Sarawak claimed the third-lowest household broadband penetration of all the Malaysian states at 47.5 per cent (ahead of Sabah, with 32.9 per cent and Kelantan, at 44.7 per cent) as of the first quarter of 2012 (1Q12).

The fixed direct exchange line (DEL) household penetration rate in Sarawak stood at just 26.4 per cent, according to Malaysian Communications and Multimedia Commission’s (MCMC) latest statistics.

From 2007 to 1Q12, broadband penetration rates increased more than five-fold from a paltry 9.7 per cent to 47.5 per cent. “While impressive inroads have been made, the state still holds one of the lowest penetration rates of all Malaysian states and is still well below the national average of 57.6 per cent,” Oxford Business Group (OBG) said in its report.

Sarawak also has the third most most WAP hotspots of any state in Malaysia. As of first quarter of 2012, it housed 2,405 hotspots, up by 318 per cent from the 756 totalled in 2010. Meanwhile, Pulau Pinang led all states with 3,045 hotspots, followed by Selangor with 2,530, while Perlis was last with just 16 hotspots.

Available in Peninsular Malaysia in 2010, the newer, faster 4G technology looks to make its debut in Sarawak in 2012 or 2013. The service, which would be provided by YTL Communications Sdn Bhd is still awaiting approval from the MCMC for the spectrum licence to provide services for both Sabah and Sarawak.

“Another possible solution used for resolving the last-mile dilemma of broadband access is cooperation between licensed mobile service providers and operators of high-speed broadband fibre networks,” said OBG.

This scenario unfolded in June 2011 with the country’s largest mobile operator Celcom Axiata Bhd (Celcom) and the largest fixed-line and fibre-optic operator Telekom Malaysia (TM), signing a service agreement for TM to provide high-speed broadband services to Celcom.

With a 2011 broadband internet penetration rate that is still below that of the national 50 per cent target, Sarawak has a great deal of catching up to do with its more connected fellow states.

“But with greater and more rugged geographic expanses to grapple with, the state will also have to be smart and efficient in its efforts to increase high-speed internet accessibility for its citizen,” OBG stated in its report.

While infrastructure improved and the establishment of dedicated IT development centres further bolstered the sector, penetration and coverage rates across telecommunications segment was expected to continue to witness accelerated growth patterns over the next few years.

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