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Report Forecasts DNB’s Single Wholesale 5G Network to Create RM122 billion in GDP

Report Forecasts DNB’s Single Wholesale 5G Network to Create RM122 billion in GDP
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Digital Nasional Berhad (“DNB”) has published a report by Ernst & Young Consulting Services Sdn Bhd (“EY”) on the potential future impact on Malaysia’s economy from the deployment of a single wholesale 5G1 network (“SWN”) and the adoption of subsequent 5G applications (or “use cases”). EY’s forecasts were based on two economic models developed by the firm’s UK-based Economic Advisory team, which has extensive experience in developing empirical economic impact assessments globally.

The report entitled “Estimating the economic impact of the Single Wholesale 5G Network in Malaysia” was published in conjunction with the National Digital Economy and 4IR Council meeting chaired by the Prime Minister, YAB Dato’ Sri Ismail Sabri bin Yaakob recently. The report sets out EY’s objective forecasts based on robust data sourced from the Department of Statistics Malaysia and EY’s third-party data sources, as well as qualitative interviews with industry leaders.

EY’s first economic model indicates that in 2030, the adoption of 5G technologies will increase Malaysia’s Gross Domestic Product (“GDP”) by 5% or RM122 billion. In addition, 5G will also support the creation of 148,000 jobs across the economy and will contribute to an increase in the proportion of high-skilled jobs. The uplift of GDP and creation of jobs are expected to begin with the rollout of the SWN in 2021, steadily increase in the years to 2030, and extend beyond 2030.

The projected increase in GDP will be driven by increases in efficiency and improvements in productivity that are delivered by digital transformation enabled by 5G use cases. The expansion of digital industries and the entry of new firms to the market will also increase GDP.

EY’s second economic model indicated that DNB’s direct investment in the 5G network could generate an additional GDP contribution of RM20.9 billion. Of this, an estimated RM7.9 billion (or 38%) relates to the GDP generated directly by DNB through its expenditure on operating and corporate costs, with RM13 billion generated throughout the supply chain and wider economy. At the peak of the network deployment in 2022, DNB’s investment could support over 14,800 jobs across the economy through the increased demand placed on the sector’s supply chain.

Thus, the overall impact on the economy will be generated by private investment as the cost of deploying the 5G network will be funded entirely by the private sector through DNB with no government allocation, funding or guarantees involved.

The report also considers the wider socio-economic and environmental benefits that could be realised with the SWN being developed by DNB for 5G services. It highlights that the SWN will help bridge the ‘digital divide’ and provide a more level playing field in terms of connectivity by providing the Rakyat with accelerated access to a high-quality broadband connection, especially in rural areas.

Bringing connectivity to rural areas will improve inclusivity, provide more opportunities for education, skills development and employment, as well as improve access to essential healthcare services. This will help in driving rural economic growth and provide rural businesses with more opportunities to scale up by accessing online markets.

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