Malaysia’s Digital Free Trade Zone goes live with 1,972 SMEs

‍Above image: Screenshot from event video on the Malaysia Digital Economy Corporation’s (MDEC) Facebook page/ Credit: MDEC

Malaysia’s Digital Free Trade Zone (DFTZ) became operational yesterday, in a ceremony officiated by the Malaysian Prime Minister, Datuk Seri Najib Razak and Jack Ma, the founder and Chairman of Alibaba Group. 1,972 small and medium enterprises (SMEs) have joined the DFTZ,

The DFTZ was launched in March 2017. It is an initiative to capitalise on the confluence and exponential growth of the internet economy and cross-border eCommerce activities. It aims to facilitate seamless cross-border trade and enable local businesses to export their goods with a priority for eCommerce.

Speaking at the Go Live event, PM Najib Razak said, “When we have all this technology, and innovation, what happens is that Malaysians can now occupy higher paying jobs. DFTZ is about creating 60,000 new jobs in this area by 2025.”

The DFTZ also aims to double the growth rate of SME’s goods exports to reach US$38 Billion and facilitate US$ 65 Billion of goods movement via the DFTZ (exports, imports, transhipments) by 2025.

Jack Ma praised the vision and leadership of the Prime Minister and how the Malaysian government took away all the barriers to make this happen. He also said that the DFTZ in Malaysia may be the first model for the many DFTZ models to come globally.

DFTZ is operated through a public-private partnership. The Government of Malaysia is the key stakeholder of DFTZ and is supported by other agencies and local key industry players, as well as Alibaba Group.

It has three components: 1) eFulfilment Hub (To help SMEs / businesses in exporting their goods easily, with the help of leading fulfilment service providers); 2) Satellite Services Hub (To connect SMEs / businesses with leading players who offer services like financing, last mile fulfilment, insurance and other services which are important in cross-border trade); and a 3) eServices Platform (To efficiently manage cargo clearance and other processes needed for cross-border trade).

Above image: Screenshot from event video on the Malaysia Digital Economy Corporation’s (MDEC) Facebook page/ Credit: MDEC

“The first one (component) to go live is our logisitics hub with best in class optimised for e-commerce transactions, that are very high volume and very fast paced. The next component that has gone live today is the brain of DFTZ, which is the platform which digitises the whole trade facilitation to make it a very seamless transaction for SMEs to go global and to export. And the last one, I would say most importantly, it is about flagging of the 1,972 SMEs” said Datuk Yasmin Mehmood, CEO of the Malaysia Digital Economy Corporation (MDEC) at the event.

‍ ‍Above image: Screenshot from event video on the Malaysia Digital Economy Corporation’s (MDEC) Facebook page/ Credit: MDEC

The E-Fulfilment Hub has warehouses with the latest technology including sorting, shelving and pick-pack facilities and Light Industrial Units) to allow for minor repair, assembly prior to shipping goods, along with category specific facilities like secure warehouse and temperature controlled storage.

The first phase of the eFulfilment hub will be operated by a private free zone operator and the first phase of the satellite services hub will be operated by a private player, while the eServices platform is developed and managed by the Government of Malaysia.

The first eFulfilment hub of DFTZ is located at KLIA Aeropolis. This is part of the Electronic World Trade Platform (eWTP), promoted by Jack Ma, and is the first such hub for Alibaba outside China. This is being done through a joint venture (JV) between Alibaba's logistics affiliate Cainiao and Malaysia Airports Holdings (MAH), in which Cainiao will hold a 70 percent stake while MAH retains the remaining 30 percent, according to a filing sent by MAH to the stock exchange Bursa Malaysia on Friday.

The first Satellite Services hub of DFTZ, Kuala Lumpur Internet City (KLIC), is in Bandar Malaysia. KLIC will be home to key players within the internet ecosystem to facilitate end-to-end support, networking and knowledge-sharing to drive innovation in the internet economy and the eCommerce industry.

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