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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?

DFTZ goes live (inc MDEC)

Photo: Alibaba Group Executive Chairman Jack Ma and Malaysian Prime Minister Dato' Sri Najib Tun Razak survey a model of the future regional eCommerce logistics hub to be developed by Malaysia Airports Holdings Berhad and Cainiao, Alibaba's logistics affiliate.

On the geographical front, Malaysia sits at the heart of ASEAN, which has a population of more than 625 million. "eCommerce is the new way of trade. There is no way that Malaysia as a global trading country can ignore eCommerce. For all merchants out there; SMEs, sellers, our consumers are buying eCommerce," she said. [See - Computerworld Malaysia's feature on "Why DFTZ will double Malaysia's SME exports]

"It is also about empowering SMEs to do cross-border commerce and trade. Through the DTFZ, we hope that Malaysian SMEs will have greater ease in conducting cross-border transactions and logistics handling," Yasmin explained.

"All these initiatives and more work towards one single goal common goal and that is to help SMEs overcome complex regulations, processes and barriers. In turn, this will further encourage businesses and traders to connect and collaborate in cross-border trading," she added.

[See also - Malaysia's battle plan for digital disruption: part 1 of an exclusive with MDEC's Datuk Yasmin  and Disrupting the disrupters in Malaysia: part 2 of an exclusive with MDEC CEO Datuk Yasmin]

What is phase 1?

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?

During the recent event, the prime minister and Ma launched the KLIA Aeropolis DFTZ Park, which Alibaba's first regional eFulfillment hub (eWTP) outside of China. Malaysia will be a regional hub that will be part of the eWTP and also will be connected to the upcoming regional hubs in other regions.
 
The eFulfilment hub at KLIA Aeropolis DFTZ Park is expected to double the growth in Malaysia's air cargo volume from the current level of about 700,000 tonnes a year to 1.3 million tonnes a year within 10 years, according to an official statement released last Friday.
 
With ground-breaking enhancements, KLIA Aeropolis DFTZ Park will "optimise border clearance and handling from 6 hours to 3 hours with 90 percent Service Level Agreement (SLA), and improve Cargo Terminal Operations (CTO) from 4 hours to 90 minutes."
 
The statement also said the eFulfilment hub is "equipped with latest technology, including sorting, shelving and pick-pack facilities, Lighting Industrial Units (LUI) that allow minor repairs and assembly prior to shipping goods, customs inspection and quarantine area and category specific facilities such as secure warehouse, temperature controlled storage and other facilities."

The eFulfilment Hub will be developed over two phases. "The first phase will be at the KACT1, refurbished and operated by POS Malaysia to serve Lazada amongst other eCommerce players. The second phase will be a greenfield development over a 60-acre plot to be jointly developed by Malaysia Airports and CAINIAO Network, the logistics arm of Alibaba. This will be operational in 2020."

Meanwhile, the eServices Platform will manage cross-border trade more efficiently and leverage on the seamless services through an integrated trade facilitation platform that provides access to eCommerce ecosystem players (financing, last mile fulfilment, insurance, digital marketing, and others.
 
As the next phase of expansion, DFTZ will support other major modes of transport in a phased manner to cover sea and rail. 
 
The benefits

 SMEs are offering products and services that include Food & Beverage, Beauty & Personal Care, Furniture, Health & Medical, Packaging & Printing, Apparel, Agriculture, Rubber & Plastics, and Automobiles & Motorcycles.

 

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