DFTZ, an idea whose time has come

Malaysia’s economy is going digital in a big way

YOU cannot resist an idea whose time has come, said Victor Hugo. This is true even for a small nation like Malaysia. When it comes to ambition, size does not matter. The ambitious idea of a Digital Free Trade Zone (DFTZ) took shape in the brickand-motar world at KLIA Aeropolis yesterday when Prime Minister Datuk Seri Najib Razak flagged it off in the presence of Jack Ma of Alibaba fame. Malaysia’s DFTZ in KLIA Aeropolis is the first such zone outside China. Close to 2,000 small- and medium-scale enterprises (SMEs) have signed up to be part of the digital revolution. This is a giant step for SMEs.

DFTZ is a confluence where the brick-and-mortar world meets the virtual world. In this microcosm of DFTZ, global trade can be conducted sans clearance and inspection headaches. And, headaches in commerce cost money, which SMEs can ill afford. But, enticing enterprises, especially the small and medium ones, was not an overnight success story. The government had to lay the foundation through the e-commerce roadmap introduced last year. Its machinery moved with 25 agencies and ministries coming together under the National eCommerce Council to shape this roadmap.

DFTZ offers three distinct benefits: the satellite services hub with end-to-end support and knowledge sharing; e-fulfilment hub connectivity with Alibaba headquarters digitising trading operations; and e-services platform with connectivity to government agencies and businesses. With these facilities, SMEs can ease through complex government regulations to click through to cross-border trading. For SMEs, given their small size and not so big capital, DFTZ, as a regional logistics hub, teems with opportunities. According to one estimate, when DFTZ is fully developed by 2025, the e-fulfilment hub is anticipated to handle and move up to US$65 billion (RM273 billion) worth of goods around the Asean region. Cross-border movement of goods and seamless air connectivity will just be a click away. In this future, our packages will be delivered within 72 hours to Asean countries.

When launching DFTZ in March, Najib said Malaysians were leading the e-commerce market in the region by generating a revenue of US$2.3 billion in 2015. With the flagging-off of DFTZ, Malaysia will serve as an e-fulfilment centre and become the regional hub for SMEs, marketplaces and monobrands. Now that DFTZ has begun its journey with 2,000 SMEs, the question is: what has happened to the rest? Malaysia’s economic engine is driven by SMEs and, to be accurate, 98.5 per cent of businesses in Malaysia are SMEs. An Economic Census on SMEs conducted last year put the number of SMEs in the country at 907,065. Of this, more than 800,000 are in the services sector, and about 48,000 are in manufacturing. Surely, 2,000 is not fully representative of this huge engine of Malaysian growth. The government has made its move, now it is the SMEs’ turn.

Surely, 2,000 is not fully representative of this huge engine of Malaysian growth. The government has made its move, now it is the SMEs’ turn.