Alibaba setting up logistics hub in KL

PM Najib and Mr Ma (holding microphones) launched Malaysia's Digital Free Trade Zone yesterday.
PM Najib and Mr Ma (second and third from left) at the launch of Malaysia's Digital Free Trade Zone yesterday. PHOTO: AGENCE FRANCE-PRESSE

E-commerce giant Alibaba Group will set up a regional logistics hub in Malaysia that is expected to propel small and medium-sized enterprises (SMEs) into the online marketplace.

The "e-fulfilment hub" - a logistics hub with warehousing facilities - will be located within Malaysia's Digital Free Trade Zone (DFTZ) that was launched yesterday by Prime Minister Najib Razak and Alibaba founder Jack Ma.

Datuk Seri Najib said at the launch: "We'll sell your product within the village but you're going to sell to the whole world."

The DFTZ will be overseen by Alibaba and the Malaysia Digital Economy Corporation.

"This is the first hub specifically designed for small businesses and young people," said Mr Ma, who is also digital economy adviser to the Malaysian government.

"If we have more small businesses that means we have more jobs, more middle class.

"That means the country's economy can stabilise and be sustainable," added Mr Ma.

The world's largest retailer yesterday also inked four memorandums of understanding with Malaysia.

They involve a logistics hub with centralised Customs clearance to speed up imports and exports; an online cross-border trading services platform linking Malaysia directly to China's Hangzhou e-commerce free trade area; cooperation in e-payment and financing; and developing talent through training and support for the digital economy.

The logistics centre, to be based at the KLIA Aeropolis - a new development focusing on air cargo, logistics, aviation and aerospace near Kuala Lumpur International Airport - will be led by regional e-commerce firm Lazada and Chinese logistics firm Cainiao.

Alibaba has stakes in both Lazada and Cainiao.

Alibaba chief executive Daniel Zhang touted the collaboration as a long-term plan.

Said Mr Zhang: "In 20 years, we want to serve two billion consumers around the world, create 100 million jobs, and we want to serve 10 million small profitable businesses across our platform."

Observers lauded Alibaba's tilt towards Malaysia.

Affin Hwang Capital analyst Aaron Kee said: "It gives Malaysia a competitive advantage with a faster turnaround, and given its leverage in sea and air trade, your goods can come in, be placed in storage and shipped out speedily."

The DFTZ's physical spaces are its logistics hub and a satellite hub, known as Kuala Lumpur Internet City (KLIC), where regional Internet-related shops are located.

KLIC will be located close to central Kuala Lumpur in Bandar Malaysia - a new development that will house the terminus for the planned High Speed Rail link between Singapore and Malaysia.

Meanwhile, the DFTZ's virtual zone consists of its digital services platform. China's third-party online payment platform Alipay collaborates with Malaysian banks CIMB and Maybank to allow Chinese tourists to make e-payments.

Correction note: The picture caption has been edited for clarity. We are sorry for the error.

A version of this article appeared in the print edition of The Straits Times on March 23, 2017, with the headline 'Alibaba setting up logistics hub in KL'. Print Edition | Subscribe