365 Days into the Pandemic

During WIEF POWERTALK on 365 Days into the Pandemic: Embracing the Digital Revolution in June 2021, ambassadors from the United Kingdom, Japan and Qatar to Malaysia shared challenges and different approaches taken to manage economic activities as well as issues brought on by the pandemic, including adapting existing new technologies to get through the period.

Speakers
– H.E. Charles Hay, MVO, British High Commissioner to Malaysia
– H.E. Hiroshi Oka, Ambassador Extraordinary and Plenipotentiary of Japan to Malaysia
– H.E. Fahad Mohd Y. Kafoud, Ambassador Extraordinary and Plenipotentiary of Qatar to Malaysia

Moderator
– Jessy Chahal, TV Personality and Broadcast Journalist, Malaysia

Session Summary
Through experiences of the panel ambassadors of the United Kingdom (UK), Japan and Qatar to Malaysia, different approaches taken by different countries in terms of adapting existing technologies and managing economic activities during the pandemic are brought to light.

The United Kingdom’s Perspective
H.E. Charles Hay: I’ve been [in Malaysia] for two years and a year of that is during COVID-19 pandemic. So, I’ve had two very different experiences in Malaysia and it has been a very busy two years. In terms of Brexit, there has been no impact between the UK and Malaysia since it doesn’t have a free trade agreement (FTA) with the EU. So, the UK hasn’t lost anything in trade terms and we’re working to boost our bilateral trade through Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and a new bilateral trade working group.

As the backdrop to all of this, last year, the UK conducted its most wide-ranging and in-depth analysis of foreign development and defense policy for many decades, it’s what we call the integrated review. One of the key outcomes of that was an explicit intention for the UK to focus more on this part of the world, namely Asia. Two other outcomes of that are the UK applications during CPTPP as mentioned, but also our aspiration to join SEA as a trade partner.

Malaysia is a very important trading partner for the UK. It’s our second largest in SEA after Singapore and trade in 2020 was worth around RM26 billion, a fall of about 6.5 per cent from the previous year. It was the first time in five years that we’ve seen a decline in total trade between our countries. The greatest impact was on trade services and travel. Obviously, goods trade was not so affected. Malaysia exports proportionately more goods to the UK, while the UK exports proportionately more services to Malaysia.

It’s a reasonable assumption that the fall in trade was very much due to closing of borders as a result of the pandemic. However, it played out differently in different sectors. An example, we saw massive increase of global demand, including from the UK, for medical examination gloves. We were grateful that Malaysia took prompt action to ensure that the production and export of them continued with minimal disruption. A key part of our initial response was helping British companies in Malaysia and Malaysian suppliers of the UK-based businesses secure the necessary approvals to operate.

Every crisis brings some opportunities. The COVID-19 disruption has certainly generated opportunities in both the UK and Malaysia. If countries like Malaysia hadn’t responded well, kept supply chains, vital goods as well as equipment open, we would now see an overwhelming political pressure to build domestic manufacturing capabilities and this makes little commercial sense. So, here’s where the focus lies on digitalisation and the future of global trade.

Last year, there was an interesting survey by Ernst and Young summarising key challenges faced by Malaysian businesses operating through COVID-19 restrictions. They found that pretty much across the board, COVID-19 is a game changer for digital transformation. They also found that over 80 per cent of companies have difficulties with their online connectivity and communication with customers as well as suppliers. Companies needed much better infrastructure and more than two-thirds of experienced disruption in one form or another.

While government departments, public sector, businesses big or small, have been able to make the transition to digital and working from home, we’re seeing the rise of the digital divide. In Malaysia, the digital divide is between urban and rural areas, as well as between East and West Malaysia. This issue was really brought home to me by the report on a student in Sabah who had to go up the hill and sleep on a tree just to get an internet signal to do her online exam.

The problem of digital divide isn’t unique to Malaysia. We’re facing similar issues in the UK. A research from Cambridge University found that more than one in five of the UK population lacks digital skills they need and this is a problem that predates the pandemic. They also found a clear link between income and digital access. Only half of low-income households have internet access at home, whereas in the higher income bracket was more than 99 per cent. Their conclusion was a fairly obvious one – the link between poverty and digital exclusion is clear: if you’re poor, you’ve got less chance of being online.

The British High Commission in Malaysia has, for some time, formed an active economic development program designed to develop our mutual prosperity. As COVID-19 broke out in the early stages, this was very badly disrupted. A lot of our engagement is through face-to-face meetings as well as negotiations, attendance of seminars, conferences, travel and so forth. COVID-19 put a stop to most of our tools of economic diplomacy.

We found that the level of digital skills and knowledge on both sides was quite mixed. That initially hampered our attempts to move our engagements virtually. We also found cultural challenges in changing mindsets to moving our diplomatic business online, including how to deal with confidential discussions and disputes. But I’m glad that we found a way and we’re now back on track with economic collaborations.

A few recent instances of note included working closely with Malaysia and the World Bank to enhance the business environment. This included sharing international experience and investment policy, as well as investor promotion which we’re working very closely with Iskandar Malaysia in Johor and Melaka to enhance the use of future smart cities approach to Malaysian urban development. We’re sharing knowledge on tackling COVID-19 and exploring innovations in Islamic finance as well as fintech. On business opportunities, we’ve worked to re-evaluate markets. We found new opportunities for British companies, particularly in edtech, fintech and digital health sectors. This has been stimulated by new ways of working, studying and living during the pandemic.

By the quickening pace of digital and technology adoption, education is one sector that’s been particularly effective. We’ve seen distance and virtual learning exploding in an unprecedented way. Some of these activities were just to keep things going to keep universities and schools open, but we’ve seen that you can conduct most teaching online. Students miss out on that essential face-to-face mixing and communication but I don’t think that’ll go back to the old way of doing things after the pandemic because we found some really good additional online ways of making learning available to students.

Despite the challenges of the pandemic, the UK tech sector boomed in 2020. It saw more than GBP820 million of investment into the UK cybersecurity sector, more than double the amount that was raised in 2019. Venture capital investment, for instance, grew by 160 per cent. The UK is a major beneficiary of the rise of digital trade and more than two-thirds of services we export are being delivered digitally. Through CPTPP, businesses will benefit from this modern digital trade rule that allows data to flow freely between its members and remove unnecessary barriers to business. All of this creates fantastic opportunities for us and for our key trading partners like Malaysia.

Japan’s Perspective
H.E. Hiroshi Oka: Currently, there are 30,000 Japanese people and 1,500 Japanese companies in Malaysia. We are now in touch with the Malaysian government on ground cooperation for providing equipment or helping distribution vaccines nationwide in Malaysia and medical equipment such x-ray machines. Japan supports the establishment of ASEAN Centre for Public Health Emergencies and Emerging Diseases. In addition to the financial support of USD50 million which have been fully funded, Japan continues its support through the dispatch of experts and training.

The relations between Japan and Malaysia, which is a strategic partnership, continues to grow in spite of this challenging circumstances, thanks to the solid basis of mutual confidence as well as trust that has been nurtured, particularly thanks to the Look East Policy since 1982. We’re going to celebrate its 40th anniversary next year. Japan is the fourth largest trading partner for Malaysia and its third source of foreign direct investment. Most of the traditional Japanese investments to Malaysia tended to focus on the electrical and electronics sector, which accounts for about 40 per cent of Malaysian export. Japanese businesses employ about 340,000 people in Malaysia’s manufacturing sector alone.

I want to emphasise that, in spite of this difficult period, Malaysia remains an attractive destination for Japanese investment. According to a survey by Japan External Trade Organization (JETRO) conducted in December 2020, around 40 per cent of Japanese companies operating in Malaysia is considering expanding their operations, whereas only nine per cent are considering downsizing. This is because of Malaysia’s key strengths such as a well-developed infrastructure and political stability haven’t been affected negatively by COVID-19. Malaysia is witnessing new investments coming in from Japan to Malaysia in sectors such as medical devices and services including logistics.

COVID-19 crisis caused significant changes that expand our way of living under the new normal which calls for more online activities. This requires digital transformation at every level. In 2016, Japan proposed what we called Society 5.0 as a model for future society following the four stages of society development of hunting, pasturage, agriculture and commerce. With Society 5.0 we envisage digital technologies will be used not only for industrial competitiveness but will also be utilised to solve practical social issues such as ageing society, sustainable development and improving quality of life.

Collaborations between Japan and Malaysia for digital technologies are already ongoing. An example is smart city, which the Japanese government launched in 2021. In Malaysia, we identified nine projects in three cities, coaching to demonstrate effectiveness of digital technology such as IoT, AI and big data to solve such practical issues that these cities face like environmental solutions, disaster mitigation or traffic congestion.

Now, a new project is on the way to connect Malaysia through our new high-capacity submarine cable network. The new submarine cable has eight times the capacity, improving the digital infrastructure. Hopefully, it’ll attract investments from global companies to Malaysia and greatly contribute to enhancing the status of Malaysia as a digital hub. Among other investments in the pipeline also include Japan’s wish to contribute to Malaysia’s new digital initiative, MyDigital, as well.

Another engine of growth would be green or decarbonisation. This area isn’t a constraint on economic growth. Instead, it creates new business opportunities. In October 2020, Japan declared a new policy targeting to achieve carbon neutrality by 2050, aiming to reduce greenhouse gas emissions by 46 per cent by fiscal year 2030. To balance between economic growth and decarbonisation depends on the innovation of technologies. Japan formed a green growth strategy in December 2020 to support investments for innovative technologies such as electric vehicles by 2035 as well as usage of hydrogen and ammonia to generate power. Malaysia has a huge potential in this field and collaborations between Japanese and Malaysian companies are already starting.

Sophisticated human resources to handle digital technologies and new trade data for funding solutions would be vital in increasing the value-added of Malaysia’s economy in the future. Japan has long worked with Malaysia on human capacity development. In this regard, we are to establish a branch campus by leading Japanese state university in Malaysia by 2023. Subjects such as data science would be best suited for developing local talent to navigate a data driven future. Under the Look East Policy, around 30,000 Malaysians have studied or received training in Japan. That gives a unique strength to the relations between Japan and Malaysia, thanks to the government.

Japan’s two most important lessons from this pandemic period are: one, the resilience of supply chains. We have encountered shortage of supplies and we have to think of how to prevent that from happening again. Two, the future of global growth depends on trade and investment. So, keeping global trade and investment open is a fundamental prerequisite for growth.

Qatar’s Perspective
H.E. Fahad Mohd Kafoud: This is my third year in Malaysia. Many of our investments here focus on shopping centres and agriculture. We did a number of initiatives with the government, including distributing thousands of food basket to those in need. It was around 15,000 families, especially in the first months of the pandemic. Three months ago, we did another initiative and distributed around 3,000 tablets for students and laptops for teachers during lockdown. Also, we’re supporting American efforts to host refugees here through USD15 million. Last year, we opened five mobile clinics to provide basic health care for them

Trade activities between Malaysia and Qatar is down by 30 per cent this year but we’re working on adapting to the current situation and how to increase the numbers. Qatar airways, during this pandemic has been one of the very few airlines that didn’t cease their service from Colombo. Now, we’re working with the government on how to arrange for a kind of bubble travel for people who are already vaccinated. Also, to allow Malaysian companies use the facility for export purposes and Qatar’s can be used as a regional hub for the Middle East. Qatar will host the World Cup 2022 and this has sparked a lot of programmes as well as projects in the country.

Last Words
‘We have to make sure that this [pandemic] experience is a [catalyst to] change for the better,’ said H.E. Hiroshi Oka. ‘We discussed digital technology for a better future, but we need to have a global corporation in terms of trading as well as investment, even sensitive data sharing with an open and free motto.’ H.E. Charles Hay added, ‘In every crisis there’s an opportunity. We have an opportunity to do things differently and grow back better.’

Main photo by krakenimages on Unsplash.