Cheah Kok Hoong (pic above), Group CEO / Director of Hitachi Sunway Information Systems, talked first of "the volatility, uncertainty, complexity and ambiguity of the economy in general - with lower oil prices, depreciating currencies, political uncertainties, and an unfavourable global environment; has been a negative impact to the IT spending of most industries especially sectors such as resources, utilities, banking, financial services, and insurance and the public sector."
"On the other hand the ICT sector overall are like any other leading edge industry," said Cheah. "The champions have never been one to confirm to sentiment as we see new ideas and innovative technologies break through again and again. Outsourcing continues to present a sensible option to many businesses especially SMEs, MDEC and the government are focused on the Digital Economy and new startups are offering interesting value propositions."
"We will see an increase in digital transformation (DX) initiatives using technologies such as mobile, cloud, big data analytics, IoT, AI and robotics," he added. "In these uncertain times, the challenges may either be viewed as a threat or as an opportunity for organisation to consolidate their strengths and leverage on technologies to leap ahead of the competition."
"One of the biggest challenges for 2017 will be balancing between investing to stay competitive and at the forefront of leading technologies, versus managing expenses to remain nimble," said Cheah. "Organisations will have to reconsider how things are currently done against the various options available and unexplored. There will be many informed discussions within organisations of on premise versus cloud, buy versus build, in house versus outsource, CAPEX versus OPEX, spend versus save etc."
"The ICT sector has a lot of values to contribute to the said discussion and we will definitely see market leaders who are able to capitalise on these opportunities emerge," he said.
"ICT is the key catalyst to drive our industry growth and we have to look at improving all aspects of people, process and technology to ensure that we become a high productivity nation," said Cheah. "The challenging year of 2016 makes the overall economic and ICT landscape more competitive, which in turn spurs the market players to innovate and be more efficient."
"Opportunities are still abound within Malaysia and ASEAN, and it is our choice on how we want to define 2017. Likewise, Hitachi Sunway are continuing to sensibly grow our businesses in Malaysia, Singapore, Thailand, Indonesia, Philippines, Vietnam and Myanmar," he added.
Data centre services provider AIMS Group's Chief Executive Officer Chiew Kok Hin (pic above) said: "In the last two years we have seen datacentre players going bust due to mismanagement and oversupply of space that lead to a price war. With the boom of the internet content taking over the world, data centres grew in demand and at that point players enjoyed a good return in investment. That attracted more players to join the market."
"Unfortunately a datacentre is not just a piece of real estate, you need to have the expertise to manage clients' needs and ever changing technology that at once acts as a catalyst and an obstruction to the industry," said Chiew.
"The datacentre industry is a CAPEX heavy industry with high operations cost. And unless you have the expertise to balance these, your company is set to make losses," he said. "And when a datacentre falls, customers are left at a lurch to move their data at a very short notice. So there's a trust deficit as well with companies looking towards public cloud hosted out of the country than in the country itself."
"On the other hand for AIMS, this has been one of our best years," added Cheah. "We will continue to report double digit revenue growth at the end of 2016, outnumbering the industry's expected growth. Our datacentre space has been expanded by 10000 this year and we are now at a 90 percent capacity, and we are still getting request for space."
"The government is moving towards making KL a smarter city. Smarter cities means more data collected, more powerful facial recognition cctvs and that means more computing power. So we will definitely be seeing more need for data storage," he said.
On sector challenges, Chiew said, "High cost of power continues to be the pain point for the industry and unless we see the government taking a proactive move, this will remain our biggest challenge. Power makes up 40 percent of our operating costs, and what we've noticed is that, as more data is consumed, power consumption increases."
"While we hope the government will look into recognising the industry as an important aspect of the government's aim to push for a digital economy, we are taking measures on our side as well," he said, adding that the company's green technology investments will make power consumption more efficient.
"The implementation of the National Security Act in Aug 2016 brings about concerns on security and data privacy. This will probably dampen our prospects to attract international content providers and social media giants," Chiew warned.
"We seem to be at crossroads now as emerging markets are pushing forward with their own digital transformations. In order to achieve our digital economy dreams, we will need to increase our competitiveness by offering more attractive power rates and a more international privacy guidelines," he said.
Security as an economy catalyst
In the final quarter of 2016, MDEC emphasised CybeSecurity Malaysia's assertion that the security sector's essential role in promoting a safer digital world also extended to being an economic catalyst.
Fortinet Malaysia's Country Manager Michelle Ong Ipic above) said one of the high points is that "Asia Pacific is projected to be a key player in the cyber security market in the upcoming years. This is definitely something to look out and be prepared for. According to Frost & Sullivan, the Asia Pacific network security market will grow strongly from US$2.8 billion in 2015 to US$4.4 billion in 2020, constituting a CAGR of 9.7 percent. The expansion rate for Malaysia is even higher, from US$60 million to US$ 120 million over the same period (CAGR 15.1 percent)."
The contributing factors for this growth include rising internet penetration and prominent cyber-attacks launched by cyber criminals, said Ong.
"Based on statistics provided by MyCERT (Malaysia Computer Emergency Response Team), there were 2.7 million counts of botnet drones and malware infection attacks by unique Internet protocols (IPs) in 2015," she said. "Forty-nine percent of all cybercrime reported in early 2016 involved fraud meanwhile 31 percent involved unauthorised system intrusion. In 2016, there has been a sharp rise of "ransomware" reports in Malaysia. Ransomware is an application that locks access to infected devices and extorts device users to pay as much as US$500 to unlock the device."
"Stronger card security should be provided with banks in Malaysia are actively migrating credit and debit cards from the less-secure signature-based system, to a more secure PIN (personal identification number) verification system to help mitigate credit and debit card fraud cases," said Ong.
"According to the Minister of Science, Technology and Innovation, Datuk Seri Madius Tangau, Malaysia is keen to develop into a high income digital economy by building a 'dynamic cyber security ecosystem'. To support this, a new Cyber Range Malaysia (CRM) facility has been established to produce 10,000 cybersecurity professionals by 2020. This is a step in the right direction to combat the expanding threat of cybercrime," she said. "Fortinet data that underpinned its recent 2017 Cybersecurity Predictions shows that threats are getting smarter and cybercriminals have grown more sophisticated, so it is important to stay one step ahead."
Ong then pointed to the challenge of cybersecurity talent. "Currently there is a shortage of cybersecurity skills and expertise in Malaysia. A research done jointly in 2016 by the Centre for Strategic and International Studies (CSIS) and Intel reported that 82-percent of companies surveyed reported a shortage of cyber security skills. Current estimates show up to 1 million cybersecurity job openings with demand expected to rise to 6 million globally by 2019."
"Another challenge is that Malaysia and some other countries are still actively being targeted for ATM attacks, based on a report by a Russian cybercrime investigation firm Group IB," she said. "Furthermore, most banks in Malaysia perform 2-factor-authentication (2FA) over SMS - there are incidents of criminals attempting to take control of a victim's SIM card by pretending to be the victim and requesting the telco to issue the criminal a new SIM using the victim's mobile number. If the telco is not careful, the criminal will own the victim's mobile number and all banking 2FA codes can be sent to the criminal. These banks should consider using 2FA tokens instead."
"Many Malaysians may not be securing their online accounts adequately with readily available 2FA technologies (e.g. Google Authenticator)," Ong said. "Greater effort must be made to remind Malaysians to use 2FA for every critical online account as much as possible."
"Exploits, botnets and malware infections continue to occur in Malaysia, with a majority of them related to ransomware and IoT vulnerabilities," she added. "Based on FortiGuard Labs' network of threat sensors, overall botnet activity in Malaysia for 2016 shows an occurrence rate of 100,000 times on average, with the highest peak occurring between April-May 2016. Botnet detection breakdown has shown that the retail/hospitality sector in Malaysia is most affected. FortiGuard also found the top 3 affected industries are the Technology, Manufacturing and Education sectors."
"Scams conducted over social media, instant messaging, SMS and phone calls continue to occur by attempting to social engineer users into transferring money to criminals. We still see wireless access points that are not adequately secured, and which are being used to infiltrate deeper into victims' networks," she said.
"IoT devices connected directly to the Internet, for example IP cameras and NAS systems, that are poorly configured with easily guessable passwords, default passwords or even no passwords, can be easily compromised by attackers and used for nefarious purposes," said Ong.
Ransomware on the rise in Malaysia
"Malaysia is witnessing a significant rise in ransomware - from 2 reported cases in 2013 to 84 reported cases in 2015," she said. "In just the first quarter of 2016 alone, the number of cases reported to CyberSecurity Malaysia has reached 14 cases. Ransomware is now dominating the threat landscape conversation today. Fortinet's FortiGuard Labs R&D team, for instance, is seeing one new ransomware strain every day. The top 5 ransomware in Malaysia in 2016 were Cryptowall, Cerber, Locky, Torrent Locker and Teslacrypt."
"The emergence of financial technology or fintech in Malaysia is digitally disrupting the way banking and financial services are being delivered. The rise of fintech suggests that there is an existing gap in banks' security that can be fulfilled by fintech's ability to cater to the needs of the consumers," said Ong.
"As digital (and mobile) transactions become commonplace, banks moving to embrace and enable the new digital economy will inevitably face increased security and data risks," she said. "They are likely to face new strains of malware and innovative phishing attacks aimed at exploiting loopholes as banks start to share more customer data between branches, mobile users, and even through the cloud."
"From a cyber security perspective, fintech will definitely become a bigger concern to secure," Ong said. "Many startup companies have been using financial technology as a platform to evolve the banking industry. As Malaysia embraces fintech, Bank Negara will play a critical role in the financial industry. Hopefully they will encourage new fintech companies to participate, understand and grow Malaysia's financial economy."
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