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Jack Ma's 'Dream Project' in Malaysia and Its Impact On The Local Internet Economy

02 July 2018 | Jeremy Chew

On June 18th, Alibaba Group opened its national office in Malaysia, the first in Southeast Asia. This marks a new chapter in the company’s strategic cooperation with Malaysia, which housed the group’s first overseas electronic world trade platform (eWTP) hub. Its primary focus is to help Malaysian businesses identify global cross-border trade opportunities and provide cloud computing services.

Launching the office was no other than Jack Ma, executive chairman and founder of Alibaba Group. Special guests which appeared at the landmark launch were Malaysia’s newly appointed Finance Minister Lim Guan Eng and Communications and Multimedia Minister Gobind Singh Deo along with Chinese ambassador to Malaysia Bai Tian. Though this attracted much attention from the press, Jack Ma’s morning meeting with the Prime Minister of Malaysia prior the launch was the biggest highlight of the day.

On May 9th, 2018, Malaysia experienced a huge political revamp, dethroning a 61-year-rule from the previous political party. As the new government was formed, it stated that it will review all deals made with China as some were deemed unfavourable to Malaysia in the long term. Included in the scrutiny was Alibaba’s investment into Malaysia with the establishment of the Digital Free Trade Zone (DFTZ) with the previous government.

The DFTZ considered as Alibaba’s flagship project and is part of Beijing’s ambitious infrastructure project (Belt and Road initiative). Aimed to help small businesses and boost eCommerce transactions between Southeast Asia and China. Some quarters feared that it would hurt Malaysian firms rather than benefiting the internet economy as a whole in Malaysia.

A core element of the scheme is an electronic world trade platform (eWTP) which is designed to ease trade between Malaysian and Chinese firms. The online platform, slated to take effect in 2019, will connect online businesses, manage cargo authorizations and assist on customs.

Critics said the Chinese eCommerce giant holds too much control over the process. In fact, the concern mirrors international worries around the Belt and Road initiative. Many experts see it as an attempt by China to construct a massive, multi-national zone of economic and political influence with Beijing at its centre.

In addition to this, the newly-formed Malaysian Government has pledged to review several big-ticket Beijing-backed projects initiated by the former Prime Minister Mr Najib. They are also seeking to tackle its recently-discovered $250 million national debt by the newly appointed Malaysian Finance Minister.

Sources states that Mr. Ma intended to meet Dr. Mahathir, the Prime Minister of Malaysia early June but was unable to do so because of schedule constraints. This is primarily due to the "housekeeping" by the Prime Minister following opposition party’s 14th general election win. Finally gaining an audience with the top minister on June 18, Jack Ma assured Dr. Mahathir that the Chinese company was eager to help Malaysia with efforts to introduce cutting-edge technology to its schools and help local businesses in areas such as cloud computing.

Speaking to the press after the meeting, Jack Ma said “Mahathir does not want Malaysia to be a low-end manufacturing base, like an outsourced assembly line. He wants to have research centres, creative centres and this is what we believe. We think globalisation in the next 30 years is about enabling, it is not about selling.”

In what seems as a successful meeting, Dr. Mahathir posted on Twitter stating, “We had a good exchange of ideas on a wide range of subjects” and confirmed that the DFTZ project would continue as planned.

Will Jack Ma's "Dream Project" Take Off?

To date, over 2,000 small and medium enterprises (SME) has signed on to DFTZ’s online platform to help them market their products to China and to other parts of the world. Karamjit Singh, a thought-leader in the Malaysian internet economy stated people should be more discerning over its claims of helping upgrade Malaysians from a digital skills point and in helping our entrepreneurs expand their markets. In other words, the effectiveness of DFTZ should be gauged by the success garnered by SMEs who signed up for the programme.

“...the litmus test will come after the one-year membership of these SMEs is over. How many of the over 2,000 SMEs will renew their subscription to the Alibaba platform. And don’t get me wrong, I hope the vast majority of them do because that will mean they have extracted value from it and are willing to invest and pay the full fee versus the subsidised fee they paid for their first year” says Karamjit.

According to Google & Temasek, the eCommerce industry in Malaysia is well placed to become a $8.2 billion industry by the year 2025. It is highly encouraging that the Malaysian government has identified the growth potential and has attracted the interest of Asia’s super-successful eCommerce Alibaba. But will they be successful in bringing businesses to the next level and realise its full potential? Only time will tell.

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This article was first published on ValueWalk.

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