- Janet Salem said that the circular economy has been mistaken for recycling- but it is more than that, as it encompasses all the components of its supply chain from sourcing, manufacturing, logistics and marketing to sale and disposal of the product. The Circular Economy produces high-value products. As such, the EU has launched a Digital Product Passport Card for all products and this will increase transparency of emission that will help companies in their route to achieve net zero goal.
An example is EON, a circular fashion brand that uses the Digital Passport to provide consumers with information on business model, manufacturing process, etc. The benefit comes when the consumer wants to re-sell the fashion item on electronic platforms - one just has to upload the Digital Passport instead of keying in product data and images. Re selling fashion items is a huge industry with millennials and GenZ looking for better products. Fintech helps the circular economy, which is projected to double in eight years.
- In addressing the question of how fintech can help in reducing greenwashing, Janet said that fintech application helps increase the transparency of the supply chain. Fintech has the structure and tools to collect data on the company’s aggregate impact on the environment and thus verify their claims. In so doing, fintech can help reduce greenwashing.
- Lead discussant Prof. Seeram said that digital tech (fintech included), uses a lot of energy especially in their data centres. He asked Janet on her opinion on whether fintech is a good way to further lower the footprint. Janet agreed that Tech and Data companies use a lot of energy which impacts the environment. However, steps are being taken to offset this: - Apple is taking steps to use more circular materials and make smaller devices. - Google and Facebook are also driving energy efficiency by ensuring that enough Renewable Energy is used to power their data centres.
Janet said that in transforming the economy, it is a matter of balancing/leveraging digital growth with lowering the carbon footprint.
- Prof. Seeram then asked Janet on her view on the Digital Economy 50 years from now. Janet said that there will be huge scaling, huge digitalisation, more digital trade and more physical products sourced locally. In 50 years on, people will ask why our current society built single-use products, carbon intensity, and why they have to clean up the environment.
- When asked how the fintech community can serve the circular economy in the pandemic, Janet said that during the pandemic, people did not handle money so much and there was an increase in contactless digital transactions. People also tend to reflect about what they want in society and their lifestyle and this has led to a huge boost in climate change. They also spend more time online, creating more interest in sustainability and what companies are doing with sustainability.
- As to whether climate change can transcend geopolitics and bring people together and improve sustainability to achieve net zero pledges by 2050, Janet said that fintech has the solutions and technology to reach zero carbon society.
UPDATE REQUIRED: FUNDAMENTAL CHANGE IN CYBER DEFENCES OF THE NEW NORMAL Panelists:
Adli Abdul Wahid (Senior Internet Security Specialist, APNIC)
Noor Aishah Mohamed - NC4, National Cyber Security Agency (NACSA)
Steve Ledzian - Vice President & Chief Technology Officer, APAC, FireEye
Lead Discussant:
Siew Kei Ho, Executive Director, Cyber Risk Advisory - Deloitte
- On the issue of how cyber threats have evolved during the recent pandemic Adli of APNIC started by explaining how the phenomenon of workers going remote brought about the need for a “new model” as confidential data was being taken home, where, unlike in the office, there was no firewall. He added that, in terms of the trend of attached during this newly-evolved period, there was really nothing new but there was a significant rise in incidents of ransomware cases and scam cases.
- On the issue of the concept of attribution, i.e. who is behind specific cyberattacks, Steve of APAC began by grouping the main threat actors into four categories:
- Those motivated by financial considerations – e.g. ransomware
- Cyber espionage
- Hacktivism
- Influence operations
He said that, of the categories of threat, cybercrime ranks highest in frequency and impact with the government sector being the most targeted sector followed by the financial services sector.
He named some of the threat actors identified by his organization, e.g. APT 40; some of the most common malware, e.g. Stonedown; as some of the most commonly exploited vulnerabilities.
- On the role of NC4 in countering cyber-attacks, Noor Aishah of NACSA defined NC4’s role as a co-ordination and command facility that ensures preparedness and response to cyber attacks with several important roles that ranged from the provision of early warnings of impending threats to the management of vulnerabilities in a systematic way, conducting cyber drills at national level, providing technical assistance to affected parties, etc.
She also mentioned that the most used “vehicles” for cyber-attacks included using infected emails as a point of entry, exploiting instant messaging systems by impersonating higher officials and data leakages from supply chain sources which didn’t have sufficient security protocols.
- Lead Discussant Siew Kei Ho raised the issue that since cyber-attacks cannot really be detected, there was a need to move toward prevention. Adli of APNIC weighed in on why attacks are still so difficult to solve:
- Vulnerability levels change periodically, sometimes even day-to-day, with changes in situations such as people and software.
- Difficulty in enforcement and the ability to track attackers makes the attacker feel more confident.
- On the defender’s side, the complexity of the defence process included reasons like organisations not understanding how attackers benefit from attacking them; not appreciating the need for firewalls; the importance of balancing productivity with managing threats which differ in priority from one organisation to the next.
- Asked to comment on the latest buzzword – “zero trust” – Steve of APAC said the place to begin was not to think that cybersecurity is a tech problem. Prevention is not a 100% solution and hence the need for zero trust, which requires that one treat all users as potential threats that must be denied access until they have been absolutely validated. This has also been expressed with the term ”assume breach”, where the assumption is that attackers can get inside and hence the idea is to kick them out before they can do damage.
Adli of APNIC then weighed in on this issue with some barriers to adoption, e.g. infrastructure (firewalls, VPN, etc.) has to be more integrated to carry out zero trust which is OK for bigger organisations but not so for smaller ones. Also, as a lot of groundwork needs to be done first (such as identifying users and assets) – and which one of these can be allowed access is a very time-consuming exercise, and companies may not have the capacity to do this. Nonetheless, Adli believes that zero trust is still a good way forward.
- On why Malaysia has been in the top 10 of the global cybersecurity index for a number of years now, Noor Aishah of NACSA offered these reasons:
- Launch of the National Cybersecurity Strategy
- Awareness programmes
- Capacity building
- Collaboration between MCMC and legal enforcement, etc. agencies
- Good public-private partnership
- National and sectoral cyber drills
- In closing, the panellists offered these pieces of general advice:
Steve of APAC said:
1) To increase preparedness for ransomeware and how to do response and recovery 2) Do not underestimate the value of user awareness
3) Measure the effectiveness of security controls like security validation
Adli of APNIC said that instead of worrying about how much to spend, think of what gaps you have to close and the resources, including the teams you need to accomplish the work. He too emphasised the importance of awareness, saying that people are the last defence, but technology helps in this battle that will never end.
Noor Aishah of NACSA said:
1) Organisations should not put security last. They should educate users but trust no one. 2) Periodic compromise assessment is important.
3) Do not panic when you get strange messages, but be vigilant and observant.
PROMISE OF THE HALAL ECONOMY
Chat Panelists:
Tuan Haji Adly Mohamed, Chief Commercial Officer of Hala Development Corporation (HDC)
Lead discussant:
Afdhal Aliasar, Director of Halal Products Industry, National Committee for Islamic Economy and Finance (KNEKS)
- Lead discussant Afdhal Aliasar said that “Halal” means complying with the needs of Muslims. It has helped to develop the economy - Halal now covers F&B, cosmetics, pharmaceuticals,
healthcare, tourism as well as education and recreation and many more segments. Please discus what halal entails and its status.
- On what halal entails and its status in the economy, Tuan Haji Adly said that Halal is a fast growing and thriving industry, noting that Muslims represent 27% of the global population and the halal market is worth US$3-4 trillion. It entails many stakeholders, multiple collaborations, new systems and procedures which has led to system developments, digitalisation and more.
- He added that Halal is also accepted by non-Muslims. It addresses consumer concerns, as halal is about quality and healthy products. To tap the huge Halal market, a company only needs to apply for Halal certification. As Halal denotes safety and integrity of product, digitalisation helps consumers to understand the halal concept and raise awareness on the halal logo.
- Tuan Haji Adly also said that a value chain creates product of value, and halal ingredients have created new industries, noting that of the 600 new companies supplying halal ingredients, 14 come from Taiwan, a non-Muslim country.
Halal means production, marketing and after-sales services which need to comply with halal standards. It is a growing industry and for it to continue to flourish, the support of finance and fintech is needed.
- On the proposition that more consumers are using mobile transactions to buy food, the question was posed on whether the halal industry was ready to provide digital information.
Tuan Haji Adly replied that digital helps to educate, raise awareness to a bigger population, make processes faster, cheaper, and easier. The increased awareness of the QR code since the pandemic (QR code helps with tracebility of product) and awareness of product goes hand in hand with acceptance.
- The Halal Integrated Platform includes all levels of its ecosystem from public, finance to government – it is developed by HDC and any one from anywhere in the world can see all the digitalised services from consultancy, training, halal bank management, etc. The Platform promotes collaboration to achieve the global goal of growth for halal.
- On whether blockchain can help create integrity in the halal industry, Tuan Haji Adly replied that finance and the halal ecosystem have a symbiotic relationship. He referred to “nano halal” companies, which need loans to grow. These nano companies and SMEs contribute to more than 70% of the economy and many of them do not have bank accounts. Fintech allows personal loans to be approved in five days, using a mobile phone.
- When asked, in the global scenario, how we can stop the unauthorised or illegal use of halal certification, Tuan Haji Adly replied that HDC is looking into a Halal logo and halal QR code to combat the misuse of halal certification, where relevant companies can just print out the certificate and place it on their products. The code will come with security features to ensure the validity of certification.
- He elaborated that the import of Kretek involves a special security logo to ensure that tax has been paid. There are existing systems in place and the Halal industry does not need to develop a completely new system but rather modify existing ones to combat the illegal use of halal certification.
- Both panelists agreed that collaboration and more standardisation are needed for the further growth of the Halal industry.
SOLUTIONS LAB: NATIONAL DIGITAL ID
Panelists:
Laila Binti Abdul Majid, Deputy Director, Information Technology Division, National Registration Department (NRD)
Lead discussant:
Thariq Adnan, Public Sector Lead, PwC Consulting Malaysia
- Lead discussant Thariq Adnan opened the session by quickly defining what digital identification is – i.e. attributes or credentials unique to a person that verify/authenticate that person in the digital realm. These attributes include biometrics; unique identity number; name, place, date of birth; citizenship ID number and may include a digital seal/stamp.
- A digital identity is normally issued by a government, although there are instances, e.g. Belgium, where the private sector drives digital identification. Usage has been increasing – in India 1.2 billion people use it; and most countries in South East Asia have some form of it.
- Laila of NRD elaborated on Malaysia’s programme, the Identiti Digital Nasional (IDN), highlighting the following:
- IDN is a verifiable authentication platform of trust for every Malaysian resident
- A form of digital identification used to obtain digital services and perform online transactions more securely, it helps generate excellence in the digital economy and national income
- A clear difference was made between the identity card, which determines the holder’s citizenship status, and the IDN, which is an addition that confirms the user’s identity.
- On the reason for developing IDN, Laila provided the following:
- Benefits to the government include increased efficiency, reduced operating costs and time savings in the identification verification process; verify identification in digital service transactions, etc.
- Benefits to the public at large include better support for contactless use cases in “new normal” life; provide value-added to various service sectors; improvement of quality of life.
- Laila of NRD touched on the socio-economic impact of digital ID, including these highlights:
- Impact on public sector from greater cost-savings and reduced fraud. - Impact on private sector from increased revenue, reduced operating expenses, SMEs gaining from more efficiency and convenience in doing business.
- Impact on citizen from reduced time taken in the identification process and reduced fraud risk from stolen identities. It is important to note that, with privacy and confidentiality assured, the citizen always has control and can better provide consent to the use of their data.
- Laila of NRD discussed some of the salient features of IDN including the inter-operability of the system; online real-time authentication and e-KYC services; that IDN shall be unique from birth to death; that IDN is associated with a unique identity card number; fresh, multi modal biometrics captured for every applicant namely 10 fingerprints, 2 iris scans and facial image.
- A number of potential use cases were brought up:
- Electronic healthcare records, e.g. the ability to transfer records, with your consent, from one hospital to another.
- Government assistance authentication, e.g. eligibility fir subsidies, application of licences, etc.
- Financial institution e-KYC and verifications
- Telecommunication verification
- E-hailing verification
- Some challenges to the implementation of IDN were highlighted, including the readiness of the NDID infrastructure, governance, readiness of service providers, legal considerations and public awareness and on-boarding.
- Also discussed were key components to the adoption of IDN - including building up the IDN adoption team, creating awareness so that the public knows what to expect and what to do, pilot runs to gain learnings to encourage adoption, deployment of key use cases based on phased value prioritisation, etc.
- Some closing questions were considered by Thariq and Laila, including whether IDN could be used for speedier processing of the hundreds of thousands of Malaysians going in and out of Singapore every day, and the technical limitations of IDN. Thariq accepted that the technology is not infallible, e.g. deepfake forgeries could not be ruled out, only that the IDN makes it much harder to pull it off.
DRIVING THE NATIONAL DIGITAL ECONOMY AGENDA: A CATALYST AND AGENT FOR CHANGE
Presente, with Q&A:
Fabian Bigar, CEO, MyDIGITAL Corporation
- In 1996, the Malaysian Super Corridor (MSC) was launched and since then there have been many blueprints and plans, released from many agencies. Over time, they have become too complicated to manage and monitor. It was a similar case for the Malaysia 4IR Policy. In 2013, the government streamlined the various blueprints into the National Digital Economy and 4IR Council to be chaired by the Prime Minister.
- There were 6 challenges that drove the drafting of the Blueprint:
- Need for digital mindset and higher digital adoption across the public sector - Build a supportive ecosystem
- Deploy quality broadband and digital technologies infrastructure
- Need for future-ready workforce
- Digital divide among income/age groups and between gender needed to be narrowed - Build trust and ethics using data and technology as well as create awareness on cyber security
The 4IR Policy also also covered similar challenges – innovation-led mindset, 4IR-enabling digital infrastructure, talent pool and coherent regulations and accountability.
- The Malaysian Digital Economy Blueprint (MDEB) charts the trajectory of the digital economy and it sets out to achieve these outcomes:
- Socio-environmental well-being for all
- Business growth in all sectors
- Fit-for-future government
The National 4IR Policy ( launched 1 July 2021) and the Blueprint ( launched 19 February 2021), are interdependent and mutually reinforcing and share intended outcomes.
The Blueprint is a 10-year document and thus is aligned to the 12th and 13th Malaysia Plan. Its Vision is to socio-economic development.
- Mr Bigar encourages industry players to be involved and also harness the workforce to make the Blueprint work.
The Blueprint has 6 thrusts:
- Drive digital transformation in the public sector
- Boost economic competitiveness through digitalisation
- Build enabling digital infrastructure
- Build agile and competent digital talent
- Create an inclusive digital society
- Build a trusted, secure and ethical digital environment
- The resulting strategies:
- Digital transformation in the public sector, some of which include:
o use of digital technology to drive efficiency and productivity,
o use of data to improve government services,
o improve digital skills of civil servants, etc
- Boost economic competitiveness, some of which include:
o Facilitate digital adoption and access
o Enhance local participation
o Develop digital industry clusters to drive entrepreneurial activity
- Digital Infrastructure: driven by expansion of infrastructure coverage, leverage digitalisation to address legacy challenges and enhance digital technology infrastructure capabilities
- Digital Talent: Some of which include:
o education
o Reskill current workforce
o Ensure gig economy and are equipped with right skills
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- Inclusive digital society - driven by increasing inclusivity of all Malaysians in digital activities and empowering special target groups in society to participate in the digital economy through entrepreneurship
- Secure and Ethical environment, some of which are:
o Enhance institutional commitment to personal data protection and privacy o Improve cross-border data transfer
o Increase cyber security uptake among businesses
- The Blueprint will focus on the agricultural, construction, manufacturing and services sectors with financial and insurance as a service subsector.
Targets will include:
- Job opportunities with the creation of 500,000 new jobs
- Digital economy to contribute to 25.5% of Malaysia GDP by 2025 (new revised figure) - 875,000 small and micro and medium enterprises adopt e-commerce - attract 2 unicorns
- invest RM70 billion in digitalisation
- increase number of start-ups to 5,000
- Larger market catchment for commercial activities
- 100% civil servants to possess digital literacy
- All ministries to provide cashless payment options
- 80% online government services
- 80% usage of cloud storage across the government
The 4IR Policy’s four main thrusts are:
- Equip rakyat with 4IR knowledge and skill sets
- Forge connected nation through digital infrastructure development
- Future-proof regulations to be agile with technological changes
- Accelerate 4IR technology innovation and adoption
- On the question of the evolving role of technology and that of technological partnerships, it was felt that technological partnerships were critical to success. This was so for partnerships such as that with Touch N Go - sharing technology meant more rapid development.
- The 4IR Policy sectors of focus are:
- Manufacturing
- Transportation and Logistics
- Healthcare
- Education
- Agricultures
- Utilities
- Tourism
- Wholesale and Retail services
- Professional services and technical services
- Finance and Insurance
- Supported by the five foundation technologies:
- Artificial Intelligence
- Internet of Things
- Blockchain
- Cloud computing and Big Data Analytics
- Advanced materials and technologies
- The 4IR Vision is to achieve Balanced, Responsible and Sustainable Growth and to achieve quality of life, local capabilities and ecological integrity using Whole-of-Nation approach. It also includes the private sector as a partner and collaborator.
Q & A segment:
- Some of questions from the audience addressed the following issues: - Digital ID and digital signatures which go hand in hand, does not replace but instead complements the existing Identity Card. It is expected to be announced early this year and will be completed/ready by 2024.
- Governance process: At ground level, the ministries will monitor at cluster level and progress report sent up to council. Local issues are resolved at cluster level. There is a reporting structure that all levels will adhere to.
- 2022 is the target year for government agencies to go fully cashless. As of July 2021, 57 of the identified agencies at federal level offer cashless solutions.
- Fabian Bigar also encouraged the private sector to participate and some have come forward suggesting the use of their existing systems in digital solutions instead of reinventing the wheel, e.g. training.
- To the query of any initiatives for a priority sector e.g. rural areas, he mentioned that there they will try to close the digital divide in geographical locations. Some initiatives include participation of MSME in rural areas and the agriculture sector in rural areas. The digital connectivity in these areas must be in place. The Jendela programme by the Communications Ministry is working hard to ensure connectivity in rural areas. Where towers are hard to install, satellite connectivity is the alternative.
REINFORCING SOCIAL FINANCE THROUGH DIGITALISATION Panelists:
Ugo Biggeri (President of Etica Sgr, Italy)
Mr. Ahmad Buchori
(Advisor of OJK Strategic Committee Department, and also Chairman of Shariah Finance and SME Task Force, OJK)
Mohd Muazzam Mohamed (CEO, Bank Islam Malaysia Berhad)
Lead discussant:
Adnan Zaylani Mohamad Zahid (Assistant Governor, BNM)
- The Lead discussant Adnan Zaylani set the stage by reminding the audience that, traditionally, it has been the government’s role to be the provider of public goods and services, including financing for low-income segments. So how can technology improve or innovate the various assets of business in general which might be recognised, right now as not being optional? It follows that digitalisation thus presents both opportunities and challenges in the sphere of social finance. He also provided four key objectives which would further frame the argument:
1) Widening the outreach of social finance
2) Optimising the cost
3) Diversifying or coming up with new business models and solutions
4) Measuring the impact of social finance
- Lead discussant Adnan Zaylani probed further on the Etica Sgr claim that disclosure and transparency were actually driven by customers wanting to know where their funds were going and asked also how technology helps in this area.
Ugo Biggeri of Etica Sgr replied:
- Working with the big database the have allows their system to collect social data and extract indicators – then, on something like a dashboard, they can see useful information like how many job positions were created as a result, or how many disadvantaged people they were able to help, etc.
- There was incremental business that came from the community of savers and borrowers they created via their web-site, helped no doubt also by the Bank’s strong brand.
- Being able to collect as much information as they did acted as a form of risk mitigation, reducing risk on the credit loss side.
- On the issue of leveraging technology to better facilitate social financing with their business operations, En Buchori of Bank Wakaf Micro, who play a huge and very strategic role in Indonesia’s rural communities, shared these key aspects from his Bank’s digitalisation of 2020:
- Application of information to the public
- Digitising access to financing
- Ease of operation, e.g. online marketing
- Access to marketing and online sales
- Muazzam of Bank Islam shared that a big part of the Bank’s success in creating offers that are meaningful to society were indeed driven by technology. He provided the example of how the Bank, in 2018, established a Sandakan house – a charity that funds development. It created a platform where donors, change-makers and beneficiaries could meet by leveraging on technology and were also able to make the act of donating easy and frictionless using mechanisms such as online transfers, internet banking, mobile banking, payment gateways, QR codes and even e-wallets. Technology allowed Bank Islam to enhance consistency of donations, e.g. to make on a monthly basis, which helped the Bank also in channelling funds to projects it supported.
- On the issue of viability of social finance, Ugo of Etiqa provided evidence from his own Bank, i.e that through the previous two big financial crises, Etiqa’s portfolio and results actually improved during those times. He put it down to the fact that work in the social sector increased in times of crisis. Also, because of the Bank’s commitment to disclosure and transparency, the reputation of trust gained from it boosted relations with its investors, clients and customers - stable relationships that hold strong advantages for the Bank. He is convinced that social finance work helps his Bank perform better because of the way it roots the organisation to the community, provides more resilience and allows gains from things like reduced credit loss to make up for weaknesses elsewhere.
- In closing, the Lead Discussant Adnan Zaylani provided this summation:
- Social financing is gaining momentum and is something that can be sustainable. In Italy, the proof of this can be seen even through many financial cycles and, also, Bank Islam has shown that there is a commercial viability to it as well.
- Among the key challenges of social financing are increasing the outreach, especially reaching out to rural areas, but this is where technology can play a role in increasing that outreach and also in improving transparency and disclosing the impact that social financing has made.
- Accordingly, there exists a lot of opportunities for fintech players, leveraging upon their technologies, to create the solutions that can advance both the social finance and sustainability agenda.
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