Tapping Malaysia's potential as a regional e-hub to accelerate recovery and growth - MIDA | Malaysian Investment Development Authority
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Tapping Malaysia’s potential as a regional e-hub to accelerate recovery and growth

Tapping Malaysia’s potential as a regional e-hub to accelerate recovery and growth

07 Aug 2021

E-commerce and the digital economy offer inclusive and exponential export opportunities for micro-entrepreneurs and small businesses

As with almost every economic sector, the Covid-19 pandemic has significantly impacted domestic and international trade flows. One silver lining for Malaysia’s economic recovery is the country’s capability as a regional e-fulfilment and transhipment hub for e-commerce, which can enable business growth acceleration.

The monumental growth of e-commerce over the past year, driven by the pandemic and major shifts in consumer behaviour, has led to an exponential increase in market size for the sector. This is seen not not only in the country but worldwide.

Global e-commerce revenue is expected to hit US$2.7 trillion (RM11.4 trillion) this year while market volume for e-commerce is projected to reach more than US$3.4 trillion by 2025 (source: Statistica).

On the home front, Malaysia’s e-commerce market is expected to achieve a gross merchandise value (GMV) of US$30 billion by 2025, according to the e-Conomy SEA 2020 Report by Google, Temasek and Bain & Co.

Given the borderless nature of online shopping, these numbers represent the massive opportunities in cross-border trade available to Malaysian businesses through e-commerce.

However, according to the World Bank, while e-commerce has opened up more opportunities for developing countries and small and medium enterprises (SMEs), large export-oriented firms and developed nations have continued to dominate as they adopt e-commerce at a higher rate than SMEs. This is largely due to barriers such as logistical costs, payment gateways as well as challenges in navigating the rules, regulations and intermediaries of various countries.

Breaking down barriers and facilitating inclusive global trade

The Malaysian government has made great strides in levelling the playing field for SMEs, with initiatives such as the National e-Commerce Strategic Roadmap (NESR) 2.0, MyDIGITAL and the Malaysia Digital Economy Blueprint.

One key strategy is to establish Malaysia as a regional and global e-fulfilment and transhipment hub to facilitate cross-border e-trade in the region while driving the exports of Malaysian SMEs via e-commerce.

In support of Malaysia’s ambitions and growing digital economy, Alibaba Group Holding Ltd, in partnership with the government, launched the eWTP (Electronic World Trade Platform) in 2017. The platform delivers comprehensive support through five key pillars: e-commerce (domestic and cross-border), mobile payment, cloud computing, smart logistics and training of human talent.

An Alibaba-led initiative, the eWTP envisions a more inclusive way to extend the benefits of globalisation. Endorsed by the G20, the platform brings together stakeholders from the private and public sectors to help break down barriers to international trade.

The platform has created eWTP hubs around the world that together form a global network for cross-border, digitally-powered trade. There are currently nine hubs – four in China (Hangzhou, Hainan, Hong Kong and Yiwu), as well as in Malaysia, Thailand, Ethiopia, Rwanda and Belgium.

Reflecting Alibaba’s mission to “make it easy to do business anywhere”, the eWTP aims to leverage technology to empower traditionally disadvantaged sectors such as micro and small businesses, young people and women entrepreneurs, so they can benefit from and contribute to the growing digital economy.

One example is China’s access to the Malaysian durian market. Alibaba’s assistance as part of the eWTP initiative helped facilitate the export of frozen whole durians, which are in high demand among Chinese consumers.

Strengthening Malaysia as a regional trade and transhipment hub

A joint venture of Malaysia Airports Holdings Bhd and Alibaba Group, the Cainiao Aeropolis eWTP Hub is a state-of-the-art 110,000 sq m e-fulfilment and smart logistics centre.

Through the hub, micro enterprises and SMEs have easy access to cargo terminal operation, warehousing and sorting centres. More importantly, they have the support to ensure good customer experiences as the hub facilitates 24-hour delivery within Malaysia and has the ultimate goal of 72-hour delivery to the rest of the world. The facility provides on-site cargo-terminal handling and services, with the assistance of Malaysian Customs staff to efficiently process cargoes and support trade.

Beyond trade, eWTP Malaysia also played a critical role as a regional transhipment hub at the start of the pandemic. At a time when borders were closed and global logistics networks were disrupted, the hub enabled rapid distribution of essential medical supplies to countries within the region such as Indonesia, Timor Leste and the Philippines. eWTP has continued supporting recovery with increased charter flights transporting goods and medical supplies between the Kuala Lumpur International Airport and China.

“Cainiao Aeropolis eWTP Hub in Malaysia plays a strategic infrastructural role in facilitating cross-border trade for SMEs and improving overall consumer experience for imports and exports. With the rise of a global digital economy, we believe that smart logistics will continue to play a pivotal role in helping SMEs access a wider global market and improving their market competitiveness,” says Eric Xu, general manager of Cainiao Smart Hub.

Empowering Malaysian micro-businesses and SMEs for growth through e-commerce

Through the eWTP, entrepreneurs and SMEs can quickly and easily gain access to domestic and cross-border e-commerce opportunities via various Alibaba business-to-consumer (B2C) platforms such as Tmall, Tmall Global, Kaola, Taobao Global, Freshippo and Lazada.

“We were looking for robust sales channels around the world for Safi, and after getting on board Alibaba’s Tmall Global platform, the brand very quickly reached large numbers of Muslim consumers in China. To date, Tmall has given us a lot of support, including knowledge transfer and skills training,” says Kaisaeng Tan, head of marketing at Wipro Unza China

“The Chinese market has become a new growth point for Safi’s overseas businesses. We are extremely confident and excited about it.”

Furthermore, by participating in major shopping events such as Malaysia Week and 11.11 Global Shopping Festival, Malaysian merchants have enjoyed record sales results. For example, the third annual Malaysia Week in 2020, which was expanded from one week to 10 days, recorded a surge of 95% in GMV from the previous year.

During the 11.11 Global Shopping Festival last November, sales of Malaysian products grew by 20% from the year before. Participating for the first time, Safi recorded an impressive sales growth of 33% at the 11-day event compared with the entire month of October.

Meanwhile, business-to-business (B2B) players can leverage Alibaba.com – the world’s largest online wholesale platform – as a localised one-stop online trade service to sell to international buyers in more than 200 countries. Major export markets include the US, the EU, the Middle East and other parts of Asia.

Take Amutha Subramaniam, founder and managing director of Her’s Manufacturing. When sales revenue for the domestic market came to almost a standstill during the first Movement Control Order (MCO 1.0) period and supply chains were disrupted, the company was able harness the export market through Alibaba.com to chalk up with revenue of RM700,000 in May 2020.

“Alibaba.com is a trusted platform to embark on global business opportunities, especially for B2B trade with small minimum order quantity (MOQ). I also appreciate the training sessions provided. And now that we have been awarded Gold Supplier, it has brought in many new buyers to our business,” says Amutha.

Malaysian SMEs can also take advantage of Alibaba Cloud’s two data centres to harness the power of world-class cloud computing to scale their businesses at a lower IT cost.

Additionally, the eWTP has promoted payment facilitation for businesses on Alibaba’s platforms – through the Touch ‘n Go eWallet and Alipay for B2C sellers, as well as trade assurance services to protect both buyers and sellers in the event of disputes for B2B merchants.

Commitment to providing knowledge transfer and skills training support

To further empower Malaysian SMEs, Alibaba provides knowledge and skills-building support for entrepreneurs, business leaders, students, lecturers and policymakers through various training programmes. For instance, Malaysian businesses can leverage programmes initiated by Alibaba Business School such as the Global Digital Talent (GDT) and Alibaba Netpreneur Training programmes as well as the eFounders Fellowship to harness e-commerce channels and tools to accelerate digitalisation and global e-commerce opportunities.

Furthermore, Lazada, Alibaba.com and Alibaba Cloud provide specific training programmes to help businesses get on board and effectively use their platforms. Alibaba Cloud, for example, has conducted training for more than 15,000 Malaysian entrepreneurs, educators and policymakers.

In a globalised world that is still trying to recover from the pandemic, e-commerce holds the key to cross-border trade and recovery for many industries and nations. Leveraging the eWTP and Alibaba’s robust ecosystem can help stimulate economic recovery while reinforcing Malaysia’s position as a regional trade and transhipment hub.

eWTP was built with a vision to connect different ecosystems. It has allowed SMEs and micro-entrepreneurs to easily access strategic and logistical means to thrive in the global digital economy alongside large corporations.

Being the first eWTP hub outside China, Malaysia has set an example of how nations can innovate and create more equitable outcomes for SMEs and large enterprises alike by defying the unilateral approach taken by several countries to grow global trade.

Source: The Edge Markets