Malaysian IT Spending Prospoct 2006 - v7

Followng the suspension of Iris Corporation Bhd and Patimas Computer Bhd shares trading on monday and eventually reopened for lowest-limit on Tuesday, Malaysian shock market suffered unprecedented declines.

Many analysts claimed it is due to the effect of shocks from the suspension of the two counter. However, today theStar reported that it is due to last-minute buying of shares from Tuesday. This actually implies that many shares had been disposed off on Monday, after the announcment of the suspensions.

Earlier on, we try to study the prospect of IT spending for year 2006 in Malaysia where we have had the following entries.

Version 6
Version 5
Version 4
Version 3
Version 2
Version 1

These previous entries favors the IT spending behaviour to be rosy at least until year ending 2006, due to the following catalysts:

1. 9th Malaysian plan
2. Hike of interest rates
3. Appreciation of the Malaysian Ringgit.
4. Share market seemingly gained the bull strenght.

Therefore, reports from theStar firmly hold on to the fact that if the market were to be real bull, the composite index should gain strenght in a short period.

Nevertheless, Pikom paints a gloomy picture over our search for a better prospect by year 2006, where the IT growth is expected to drop to 10% for 2006. This also contradicted with IDC forecast of 11% and Microsoft forecast of 7%.

According to Pikom ....

"Companies are not willing to invest (in ICT) long term because of economic factors like the ringgit repeg and external factors like the Tsunami.Also the technology is changing so fast, that companies aren't willing to upgrade to something that would be updated in two years,"

Pikom advices local ICT entrepreneur to start focusing on export market as the local market has been saturated. This is really a bad news for startup because it is impossible to have export capabilities unless you already proved a strong home-root. The prospective market to look into is China, Indonesia, Philliphines and Vietnam.

On the other development, MSC hasn't announced any new grants from the government yet. We take a look at previous grants winner and figure out how well they have faired according to justification of tax-payers money.

Previous grants winner.