Malaysia to Outpace Other ASEAN Countries in E-Commerce Growth

Malaysia actually has a very unique position, which explains the interest of regional and global e-commerce players.

March 2017 , by

Compared to other Southeast Asian markets, Malaysia is in the bottom range of e-tail markets in terms of size, yet it is expected to outpace other e-commerce countries in growth significantly. According to our report, "Malaysia's E-Tail Market: The Nurturing Nest for Regional Growth Stories", e-commerce in Malaysia will grow by 23.7% throughout 2016-2021, the highest growth rate compared to other neighboring countries.

E-Commerce Growth in ASEAN

While it is not a large e-tail market, Malaysia actually has a very unique position, which explains the interest of regional and global e-commerce players. Malaysia, as a destination for e-tail investments, is in a very well-balanced position between a now fertile digital environment when it comes to internet penetration, infrastructure, credit and debit card ownership, and a fairly modest cost position, offering attractive conditions for programmer wages, internet bandwidth cost and the cost of logistics in general - as opposed to, for instance, a premium market like Singapore.

With neighbor Singapore being the corporate headquarter for many global firms, the current balance gives Malaysia potentially the role of a Platform Market, where firms can test and scale concepts in a stable multi-cultural environment, before rolling it out to large scale markets such as Indonesia.

Malaysia Becomes ASEAN's E-commerce Gateway

ASEAN nations are currently tending towards the development and use of e-commerce in most of its industries. Moreover, e-commerce also becomes an important part of the Fourth Industrial Revolution, turning as a primary mode of business and trade around the globe. In accordance to this, Commodity Global Trade Sdn Bhd (CGTSB) and Tianjin Commodity Exchange (BOCE) signed a "Cooperation Letter of Intent" as well as the "International Regional Cross-Border E-Commerce Service Provider Cooperation" agreement. Through this agreement, CGTSB was appointed by BOCE as a regional trading platform service provider for Malaysia and other ASEAN countries. The platform will enable Malaysian and ASEAN businesses to enter Chinese market through a safe, secure and efficient digital platform, assisted by BOCE Global platform wishing to leverage on China's Belt and Road Initiative (BRI). Furthermore, the agreement also puts Malaysia on the map as the fifth country in the world to operate this platform outside China, and becomes a gateway for ASEAN.

Aiming 20% Growth in 2020

The government of Malaysia is set to achieve an annual growth rate of 20% in 2020 for its e-commerce industry, an increase from 14.3% growth in 2017. Dr Ong Kian Ming, Deputy International Trade and Industry Minister, also stated that the government is looking to achieve e-commerce industry's contribution to the GDP of over RM100 billion by 2020. The government feels confident to achieve the target as e-commerce and digital economy show new opportunities derived from the technological advances and innovation in Malaysia.

Through the implementation of the National eCommerce Strategic Roadmap and National eCommerce Council, the government of Malaysia will also continue to keep track of the e-commerce growth and development. By December 2018, there were also  5,000 small and medium-sized enterprises that have participated in the Digital Free Trade Zone initiative. Adding to that, the Ministry also aims to align Malaysia's trade strategies and plans with other regional and international markets in order to gain the most potential benefits from bigger access and range.

Gain more insight on our full report, Malaysia's E-tail Market: The Nurturing Nest for Regional Growth Stories

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