Fundnel Spotlight 08 September 2020

Taking Flight — The Future of the Drone Economy in Malaysia


From a bird’s eye view of drone technology to a zoomed in understanding of the various applications of DroneTech across industries, we chat with leading Malaysian ecosystem players to explore how the nation is cementing its position as the drone hub of ASEAN.

Malaysia has emerged as a powerful frontrunner in DroneTech, with strategic collaborations between Malaysia Digital Economy Corporation (MDEC) the World Economic Forum, and significant government investments into drone-related initiatives allocated under the 2020 National Budget as Malaysia strives to become the drone hub of Southeast Asia.

From being merely used by hobbyists in its infancy, drones today present limitless potential in unlocking growth across industries. Drones have increasingly been used to address new problems in novel ways, from commercial use cases like inspection and delivery, to collaborations with the government for social safety during the Movement Control Order (MCO) imposed to curb the spread of COVID-19.

Fundnel Malaysia’s Country Director, Wan Mohd Firdaus recently moderated a panel discussion with leading industry and ecosystem players of the drone tech ecosystem in Malaysia. Attendees were also introduced to the DroneTech landscape and its growth potential in Malaysia by MDEC’s DroneTech Manager, Wan Mohd Farhan.


Wan Mohd Farhan Wan Mohd Fuaad · Manager, DroneTech, MDEC

The panellists

Amsyar Faiz · Business Development Director, OFO Tech

Safuan Zairi · Chief of Staff & DroneTech Lead, MDEC

Dr Shian Lee · CEO, Fourfang

Dato’ Sri Ganes Palaniapan · Founder, Chairman & CEO, SG Education Group

Watch a recap of Fundnel's discussion with leaders in dronetech in Malaysia

Malaysia’s DroneTech Ecosystem (presentation here)

Farhan: MDEC’s overall vision is to position Malaysia as the heart of digital ASEAN through three key strategic priorities:

  1. Upskill Malaysians to become digital natives.
  2. Grow startups, digitalise SMEs, and uplift the bigger technology companies.
  3. Position Malaysia as a hub for industries like animation, games, FinTech and Islamic digital economy to drive digital investment into Malaysia.

MDEC’s MyDroneTech initiative aims to accelerate the growth of Malaysia's drone industry by building collaborative ecosystems, driving IR4.0 for adoption via drone technology and connecting ecosystem players and communities.

Malaysia now hosts two of the biggest drone services companies in the world; Aerodyne and TerraDrone.

Interest in drones and dronetech has continued to gain momentum this year, even with the MCO in place, as digitalisation using technologies like drones are seen as more cost effective, safe, and better, especially for conventional industries in Malaysia like paddy and palm oil.

Drone companies have been receiving more requests than they can meet from corporations seeking solutions for spraying and mapping .

This is why we need to start engaging more top regulators like CAAM, JUPEM, MCMC, CGSO and PDRM, as flying drones over airspace is risky, and has to be checked with commercial aeroplanes and the military which is why everyone needs to be able to understand each other.

MDEC is also working to encourage the adoption of drone technology by showcasing its applications. With this, we hope to eventually improve Malaysia's drone Readiness Index ranking from 37th globally in 2019 by DRONEII to an improvement in that in 2020. We'll be able to see more investors and international corporations start to look at our talent and our companies in drone technology and services once that happens.

Safuan - What are the challenges of bringing the Malaysia drone economy to the next level  and the opportunities in terms of public-private partnerships?

Our challenges are not dissimilar from other countries and economies — we're talking about regulation, adoption, awareness.

On awareness — It’s very important that dronetech and drones are a tangible element, unlike technologies like AI,..., IoT which are difficult to explain to people on the street. But if you mentioned drones, chances are they will be looking up to try to locate it, which means that they have an idea of what  a drone is. Next, we would talk about awareness around the services dronetech can provide, because this gives us an opportunity to have a further discussion on topics such as automation or robotics. And once they are aware, then they know that this area of drone technology and drone powered services has a game-changing impact in the agriculture, construction, logistics and surveillance landscapes because it enables us to do things better, faster, cheaper and safer.

On private and public partnerships, I think we already have been quite successful in terms of generating interest.

Currently, a tripartite collaboration is taking shape in Johor, between Iskandar Investment Berhad, DHL and MDEC regarding drone and robotics. There are other players involved, including MaGIC, Futurise, and drone companies.

The intention is to build a safe and ideal location for drone technology innovation to thrive. And that's critical because before you can get public adoption, you have to make sure that it is safe.

Ultimately, the intention is to position Malaysia as the epicentre and launchpad for ASEAN for the dronetech industry, so it is not exclusive for Malaysian companies alone — all are welcome.

Amsyar - Can you go into a little bit more detail into the kind of verticals that drone companies can explore in Malaysia and an example of a problem solving learning that you've encountered.

I believe that the past years can be characterised with fast growth and in terms of a regulatory framework, the dronetech industry is quite aligned with international standards. There are many use cases for drone tech applications both globally and in Malaysia, such as the oil and gas sector, construction, agriculture, and even border & security.

It's solely up to our creativity in where we want to apply this technology. In light of COVID-19, while certain industries such as oil & gas and construction are scaling down, the dronetech industry is gravitating towards new sectors such as border security and public security control to discover new growth opportunities. I believe that local drone players have many areas in which they can offer their solutions.

The biggest value proposition of drone technology from our client’s point of view is cost effectiveness and the ability to improve existing operations by reducing operational costs and increasing efficiency.

Dronetech can replace what manual labour would take months to do in a fraction of the time. So at the end of the day, what translates positively on our clients balance sheet is something that they would be open to explore.

In OFO Tech’s case, we have been heavily focused on construction infrastructure and in agro-plantations. For example in the plantation sector, we combine drone technology and artificial intelligence to map large acreages of land in order for our clients to manage their property more effectively, such as understanding yield projections. Identifying how many crops or trees they actually have accurately using manual labour would be subject to a lot of human error, very cost and time-consuming. Using drones, once we've mapped the entire plantation, our AI can automatically calculate how many trees plantation owners actually have.

In one example, a client initially thought they had about 11,000 trees, but upon our calculations, they only had roughly 9,000 trees. This means that they had been buying fertiliser, and pesticides for 11,000 trees — which translates to excess expenses. We were able to provide that transparency throughout organisational levels for them to manage their assets much better.

Dr Shian -  Where does Malaysia stand to be the most competitive in: software or hardware services? I also know that you are quite familiar in terms of regulatory standards. What do you think are some regulatory standards we should follow?

I will say that it should be software. Although hardware is not going to go anywhere, most of the time, we are quite limited to what the [drone’s] battery technology can do. What is limiting now is that drone batteries are only able to produce about 200 to 250 watt hours per kilogramme — that's a standard lithium ion cell, on which we are quite reliant on the Japanese and Korean corporations that have control over the production of battery cells to manufacture.

A breakthrough in battery cell technology would improve drone performance in terms of flying further and faster.

I'm really looking forward to a new kind of battery cell called solid state by Samsung. Another piece of hardware that I see will boost drone performance will be a hardware neural network which companies like Tesla used for their autopilot unit.

But software is unlimited. For example, in the Spider Man movie (Far From Home, 2019), there were plenty of drones flying around, with the controlling interface from Tony Stark's glasses, which is a very cool feature. Instead of having a remote control or heavy bulky ground control stations, why not just have one variable for you to just talk to your drone. It's all software and AI adjusting the neuro-linguistic processes so it can recognise your voice and your gestures.

The possibility of developing new software to further enhance the capability of a drone is virtually limitless — it's up to our imagination.

For regulation, one of the key things for us as inventors is that we are always looking for a textbook or form of regulation. For example, if you were to build a car, we know that we have a certain emission level to adhere to to limit toxic gases, there are certain requirements in terms of cc and you have to carry out a car crash test to pass safety requirements. But for drones that do not carry people or for those that are below 20 or 35 kilogrammes, we don't have a standard for that yet.

In manufacturing, we have to make sure that the manufacturers know what they're doing, and then we need a third party, or perhaps the manufacturer’s factory itself, to run tests that show that the machines they produce are living up to what they claim. And if we were to talk about say 1,000 drones from different manufacturers in the air, then we will need a UAV traffic management process such as  digital signal processing (DSP) to be installed on the drones, so that we know who and what these drones are; are they foreign, are they friendly? Because technology can go two ways — you can use it to help humanity, or you can use it to start a war.

Dato’ Sri Ganes, you have a special role today to explain to us about the humans behind the drones. As we build a competitive drone industry, we need to also cultivate a pipeline of professional, technical Malaysians, who are able to support the industry. What is your take on this?

I want to emphasise the drone gig economy because if I were to talk to you about upskilling and getting a job — which six months ago I probably would have — the situation is different now. I’m very sure some of the drone companies are cutting down on their operations, staffing and so on. I think this category of people should go into the business of earning as a freelancer in drone technology as this is an opportunity. As with most other devices, the competition in the marketplace continues to drive down the prices of drones. Features like 4K cameras with GPS, Bluetooth capabilities, collision avoidance and terrain follow, all this has become like a package given for a good price. A basic surveyor in the industry can be upskilled into learning aerial mapping and acquiring surveying skill sets which will add value to their current vocation or occupation, and eventually lead to companies engaging them.

In a conventional business operation that requires intensive human labour, such as agriculture inspection, the need to shift towards technology automation is imminent to stay relevant. The conventional method is not only time consuming, but also highly risky due to height and voltage issues. Small farm holders face enormous challenges in producing quality food, and to sell it for a decent price. These tech savvy dronepreneurs which emerge from the drone gig vertical can provide breakthrough services such as on-demand farming, leveraging Uber's business model to spray farms mainly for oversight, insecticide and vitamins for the plants. Combined with big data, this could also provide small farm holders with better knowledge on what and when to produce.

Other opportunities could also include one-man aerial film units. With basic knowledge of operating video cameras and piloting drones,  one would have a manual and safer way of filming, rather than using helicopters. One can approach large enterprises and also pursue wedding and special events photography. Repairing drones may not sound like the most revolutionary business opportunity in the field, but it would be a great way to grow in a particular niche, for instance, by replacing drone parts using 3D printers. Real estate agents currently really want to sell their properties — drone technology has the ability to generate video tours for customers creatively to provide them with an immersive experience.

We are currently working on an initiative to foster a drone gig platform for Asia for drone owners with good skill sets to grow their businesses. They will register via a portal with their drone skills and competencies listed, for these drone troopers to showcase their completed jobs and achievements so consumers will be able to rate their ability and skill sets, which we can then help to upskill and certify. For instance, if an event company requires aerial filming, they can put up their requirements on this drone gig platform, and the drone freelancers who are within their area and with the right skill sets are able to leverage on the opportunity. Instead of pushing them to find jobs which companies are struggling to fund now, we can start encouraging them to go on the drone gig pathway.

Lastly, what’s your wish list to bring the drone economy in Malaysia to the next level?

Safuan: Everybody has the tools, and Malaysia has good people and talent. I think we should push for innovation, and for creativity as well — I see that in all of the entrepreneurs in Malaysia. You need to be able to innovate, to be creative, to think on your feet, and to smell the opportunities quickly. And you're not alone. I think my message here is that you've got agencies that you can work with, and some of those agencies also have funds. Especially now, there are a lot of initiatives and opportunities in Malaysia and you need to harness the opportunity.

Dr Shian: It’s very important to have a very good and solid regulatory body to consolidate regulations that we can follow.

Amsyar: I think when it comes to innovation, Malaysia is on par with global levels. However, when it comes to technology maturity that's where we fall behind. So my wish list is that when we push drone technology to the forefront of the global stage, that we are able to actually mature the industry and be able to keep that momentum up. And that requires everyone in the ecosystem to work together.

Dato’ Sri Ganes: My wish list would be a long list but given only 30 seconds, my quick wish would be to make our talents employable and I mean beyond borders. We should promote borderless employment as they should be highly employable out there, and should be given a chance. In order to promote this, we need to have certification, training and accreditation processes in line with the requirements of international drone businesses. So let's not simply be technology consumers. Let's go out there and be innovators as well.

Farhan: I would just like to remind Malaysian companies and future dronepreneurs that Malaysia, and ASEAN are two very big markets that currently require technology like drones to be in the industry. Number one in agriculture, mainly paddy, and number two, palm oil. So if we can ensure that everyone in these two industries adopts drone technology, even with 100 drone companies, it wouldn't be enough to be able to serve the whole ASEAN market in these two specific verticals.

From MDEC, this is why we need to set certain standards and SOPs, so in the future, larger drone companies can work together with smaller companies to support them to be able to go on-ground and serve the paddy field communities in the rural areas in Vietnam or in Myanmar, but we need to start here, together. Everyone needs to start sharing their technology so that with the proper technologies and standards, whenever the dronepreneurs go into the market, they wouldn't make the same mistake that we might have made three or five years ago. We need to do that sharing in order to benefit everyone in the ecosystem.

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