Malaysia's digital economy to reach US$31 billion in 2024

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Malaysia's digital economy is set to grow by 16% to US$31 billion by 2024 with e-commerce leading the growth, with the sector poised to grow by 17% to US$16 billion. This is followed by online travel (+19%), transport and food (+10%) and online media (+10%). This is according to the latest e-Conomy SEA 2024 report by Google, Temasek, and Bain & Company. In fact, steady economic momentum with looming talent challenges are on the horizon, said the report.

The country is consolidating returns on prior infrastructure investments and leveraging its established expertise in electronics, semiconductors, and data centres.

The government has also raised sales and service taxes to boost revenue and introduced a low-value goods tax to support local businesses. However, political shifts and the gradual outflow of talent could impact future economic progress.

Don't miss: 7 trends to note as the SEA digital economy progresses to profit

In addition, digital financial services (DFS) is on an upward trajectory, with wealth to significantly expand by 20230. Digital payments have grown by 5% from US$164 billion in 2023 to US$172 billion in 2024. In 2030, digital payments is expected to amass approximately US$250 to US$350 billion.

Within DFS, digital lending has gone up 21% to US$12 billion in 2024 from US$10 billion in 2023. In tandem, Digital wealth has gone up by 27% and digital insurance grew 18% from 2023 to 2024.

According to the report, online banks have reignited the momentum in DFS, with GXSBank, AEON Bank and Boost Bank leading the charge. These digital banks offer compelling features and ease of access, contributing to the rapid growth of the DFS landscape. The anticipated launch of two additional licensed digital banks will further stimulate competition and innovation too, said the report.

Furthermore, Kuala Lumpur, Putrajaya and Selangor lead in AI interest in demand.

The top industries driving AI search interest are education, marketing and gaming, said the report. Strong growth can also be observed in the number of brand and influencer video creators.

In the travel sector, SEA visitors account for almost half (49%) of Malaysia’s inbound traveller spend, driven by several factors including improved air connectivity, strategic airline partnerships and a favourable exchange rate. Outbound traveller spend has also increased by 330% since 2020. This is driven by shopping (48%), food (21%), lodging (16%), health (3%) and others (12%).

Earlier in August this year, it was reported that Malaysia's digital investment soared RM66.22 billion in the first half of this year, demonstrating robust growth and resilience of the digital economy despite global geopolitical tensions.

Digital minister Gobind Singh Deo reportedly said that this was a significant achievement, noting that the amount has already surpassed the full-year digital investment for 2023, which was RM46.2 billion at the time.

According to The Edge Malaysia, the minister attributed the strong upward trajectory to stronger investor confidence and the economy's forecast growth of 4-5% this year.

He reportedly added that the investment inflow has created 25,498 jobs in the first half of the year, surpassing the 22,258-tally recorded in 2023 and that the digital sector continues to be a powerhouse for high-skilled, high-income employment.

Meanwhile, the ministry's efforts via the Malaysian Digital Economy Corporation's (MDEC) partnerships and business matching programmes have generated digital export opportunities worth over RM1.93 billion, Deo reportedly said. These involved 228 companies from 11 countries including Cambodia, Indonesia, Japan, Kenya, Philippines, Saudi Arabia, Taiwan, Tanzania, Turkiye and the United Kingdom.

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