Malaysia’s digital payments value and volume have shown steady growth, with latest stats (as of April 2021) from Bank Negara being RM23 billion and 302 million, respectively despite the absence of tourism industry contribution. — Bernama photo
KUCHING: Malaysia’s digital economy is gaining traction, driven by smartphone access, internet connectivity, market readiness towards ride hailing and food delivery app services, drastic shift towards e-commerce and companies integrating technology in their core business, the research arm of Maybank Investment Bank Bhd (Maybank IB Research) notes.
Maybank IB Research gathered that the accelerative growth in the sector has kicked-in vastly since the implementation of Movement Control Order (MCO) 1.0 in March 2020.
“In the Asean region, market dominators are continuing to raise their profile and funding capacities.
“Super-app Grab (Singapore-domiciled) has announced its plan to list in the US (via special purpose acquisition vehicle) while Indonesia’s Tokopedia (marketplace) and Gojek (ride-hailing) are to merge to form GoTo Group, which will be dual-listed in the US and Indonesia,” the research arm noted in its digital payments update.
Maybank IB Research recapped that since 2020, various innovative tech companies have been successfully funded, with committed capital amounting to more than RM4 billion.
According to the research arm, the top three sources of venture capital (VC) funding came from government agencies and investment companies (42 per cent), followed by sovereign wealth funds (33 per cent) and corporate investors (20 per cent).
“Early this year, the Malaysian government completed its MyDigital Blueprint, outlining various aspects of digitalisation investments in both the private and public sectors,” the research arm recalled.
“The burgeoning number of e-wallet companies (issuers) has resulted in a very competitive space, with highly-sensitive pricing to maximise monthly active users (MAU) or user acquisition, for example by offering very low merchant discount rate (MDR), likely resulting in ‘survival of the fittest’; Touch ‘n Go (TNG), Boost and Grab.
“Meanwhile, competitive dynamics look better among the merchant acquirers (provider of payment terminals and transaction processors) with the major ones being GHL Systems Bhd (GHL), Revenue Group Bhd (RGB) and the banks.”
That said, the research arm noted that new entrants like Stripe, iPay88, and Razer Merchant may limit growth outlook of the incumbents, principally in the innovative online merchant space, such as e-commerce and ride-hailing.
Overall, Maybank IB Research gathered that digital payments value and volume have shown steady growth, with latest stats (as of April 2021) from Bank Negara being RM23 billion and 302 million, respectively despite the absence of tourism industry contribution.
The research arm also highlighted that government efforts to implement e-payment solutions in city councils would benefit third-party acquirers in expanding their reach to the public sector.
“Nonetheless, GHL and RGB have limited exposure to the thriving e-commerce, ride-hailing, food delivery and other online services merchants who stand to gain most from the brick-and-mortar retail expenditure hurdles due to MCO 3.0.
“We see stronger catalyst from faster-than-expected merchant recruitment vis-à-vis transaction processed value (TPV) growth, retail expenditure and tourism recovery, stronger regional expansion efforts and visibility from value-added services (VAS) segment contribution for the merchant acquirers.”