Malaysia's new digital free trade zone brings opportunities and challenges: Sin Chew Daily

In its editorial on March 28, the paper says that the new Digital Free Trade Zone will help Malaysian businesses further benefit from globalisation, although the digital economy will offer challenges as well as opportunities.

PETALING JAYA (SIN CHEW DAILY/ASIA NEWS NETWORK) - The Digital Free Trade Zone (DFTZ) jointly created by China's Alibaba Group and the Malaysia Digital Economy Corporation (MDEC) will be a future one-stop digital hub of logistics, payment gateway, clearance and data standardisation.

DFTZ has taken its roots from Jack Ma's e-hub concept providing SMEs the necessary infrastructure for global trade and allowing them to "buy and sell globally".

Malaysia's DFTZ will be the world's first digital global trade platform outside China. Ma has chosen Malaysia due to our business-friendly environment and strong government backing while believing that the future digital economy will become the catalyst to spearhead the country's economic development.

Although around 97 per cent of Malaysia's businesses at this moment are either SMEs or micro businesses, they collectively contribute only 37 per cent of the gross domestic product. The government believes that a cooperation with Alibaba will remarkably increase this ratio.

Based on Jack Ma's concept, the digital global trade platform has been specifically designed for young entrepreneurs and SMEs, helping them start their career pursuits and succeed through new technology, and subsequently perk up the GDP to ensure the country's sustained and steady development.

Electronic commerce and digital economy have today evolved into prerequisites for any related businesses, and are the key to success be it for online or offline businesses to fully grasp the needs of their clients and consumers, to keep abreast of the latest knowhow and utilise the acquired data to draw up the right strategies to bring about significant business growth.

DFTZ will allow the country to further benefit from the globalisation trend, while Alibaba's success story is what we should emulate, as its model has made international trades much simpler through the dismantling of geographical and time limitations. We hope that Ma's team and success formula will not only be applied in the running and managing of DFTZ. What we want more is the transfer of professionalism and experiences that will benefit local businesses.

Local businesses have already started selling their products and services to the international market through a variety of channels and ways. The scale is nevertheless still very small, and there is much room for expansion.

With a little help from the DFTZ platform, it is believed that these companies will be able to significantly expand the scale of their international trades.

Another limitation in trade is clearance and inspection, something all online and offline transactions will have to go through. The smooth flow of goods requires close coordination among various departments and institutions to effectuate substantial savings in time and financial costs. In addition, telecommunication network coverage and speed are also key elements to ensure the success of digital trade. The security aspects and convenience of e-payments are decisive factors for the smoothness of these transactions.

Alibaba has been vastly successful in China because of its innovation and resoluteness, along with some external coordination.

Digital economy offers a unique trove of opportunities as well as challenges. As e-commerce has emerged as an inevasible trend of future, it is essential for all offline marketing networks to transform themselves to secure a breakthrough in their business development.

Given the country's relatively small market, it is advisable for the government to also take into consideration the future development of the retail industry while promoting the digital economic model.

But, are our consumers mentally prepared to jump onto the e-commerce bandwagon?

Sin Chew Daily is a member of The Straits Times media partner Asia News Network, an alliance of 22 news media entities.