A Quick Guide to Understanding Digital Certificates in Malaysia

In Malaysia, digital certificates verify identities, protect transactions, and facilitate trust. They also secure communications and government operations, supporting businesses and individuals. With the introduction of e-invoicing in Malaysia, digital signature certificates have become essential in authenticating invoices and ensuring secure, compliant transactions.  This blog explores what a digital signature certificate is, its importance, and the different types. We’ll also find out how to obtain a digital certificate in Malaysia.

What Are Digital Certificates?

A digital certificate is an electronic document. It proves the identity of an individual, organisation, or device in an online environment. For that, it uses encryption. This ensures data integrity, authenticity, and confidentiality during online information exchanges.

For example, Hebat Group (Buyer) sources fresh produce weekly for all its hypermarket outlets. The supplies come directly from Fresh Food Hub (Supplier). For each sale, Fresh Food Hub generates and sends e-invoices using its ERP system. These invoices are issued via API in XML or JSON format. Fresh Food Hub must attach a digital signature to each e-invoice. This signature verifies that the invoice is genuinely from Fresh Food Hub.

Digital certificates come from trusted third-party Certificate Authorities (CAs). They create secure communication channels between two parties. Each certificate has a public key tied to the certificate holder. It also has a digital signature from the CA. This signature confirms the certificate’s authenticity.

Digital Signature vs Digital Certificate

A digital signature is a secure, encrypted "stamp" that verifies the authenticity and integrity of digital documents, like a handwritten signature. A digital certificate, on the other hand, is an electronic document issued by a trusted authority that verifies the identity of the certificate holder, allowing secure, trusted online interactions. 

A digital certificate is required to create a digital signature. The certificate verifies the identity of the signer, allowing the digital signature to be trusted as authentic and secure.

Importance of Digital Certificates in Malaysia

Digital certificates offer several advantages for both individuals and businesses in Malaysia. Some of them are as follows:

• A digital certificate for e-invoice is legally required by the Inland Revenue Board of Malaysia (IRBM), also called Lembaga Hasil Dalam Negeri Malaysia.
• Encryption protects sensitive information. It reduces cyber attack risks.
• Digital certificates help organisations meet compliance standards. This builds trust with customers and partners.

3 Key Types of Digital Certificates in Malaysia

In Malaysia, digital certificates are divided into classes. Each class offers a different level of security, trust, and verification. Here’s a breakdown of the three main classes:

1. Class 1 Certificates

• Offer a basic level of assurance
• Involve minimal identity verification
• Primarily used for verifying email communications and basic identity validation
• Offer an entry-level layer of security, suitable for low-risk interactions

2. Class 2 Certificates

• Offer a moderate level of assurance
• Involve some verification against trusted databases
• Used in online transactions and for access to secure websites
• Suitable for medium-risk applications

3. Class 3 Certificates

• Offer a high level of assurance
• Involve stringent verification, including in-person checks
• For high-risk transactions such as electronic banking, financial dealings, and legal documentation, where security is a must

5 Key Players in Malaysian Digital Certificate Issuance

Several key players contribute to digital certificate issuance in Malaysia, supporting secure online interactions and digital identity verification.

Certification Authority

A licensed Certification Authority provides digital identities for businesses and administrative processes, ensuring compliance with regulatory standards for secure digital transactions.

National Registration Department of Malaysia (JPN)

JPN issues a National Digital ID (NDID) for Malaysian citizens and permanent residents, providing a centralised digital identity that enables secure, verified online interactions.

Government Authorities

These bodies regulate and support the NDID program's implementation, ensuring that digital identification frameworks meet legal and security standards.

Relying Parties

Public and private sector organisations act as relying parties. They use the NDID platform to verify digital identities and provide trusted services.

How to Obtain a Digital Certificate in Malaysia

Getting a digital certificate in Malaysia is a systematic process. It involves a few steps. Here’s a quick guide to how to create digital signature certificate:

1. Reach out to a Certificate Authority as listed here. Then, request a quote.
2. After receiving the quote, complete the payment process by issuing a purchase order or payment advice.
3. Submit the required documents to the CA. 
4. The CA will contact the designated administrative contact for verification of information.
5. Once verified, the CA will issue the digital certificate and send it to the administrative contact.
6. Configure the certificate with your ERP or other systems with assistance from your ERP provider.

Common Uses of Digital Certificates in Malaysia

Digital certificates are widely used across various sectors in Malaysia. Some of them are as follows:

• In banking and financial services, these certificates ensure secure online banking transactions and financial data protection.
• In government services, digital certificates support secure e-government platforms, allowing citizens to access services and information safely.
• During corporate communications, these certificates validate emails and documents exchanged within organisations to prevent phishing and fraud.
• In healthcare, these certificates safeguard patient information and enable secure access to electronic health records.

Challenges in Using Digital Certificates in Malaysia

While digital certificates offer numerous advantages, their use also comes with certain challenges:

• The initial setup and renewal fees can be high for small businesses.
• Maintaining certificates needs technical skills. This can be difficult for you if you have smaller firms.
• Integrating certificates with legacy systems may need custom development. You might need third-party support.
• Digital certificates expire after a certain period. You need to regularly renew it to keep security up to standard.

Conclusion

From basic identity verification to secure financial transactions, digital certificates enhance trust and support legal and regulatory compliance in Malaysia. Challenges exist, but benefits outweigh drawbacks. They are a valuable investment for online transactions and secure communications.