More last-mile infra investments needed


MALAYSIA needs more investments in last-mile infrastructure in order to further develop its e-commerce sector, said The Economist Intelligence Unit global chief economist and MD Simon Baptist (picture).

He said although infrastructure in Malaysia is generally adequate, the weaker integration of last-mile delivery between local and international supply chains would result in traffic congestion and lower productivity.

“Hence, a better integration of last-mile delivery with supply chains is needed to promote efficient movement of goods,” he said in a panel discussion after presenting on the “State of E-commerce in South-East Asia and Malaysia” organised by Lazada Malaysia in Kuala Lumpur yesterday.

Baptist also said the projected increase in Internet access rates is expected to deepen the pool of potential online shoppers in Malaysia, which could help boost the demand in the e-commerce sector.

“Support from the government in terms of allocation of funds to develop communication infrastructure and broadband facilities could drive more than 90% Internet penetration rate in the country by 2020,” he said.

Baptist added that the focus should be on developing awareness on e-commerce and capacity development among Malaysian small and medium enterprises (SMEs).

“Awareness on e-commerce and capacity development among Malaysian SMEs, along with the support for export capability, will increase the chance for them to benefit. Finally, firms and governments need to continue making it easier to make and pay for small transactions across borders,” he said.

Baptist also said it is important that cross-border compliance procedures are simplified as there is an active promotion of e-trade and encouragement for SMEs to export.

According to Baptist, Malaysia takes about 45 hours for export and 75 hours for import on border compliance, while Singapore appears the fastest among the six Asean countries with about 10 hours for export and 35 hours for import.

“The main motivation for buying via the e-commerce platform is to access products that are not locally available. However, time-consuming custom procedures will be a challenge for SMEs, and would slow down delivery to consumers.

“Another key challenge is that SMEs tend to be insufficiently aware of the import and export procedures. The lack of information makes it difficult for SMEs to take advantage of import and export opportunities,” he said.

Meanwhile, Baptist opined that supply chain will be the biggest impact from the escalating trade war between the US and China.

“Malaysia is in an interesting position here as it stands today. Malaysia is a big supplier of electronic components such as semiconductors and circuit boards, especially into Chinese factories. These will be exported to China to be turned into final goods before being delivered to the US.

“Now, there have been tariffs put upon them in the US, there is certainly chance for Malaysia to move up the value chain and start producing these final products and will lead Malaysia to become more attractive in becoming a more export-based to the US, in particular, due to the tariffs,” he said.

Baptist added that the matter does not bring a direct impact on e-commerce due to e-commerce often not being subjected to the same regulation although it is changing in many countries.

In the meantime, Lazada Malaysia CEO Christophe Lejeune said allowing SMEs to tap into Lazada’s logistics network to facilitate the transfer of goods across countries would create more opportunities for growth in e-commerce along the supply chain.

“Lazada’s commitment to cultivating eight million SMEs by 2030 in Asean-6 will, in turn, open up opportunities for various e-commerce supplying industries to flourish, including logistics, young social influencers, manufacturers and designers, and the cottage industries,” he added.