Digital trade barriers need to be reduced to maximise returns, says expert


DIGITAL trade barriers at home and abroad need to be reduced in order to maximise future returns, which have the potential to reach RM222 billion in the domestic economy by 2030.

The Hinrich Foundation Digital Trade Report — prepared by Alpha- Beta, a consultancy firm that utilises advanced data analytics for solutions that could be used by businesses and governments — stated that actions in four areas could reduce digital trade barriers.

AlphaBeta engagement manager Dr Konstantin Matthies said it is pertinent for policymakers to address the multiple concerns surrounding digital trade that might stifle its potential.

“Now, on privacy, it is important to safeguard it without limiting the data flow. In order to have this digital trade opportunity, we need to have data flow across borders,” he said at the report’s presentation in Kuala Lumpur yesterday.

He said relevant parties should try to find ways, such as imposing self-regulation in the industry, that could ensure a code of conduct for people to adhere to in terms of privacy.

He added that innovation-oriented approaches to copyright, as well as intermediary liability regulations should also be promoted.

“It is important to address copyright concerns and remove inappropriate content, especially on intermediary platforms, but it is also important to ensure that it is flexible enough to not put a burden on small and medium enterprises (SMEs),” Matthies said.

He said liability regulations should be clear so that no one, whether the user or intermediary, may interpret it in a different way.

“On top of that, cross-border digital trade should not stray into protectionist ways, so that border frictions can be minimised,” he said. Matthies added that digital adoption should be encouraged.

“Affordable and reliable access to the Internet is crucial to ensure that local businesses can take advantage of future growth in digital trade. However, currently, the Internet adoption is showing a mixed image,” he said.

With the low costs for accessing mobile Internet on top of the high take-up rate, the fixed line broadband now has a different view.

Malaysia is placed 41st in the World Bank’s Digital Adoption Index, and is currently offering one of the highest high-speed Internet costs among six Asean countries, which has resulted in lower digital adoption among SMEs.

The report added that a related issue for digital adoption is the continued reliance on cash among businesses.

According to the report, digital trade could create a RM222 billion opportunity by 2030 domestically, while its potential to grow abroad goes up to RM122 billion.

While potential benefits of digital trade are spread across all sectors in the domestic economy, the benefits are expected to bolster the economic value estimates greatly in 2030 for infrastructure, manufacturing, as well as agriculture and food, noting RM51 billion, RM48 billion and RM30 billion respectively.

“Digital trade” in the report was defined as activities in the production, distribution, marketing, sales or delivery of goods and services, both domestically and abroad, supported by cross-border data flow.