Are Malaysians Ready for DFTZ Malaysia?

For a start, the digital marketing economy is not just an element of the genuine economy. It is among the crucial underlying elements of the real economy that serves as both driver as well as catalyst. This is accomplished with the utilization of innovation which crosses all markets, product or services.

For business, the key to success in the digital economy has changed. Change in the world of the digital economy right now is important, not only for progress, however even survival. Innovation has actually ended up being such a force of disruption in which the landscape of whole markets alter in the blink of an eye, and does so constantly.

Business that avoid this modification, or are not active enough to move with the tide will be sunk. Yet once again such modification provides chances for brand-new and eager business to harness and lock upon. Consider well the modifications at hand and choose how to take advantage of the change for growth.

In upcoming commentaries, I will discuss the current patterns and innovations readily available today, and how using a few of today’s most innovative tools opens a world of business opportunities for local business.When MSC Malaysia was first formed in 1996, the main purpose was to push the advancement of Malaysia’s ICT (information, communications and technology) segment.At that time, the Online world had yet to completely set off and cellphones were considered a luxury.

Fast forward to today and the world has actually progressed to make use of the digital economy where the rules have actually altered and continue to do so, at warp speed.

With such changing situations, the Digital Malaysia national agenda was developed to draw upon the big prospects produced by the digital world to harness the nation’s ICT abilities.

In short, it has to do with building on a dynamic domestic ICT market, transformative use of digital solutions by federal government, companies and people, in addition to the consistent nurturing of robust allowing ecosystem. Customer experiences have actually been changed by digital comfort. Online retail is well on its way to form the base of private consumption although some e-commerce business in the online retail space are amongst the most important business worldwide.

Assistance from the Ministry of International Trade and Industry suggested that e-commerce contribution to GDP stood at around 5.8% in 2016, far listed below China and United States’ particular contribution at around 21% and 35% each.

Based upon a customer questionnaire report by PwC in 2016, 48% of Malaysian users were apparently making purchases online on a regular basis, dragging South-East Asia’s and China’s average participant study rate of 55% and 91% respectively.

The goal of Digital Malaysia is targeted at making it possible for the nation’s digital economy so that Malaysians and our nation’s companies can develop within this brand-new business environment.

Digital Free Trade Zone Defined

First of all, let us define what is DFTZ?

According to Alibaba Group executive chairman Jack Ma, who was speaking at the launch, Malaysia’s DFTZ will be the first outside of China and is meant to allow SMEs (small and medium enterprises) and “the younger generation”, as Ma puts it, more access to global markets by lowering trade barriers.

Under the DFTZ, the plan is to establish an e-fulfilment hub, which is a logistics hub in close proximity to the Kuala Lumpur International Airport (KLIA) which will function as a centralised customs clearance, warehousing and fulfilment facility for Malaysia and the region, to speed up clearance for imports and exports.

Where will DFTZ be?

Bandar Malaysia – The DFTZ will also see the creation of a new Kuala Lumpur Internet City (KLIC) in Bandar Malaysia.

The KLIC aims to house 1,000 internet-linked firms and 25,000 tech professionals, by taking up five million sq ft feet (464,515 sq m) built over 15 years.

Within Bandar Malaysia, Alibaba will also be occupying 500,000 sq ft (46,451 sq m) for the setting up of small businesses.

Prime Minister Promise – to Cut Internet cost by half and double the speed currently to equipped Malaysians going into e-commerce by 2018.

3rd wave of IT change

From a business sector point of view, the digital economy represents the 3rd wave of IT transformation with a lot more development, efficiency gains and financial growth than the very first 2 waves.

The very first wave was the automation of procedures which saw performance boost considerably.

The 2nd wave represented the Web economy, and connection in between business and clients, improving how we interact and negotiate.

Now with the world experiencing the 3rd wave, we now have 3 times the financial opportunity through the digital economy than exactly what we have actually seen over the last Twenty Years.

By 2020, the overall size of the digital economy is approximated to become US$ 90 trillion.In today’s connected world, Malaysia and our business have the option to further leapfrog in advance over other nations if we have the ability to reimagine our organisation designs and proactively develop to remain pertinent.

My Personal Thoughts About DFTZ

I don’t think it will grow and benefit Malaysians everywhere. Yes it might create more jobs temporarily to fulfil those that are new and immediate needs but in the long term it will be useless.

1. What happened to Cyberjaya? The so called Silicon Valley of Malaysia? After so many years, MaGIC is the probably only centre that is active and more like a hub for start ups rather than the silicon valley of the East. Will Bandar Malaysia suffer the same fate? I am not going into politics, but why Bandar Malaysia? Why we need a new place when we already have Cyberjaya or Putrajaya? Since it is going to be Internet based E-commerce, why want everyone to gather in one location? Isn’t e-commerce means you can start and handle a business everywhere?
2. The offer of non tax up to RM1200. How can local cope when most of the products are imported from China? Will China want anything from us? I meant at one glance, the warehouse that will be built, will be used as China good surplus and a dumping ground for China to put their goods here since they will be no charges, and only after it is out certain tax will be implemented. To Malaysians in general, yes probably I will be happy that I can order direct from China at a much discounted rate. Local retailers and shopping malls all over the world are already suffering due to economic change and the way business is done online; and I believe even local shopping ecommerce will suffer due to the inability to compete in terms of pricing. What is the impact of the economy when money is going out from the country in the long term? Have any studies been done about these?
3. Our government is proud that in 4 months they manage to launch DFTZ. Yes Malaysians are known to be first and fast and also sometimes furious but we have the ability also to enjoy spending money and lots of money without even thinking of the longer term effect. Case in point Cyberjaya again. Our fundamental of Internet is our speed is so slow and so expensive and this is big hindrance. Government should open up more market share for other players to come in rather than be dominated by TmNet Unifi or other few major suppliers.
4. Enforcement is bad. Look at our custom clearance. Many new things are coming in from all over the world and some of them are not even categorized. Red tape is slow and to register things online is tedious and takes time. I remember importing cosmetics overseas from USA to sell online in Malaysia. It took months to get license, pharmacist license and there is no clear instructions how to do things effectively. But when comes to raiding business, stalling at customs, these are what we are famous for.
5. People are not trained. Yes, we can have the system, the best idea but look at our delivery system. If you are e-commerce in Malaysia you will know how bad and unreliable  our Pos Laju works. Package gets missing, tracking gone and worst still, no accountability when things goes wrong. And we Malaysians we tak ada apa attitude always forgive and let go and move on. On average, China logistic person can deliver average of 300 packages a day. Guess how many parcels can a Malaysian deliver on the same day? China takes pride in their job; Mr Zhang makes the analogy to Foxconn factory workers who build Apple’s iPhones. “China’s logistics companies are not just cheap. They are also efficient and fast,” he says. Ecommerce relies on these super-cheap delivery services. Delivering a package overnight in most locations costs Rmb10-13 ($1.50-$2) This is example how China works; He says he is only able to return home to his wife and child once every three months due to the workload. Wu Zhangcai, a wiry 23-year-old, who like Mr He hails from Guizhou at the southern end of China, is more typical — he returns home only at new year. No Malaysians will work that hard meaning we will not be able to cope with the technology and system.

Overall, I feel DFTZ is too rushed a project. More planning should be put into, calling experts all over the country to give their thoughts and think tank. Rather than implementing it then only start finding experts to figure out how to work. Remember a jigzaw puzzle is created by jumbling up the main big picture, not the other way around. Right now, the pieces is created and we have the big picture (DFTZ) but many do not know how the exact image will turn out.

This is written by Charles Gregory, the CEO of DMC.