KUALA LUMPUR, October 14, 2024 - Widespread adoption and scaling of digital agriculture technologies (DATs) will accelerate Malaysia's journey to achieving high-income nation status, a new report from the World Bank concludes.
According to the latest Malaysia Economic Monitor report, entitled "Farming the Future: Harvesting Malaysia's Agricultural Resilience through Digital Technologies", DATs have strong potential to drive economic growth by unlocking extra productivity in the country's structurally critical agriculture sector.
The economic boost promised by DATs, which include technologies such as GPS, drones, and sensors, follows a recent rebound in the agriculture sector, which grew by 7.2 percent in 2Q 2024. The results feed into a positive forward-looking picture for Malaysia's economy, with the report predicting an overall growth of 4.9 percent in 2024, up from 3.7 percent in 2023.
"We are committed to transforming Malaysia's agrofood sector to ensure it remains an engine of sustainable growth and poverty reduction," said Malaysia Minister of Economy, Rafizi Ramli. "By focusing on equitable access and tailoring digital solutions to producers in rural areas, we can ensure that the rural economy and agrofood sectors benefit from digital agriculture technologies."
In addition to higher productivity, DATs are projected to improve marketing efficiency and export competitiveness as well as increase food security, climate resilience, and social equity. Smallholder farmers are especially well placed to benefit, according to the report, which highlights the expanded use of data platforms, precision agriculture, e-marketplaces and other digital solutions facilitated by DATs.
Released today, the Malaysia Economic Monitor report closely aligns with ongoing government efforts to modernize agriculture nationwide. A key challenge in this respect is the country's historically low adoption of new technologies. As well as meet this challenge head on, moves to catalyze the uptake of DATs would also benefit other government objectives for the sector. Key issues here include improved productivity, stronger market competition, increased investment in agricultural research and development, and greater resilience of primary producers.
"Digital agriculture technologies have the potential to transform Malaysia's agrofood system. They can reduce costs and support agrofood value chains, increase information availability and guarantee fair access to this information for all stakeholders, all of which are crucial for sustaining economic growth and maintaining a resilient food system," said Zafer Mustafaoğlu, World Bank Country Director for the Philippines, Malaysia and Brunei. "With a focus on technological innovation and structural reforms, the agriculture sector is well-positioned to contribute to sustained economic growth, food security, and the nation's long-term prosperity."
To ensure that the rural economy and agrofood sectors gain the greatest benefit from DATs, the report identifies a specific set of actions tailored to the needs of rural areas. These are categorized into three broad priority areas: (1) increased financing for public goods that provide sufficient resources for the successful implementation of DATs; (2) greater investment in the innovation ecosystem to create an environment that fosters innovation and supports the development of DATs; and (3) the creation of an enabling environment through clear and actionable strategies for data governance, privacy, security, and an incentive framework.
