| IDC Downgrades IT Market Growth, Sees '99 Rebound
April 3, 1998 (KUALA LUMPUR) -- International Data Corp. revised downward its
growth forecast for Malaysia's information technology market to 9.7 percent from
20 percent for the next five years.
|IDC predicts the local IT market will experience a compounded annual growth rate
(CAGR) of 9.7 percent from 1997 to 2002. Previously, the company forecast a 20
percent CAGR for years 1996 through 2000.
"The currency crisis has affected growth in all sectors," said IDC country
manager Selinna Chin.
Chin said that for 1998, the local IT market is valued at US$1.368 billion, a
drastic 28 percent dip from the US$1.9 billion in 1997.
"Even using differing exchange rates, the market value in ringgit was valued at
5.472 billion ringgit in 1998 compared to 5.3 billion ringgit in 1997,
reflecting a low growth rate of slightly over 3 percent," she said.
On the PC market, IDC estimates 324,000 units will be shipped in 1998, even
lower than the two previous years. An estimated 394,000 units were shipped in
1997 and 328,000 in 1996.
Chin said the limp growth rates were due mainly to the expected decrease in
consumer spending brought on by the ringgit depreciation, the market slump and a
"Large companies are expected to freeze a lot of their capital expenditures, and
we anticipate large IT projects to be postponed," she said.
Chin said the banking, finance and telecommunications industries, usually the
biggest IT-spending sectors, were also expected to trim their budgets in 1998.
"I still see spending for maintenance, service and for solving the Year 2000
problem, but not so much on acquiring new products," she said.
Chin said she expects growth this year to primarily come from the networking
market, and the emerging small- and medium-sized enterprises market, where IT
usage is relatively low.
"Many small- and medium-sized businesses will computerize to help them save
costs and reach out to customers. There is also a growing trend towards resource
sharing, and more users will likely network their PCs to gain efficiency," she
She said there was also growing awareness among businesses of the importance to
link up electronically with customers, which could boost local IT spending. Chin
said despite the negative impact of the crisis on the growth rates, the industry
could see improvement in services as a result.
"In these hard times, we will see a lot of players pulling up their socks and
improving their products and services in order to survive. In the end, users
stand to benefit," she said.
Chin also expressed optimism that Malaysia was likely to rebound faster than its
neighbors. She cited the setting up of the Multimedia Super Corridor (MSC) and
various other technology parks around the country, as well as the recent
announcement to allow four more Internet service providers, as factors that
could spur growth over the next two years.
"I expect a rebound in 1999. With the MSC and new foreign investors, Malaysia is
becoming a good hub for international companies to penetrate the Southeast Asian
market. This will bring a lot of opportunities for the local IT market to grow,"
(Julian Matthews, Asia BizTech Correspondent)