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Malaysia’s Digital Free Trade Zone goes live: Here’s a Deep Dive on the ROIs

AvantiKumar | Nov. 6, 2017
How will the rapidly launched Digital Free Trade Zone (DFTZ) in Malaysia actually break through cross-border challenges and lift SMEs into the digital economy?

Photo 1 DFTZ goes live

Photo (official): (From left) Malaysian Prime Minister Dato' Sri Najib Tun Razak and Alibaba Group Executive Chairman Jack Ma hit the gong to signal the first eWTP hub outside of China has gone live-in Malaysia..

 

  Just a few months ago in March of this year, the Malaysia's prime minister Dato' Sri Mohd Najib Tun Abdul Razak and Alibaba Group's founder and executive chairman Jack Ma officially announced the Digital Free Trade Zone (DFTZ), an initiative eyeing the explosive growth of eCommerce in Asia and across the globe.

The idea to form a global digital economy enablement hub in Malaysia took just a few minutes only to hatch. "I want to share here that it took us only ten minutes to agree on this project - but I had been thinking about this for more than 10 years. And I am pretty sure that the prime minister had also thought about this for a long, long time. Only when the opportunity comes, when the chance come, can we make it happen - and we did it," said Ma during the initial announcement. [See - Computerworld Malaysia's "Deep Dive with Jack Ma on Malaysia and the Digital Silk Road"]

Implementation by government agencies, with Malaysia Digital Economy Corporation (MDEC) in the vanguard, along with Malaysia Airports, POS Malaysia, Alibaba and other players, is maintaining the same top gear with the Phase 1 of DFTZ now going live.

On Friday (3 November), Malaysia's prime minister  and Jack Ma opened the first ever eWTP (electronic world trade platform) hub outside of China at a Kuala Lumpur ceremony, which also flagged off 1900 export-ready small and medium enterprises (SMEs).

At the ceremony, Najib said DFTZ is expected to increase SME goods export to US$38 billion, create more than 60,000 jobs and support US$65 billion worth of goods moving through DFTZ by 2025.
 
"SMEs have the power to transform the economy," he said. "They are ambitious, nimble, and have the potential to create high value employment. They have the power to move Malaysia to become a high-income nation."

It's about simplifying eCommerce

"Back in March, I said Malaysia is set to make it easier for SMEs to do cross-border trade," Najib explained. "This is the primary purpose of DFTZ. It is simplifying eCommerce by bringing together government agencies, eMarketplaces, logistic and payment providers all on one platform."

To look behind the acronyms and to better connect the dots, it's useful to consider local eCommerce briefly: In Malaysia, the eCommerce sector - considered a vital driver of  Digital Malaysia - was originally slow to take off despite rapidly increasing Internet penetration rates from about 2015. At that time, just 5 percent of Malaysian businesses had any form of digital presence.

Today, local eCommerce is in a different position:  According to a recent report by BMI Research, Malaysia's eCommerce market is expected to grow to RM16.3 billion this year alone.

The Malaysian government has also tagged 2017 as 'The Year of the Internet Economy', and there has been a marked increase of efforts to catalyse cross-sector digital business.

Even without cross-border trade, the Malaysian market represents a digital population in excess of 20 million people. With high-speed Internet access now increasingly available, the country now also has a stable and developed infrastructure, lending further credibility to the potential for eCommerce growth.

"In Malaysia right now, on one of the famous platforms, the ratio of sellers to buyers is something like 1:15. This means that for each seller there are fifteen buyers," MDEC's chief executive officer Datuk Yasmin Mahmood (On left in photo below) had said to Computerworld Malaysia earlier this year.

 

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