Mustapa: 10,000 SMEs in DFTZ by year-end

By P PREM KUMAR / Pic By AFIF ABD HALIM

The government targets 10,000 Malaysian companies to partake in the Digital Free Trade Zone (DFTZ) project.

The DFTZ, which was launched in November last year, commenced with the participation of 1,998 local companies — all of them are small and medium enterprises (SMEs).

International Trade and Industry Minister Datuk Seri Mustapa Mohamed (picture) said more Malaysian companies are benefiting from the Alibaba Group Holding Ltd platform, as it expands the export market for local products.

“The local companies do not only export to China, which is the general perception when it comes to Alibaba, but utilise the DFTZ platform to export globally.

“We are already seeing success stories which include traditional musical instruments, food and beverages, as well as services,” he told reporters after launching the Malaysia Digital Economy Forum yesterday.

Mustapa said the government, through Malaysia Digital Economy Corp, is currently negotiating with other e-commerce giants apart from Alibaba to participate in the DFTZ.

The expansion of platform providers will enable Malaysian companies to benefit most from the DFTZ, against the perception that the project will only allow heavy influx of Chinese products into Malaysia and suppress the local SMEs.

“We are expanding the DFTZ to beyond Alibaba… taking on potential overseas export by Lazada via the DFTZ and (we are) also talking to Aladdin and 11street,” Mustapa added.

“We are confident the DFTZ will be a catalyst to increase the percentage of the e-commerce industry in the country’s gross domestic product (GDP).”

He noted that over a decade, Malaysia’s digital economy has seen exponential growth with some 58,824 online businesses already registered with the Companies Commission of Malaysia to date.

“Latest figures from the Statistics Department also indicate that the digital economy accounted for 18.2% of the country’s GDP in 2016, while the share of e-commerce in the national GDP has increased to 6.1% compared to 5.9% in 2015,” he said.

According to the minister, the current contribution of 18.6% in export by SMEs is still relatively small — considering the sector makes up 98.5% of business establishments in Malaysia.

Mustapa said nine out of 10 business establishments in Malaysia are SMEs, from which 28% of these SMEs have online presence and 15% already use that presence for export purposes.

The DFTZ was an initiative by the government and Alibaba to capitalise on the confluence and exponential growth of the Internet economy and cross-border e-commerce activities.

It was set up to facilitate seamless cross-border trade and enable local businesses to export their goods with a priority for e-commerce. The project has three components: An e-fulfilment hub, satellite services hub and e-services platform.

The government targets to double the growth rate of SME goods exports to reach US$38 billion (RM149.34 billion) by 2025, while creating 60,000 jobs — direct and indirect — via the platform.

The DFTZ is also poised to facilitate US$65 billion worth of goods movement, which includes exports, imports and transshipments by 2025.