Deep dive with Trade Minister, MDEC CEO: What's really behind Malaysia's Digital Economy boom?

AvantiKumar

MITI Minister Dato’ Sri Mustapa Mohamed and MDEC CEO Dato’ Yasmin Mahmood

Photo - (Centre) International Trade and Industry Minister Dato' Sri Mustapa Mohamed and MDEC CEO Dato' Yasmin Mahmood.

 

  In Malaysia, the eCommerce sector - which is considered a vital cog in Digital Malaysia's matrix - was originally slow to take off despite rapidly increasing Internet penetration rates from about 2015, said some industry analysts.

At that time, a mere 5 percent of Malaysian businesses had any form of digital presence, never mind eCommerce capabilities. Also at that time, many businesses in other parts of the world had grown mostly from leveraging digital platforms

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. Analyst firm IDC, during its tracking of the digital economy has presented some predictions of further transformation in the next three years. More recently, Sudev Bangah, IDC's Asean managing director, has emphasised the inevitability of transformation across the region in a Computerworld Malaysia interview.

Drilling down, Malaysia's International Trade and Industry minister Dato' Sri Mustapa Mohamed and national ICT agency Malaysia Digital Economy Corporation (MDEC) chief executive officer Dato' Yasmin Mahmood recently offered some insights into what is driving the local eCommerce sector.
 
Why Digital Malaysia will continue to boom

"eCommerce is growing rapidly in Malaysia as more people are getting connected to the Internet and it has become extremely important in Malaysia's digital economy agenda," said the minister, who is also the chairperson of Malaysia's National eCommerce Council (NeCC). "SME development will remain as the key focus area under the Government's digital transformation agenda."

The minister was speaking at the National eCommerce Forum (26 July 2017). The event, he said, was another important milestone in the Government's efforts towards driving the national digital economy agenda.

Earlier growth faced certain hurdles that prompted government and its various digital economy agencies to make increased efforts to encourage growth such as easing   cross-border trade.

"The theme of 'Embracing Digital Transformation' manifests the Government's efforts to reach out to the eCommerce players along the value chain, particularly SMEs, on the importance of embracing digitalisation for their businesses to sustain themselves amid the challenging economic environment," he explained.

Incidentally, this particular forum was organised jointly by the members of the NeCC, which includes 25 ministries and agencies. Since its inception in December 2015, the NeCC has initiated various activities and events to spearhead the development of the eCommerce sector in Malaysia.

The Hub vision

Another part of the jigsaw is the almost ubiquitous 'hub' vision in Malaysia's digital economy strategising. MDEC's Dato' Yasmin explained how the eCommerce version of concept worked.

"The vision is to nurture an ecosystem for Malaysia to be a 'best of class' logistics hub that will serve the ASEAN market for all global brands, as well as all for global market places," she said.

Under the government's 'National E-commerce Strategic Roadmap,' which aims to double Malaysia's eCommerce growth rate and reach a GDP contribution of RM211 billion by 2020, MDEC has been driving efforts to encourage industry growth in this sector.

Most recently, there has also been the establishment of the Digital Free Trade Zone (DTFZ), which is a collaboration between MDEC and China's Alibaba Group headed by Jack Ma. Ma has also been appointed as Malaysia's Digital Economy Advisor. [See - Computerworld Malaysia's "Deep Dive with Jack Ma on Malaysia and the Digital Silk Road"]

"It is also about empowering small and medium enterprises (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 said.

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

The SME card

In a panel discussion held earlier (pic below), SME Corp CEO Dato Hafsah Hashim said: "In a survey which we conducted in Q3 of 2016, we found that 25.7 percent of SMEs said that they are already selling online. In the first quarter of this year, that figure increased to 27.2 percent of which 15.6 percent are already exporting online, which is a good start.  Now, what we want to do is double that."

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