Unlocking growth in Malaysia’s export economy through e-commerce - MIDA | Malaysian Investment Development Authority
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Unlocking growth in Malaysia’s export economy through e-commerce

Unlocking growth in Malaysia’s export economy through e-commerce

12 May 2021

E-commerce is recognised as one of the thrusts that will play an imperative role in charting a path towards economic recovery

Last year was one of the most challenging seasons for Malaysian economy as the country navigates through the Covid-19 pandemic. Due to global economic challenges and border closures, the country’s GDP recorded a -5.6% growth.

However, with the rollout of Covid-19 vaccinations globally and locally, we can look forward to emerging from the worst of this health pandemic and transitioning into a recovery phase.

This is an opportune time for us to find sustainable ways to future-proof ourselves, as well as to strengthen our social and economic models.

The Malaysian government has already made great strides in this direction with the recently launched MyDigital initiative and the Malaysia Digital Economy Blueprint.

This plan is imperative to the nation and the rakyat as it focuses on accelerating the country’s progress as a technologically advanced economy while ensuring that no Malaysian gets left behind.

E-commerce, for one, was recognised as one of the thrusts that will play an imperative role in charting a path towards economic recovery.

E-commerce provides level playing field for small businesses

Historically, the global trading system and institutions have focused on large enterprises, as they were the only entities with the capacity and resources to utilise global supply chains and markets.

However, in recent years, barriers to accessing larger and more robust markets are receding and small businesses and entrepreneurs are beginning to leverage technology and global marketplace platforms to reach consumers in new ways.

E-commerce platforms like eBay are allowing small businesses, and even micro-businesses, to open with minimal start-up costs and compete in global markets.

This is possible because technology, and specifically platforms, has dramatically reduced the cost of distance. What is perhaps most significant is that this ability to access global market opportunities is available to small and micro businesses in advanced and emerging economies, thus making it a more inclusive model of trade than the more traditional models of trade.

Going online during Covid

In the last one year, many brick-and-mortar retailers took their businesses online to mitigate the negative impact the lockdowns had on them and to adapt to the shift in consumer behaviour. This resulted in exponential growth in the e-commerce sector.

In 2020, eBay South-East Asia launched an e-commerce accelerator programme, “Global 24/7”, to guide businesses to set up their global online business more quickly and export their goods globally.

Within a period of three months, more than 2,000 businesses applied and received training on global selling best practices to start their global export business.

This has given the opportunity for Malaysian small and medium enterprises (SMEs) and micro SMEs (MSMEs) to keep their business up and running with the income through selling online.

As the Malaysia Digital Economy Blueprint rightfully sets forth, these SMEs and MSMEs will play a crucial role in realising the full potential of the digital economy which will contribute to the country’s GDP.

Bridging the divide between industries and global marketplace

In 2020, Malaysia’s total exports amounted to RM980.98 billion and manufactured goods contributed up to 86.4%. SMEs in the manufacturing sector contributed up to 34.6% to the total sector’s GDP.

This comes to show that there is a sizeable demand for Malaysia’s manufactured products in the global marketplace and SMEs are in a strong position for further growth in the industry.

The clarion call now would then be for these SMEs to harness the opportunity for cross-border trade in a global marketplace through e-commerce.

On eBay’s platform, Malaysia is recognised as a manufacturing hub for the “Automotive” and “Furniture” product categories because of the volume of the exports by SMEs and MSMEs. The four destinations Malaysian SMEs in these product categories predominantly export to are the US, the UK, Germany and Australia.

By accessing eBay’s marketplace, Malaysian manufacturers currently onboard have been able to directly access consumers in over 190 countries. There are 185 million active buyers on eBay, representing a far larger pool compared to Malaysia’s population of 32 million.

Steps to be taken

The first step in this direction would be to double down on the efforts of supporting SMEs and MSMEs to take their retail businesses online.

Entrepreneurs who are new to e-commerce require guidance on setting up their stores online and on digital marketing strategies as well. Incubator programmes play an important role at this juncture to help grow these aspiring entrepreneurs.

Similarly, the support has to be extended to SMEs which are already in the e-commerce space by scaling their businesses to unlock more growth in the global marketplace. This would require a deeper understanding of the barriers they face and finding solutions to overcome them.

As an example, many Malaysian SMEs new to global e-commerce are unfamiliar with export shipping documentation and are not able to access competitive shipping rates.

The responsive action eBay took to support this was to develop an in-house shipping platform, SEAPaSS, that guides sellers in export declarations while linking up with global shipping partners to offer rates at discounted prices to kickstart SMEs’ international selling journey.

Beyond the aforementioned points, the more important change that has to happen is the change in one’s mindset.

Many a time, the barrier to taking the first step towards digitising retail businesses is the fear of complexities in the e-commerce space, which stems from not having adequate information and understanding.

An inspiring anecdote about entrepreneurs taking their business online is that of a 65-year-old man who operates from a humble watch shop in Johor Baru.

Uncle Peter has been repairing and selling watches from his brick-and-mortar shop for about 20 years, until he realised he needed to sell online to sustain and grow his business.

He took the opportunity to start his shop online on eBay and learned the ropes of the e-commerce trade. Today, Uncle Peter is one of the top sellers in the product category for Malaysia.

In an increasingly borderless and seamlessly connected world, e-commerce is the new form of cross-border trade that is transforming the global economy.

It will be one of the catalysts that propel our Malaysian economy to recovery and towards building the country’s profile as a regional digital economy hub.

There is also this unique opportunity to create economic inclusivity with cross-trade via global marketplaces like eBay, because Malaysian SMEs and MSMEs now have the opportunity to participate in global trade.

The goal is to unlock Malaysia’s full potential in e-commerce by leveraging the strength of the manufacturing industry as we aspire to be an economic powerhouse in Asean.

  • Tam Yong Sheng, head of cross-border trade business development at eBay South-East Asia.

Source: The Malaysian Reserve