The number of Internet users in Malaysia is expected to grow from 18 million last year to 25 million in 2015, according to the Finance Ministry in its Economic Report 2013/2014 released today.

The report said the household broadband penetration rate had risen to 66.8 percent as at June-end, while with a penetration rate of more than 100 percent.

There are currently 42.6 million mobile subscribers.

Meanwhile, Malaysia’s online shopping market size was RM1.8 billion in 2010 and is estimated to reach RM5 billion by next year.

According to the report, Malaysia is among the top three in Asia on the average amount spent online in the past 12 months. This, in turn, is being pushed by travel services, especially airline tickets and hotel bookings, which lead in terms of products and services purchased online.

Furthermore, purchases over the Internet have been made easier with electronic payment via online banking or credit cards.

The increasing number of Internet users and consumers who buy online thus suggests huge market potential for online businesses.

In order not to lose out on this growing number of online consumers, firms that do not have websites or offer online buying, will have to transform their traditional business to online business.

Furthermore, it is imperative that businesses reach out to mobile phone subscribers as their numbers far exceeded that of Internet users.

The report said, Malaysians were increasingly spending more time surfing the Internet than using other media such as watching television, listening to the radio and reading newspapers, whereas the more prevalent use of the Internet was for social networking.

“The penetration rate of social networks is 91 percent; one out of every three minutes spent online is on social networking, an estimated 11.8 million Malaysians have Facebook accounts and more than 80 percent of Malaysians on the Internet access Facebook,” added the report.

The report said most businesses, particularly small and medium enterprises (SMEs) were still slow to adopt ICT due to limited financial resources, lack of technological knowledge and high cost of technical team and software applications.

According to the report, Internet accessibility is low for Malaysian SMEs and entrepreneurs due to high costs of band width and domain registration.

“For example, in 2010, it cost US$143 to register a domain in Malaysia compared to US$64 in Taiwan and US$24 in the United States,” said the report.

Only 100,000 businesses have websites

SMEs make up 97.3 percent or 645,136 of all business establishments in Malaysia, with only about 100,000 businesses having websites and 20 percent of SMEs using ICT extensively in their daily operations.

The report said in 2010, broadband penetration among Malaysian businesses was only 33 percent while spending on online advertising was also low, at only one percent of the budget of Malaysian businesses.

The report pointed out that there were issues such as data and network security, whereby according to Paypal, more people would increase their online purchases if their security aspect was improved.

In conclusion, it is important that Malaysian businesses, particularly SMEs and entrepreneurs as well as consumers, capitalise on ICT and wholly embrace digital technology, in line with the transformation towards a high-income nation.

- Bernama