SMEs get a leg up in Malaysia’s DFTZ

Rachel Turner | fusionex |

Even China’s wunderkind billionaire Jack Ma was amazed at how quickly Malaysia set up its Digital Free Trade Zone (DFTZ), complete with the 1,900 enterprises needed to start it up.

Promised as the best thing to happen for Malaysian small and medium enterprises (SMEs) in a long while, the DFTZ is seen as a way for small companies to ride on the coat-tails of Alibaba Group Holding Ltd — one of the world’s biggest tech companies — and reach markets they usually would not otherwise.


“With DFTZ, small businesses can use the digital way to sell and buy things. They can also buy global and sell global,” said the Alibaba founder and executive chairman at the launch early this month.

SMEs will mainly see the benefit of easier customs clearance, currency conversions, as well as a dedicated hub to send and receive goods at the DFTZ’s e-fulfilment hub being built near the Kuala Lumpur International Airport (KLIA) in Sepang.

Officially to be known as the “KLIA Aeropolis DFTZ Park”, the hub is expected to double Malaysia’s air cargo volume to 1.3 million tonnes a year within 10 years.

This can be achieved because Alibaba plans to make Malaysia its regional hub that will be part of Ma’s Electronic World Trade Platform.

“The KLIA Aeropolis DFTZ Park will optimise border clearance and handling from six hours to three hours, with 90% service level agreement and improve cargo terminal operations from four hours to 90 minutes,” said Prime Minister Datuk Seri Mohd Najib Razak at the launch.

Another component of the DFTZ will have nothing to do with cargo, and will be physically located at its services hub being built as part of the Bandar Malaysia project in Sungai Besi, Kuala Lumpur.

The services hub is planned to be a creative and conducive environment where startups can be created and prosper.

Taken together, the two components are expected to make huge contributions to the economy.

Bank Islam Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the DFTZ and its network will enable Malaysian SMEs to expand and tap into a larger market, and hence, increase revenues.

“The government will benefit from all this activity in both tax and non-tax revenues, while at the same time, creating more high-skilled jobs and using state-of-the art technology which can be gross domestic product-accretive in the long run,” he said.

“Implemented properly, the whole project will produce more Malaysian entrepreneurs as a side effect.”

The first project at the satellite services hub will be the Kuala Lumpur Internet City (KLIC) which will be developed through another strategic partner, Catcha Group.

The KLIC will be the centre for creating and marketing Internet-related services specifically for the South-East Asian market.

It will group together companies that would provide a complete eco-system for companies to create, develop and market products for the Internet and e-commerce platform.

“DFTZ will encourage the development of more startups, as well as SMEs that focus on technology and the digital or mobile sector,” an analyst said.

“DFTZ also improves our local technology, products and services as there will be a healthy competition and accessible business knowledge for them as the result of technology.”

Sunway University Business School economics Professor Dr Yeah Kim Leng said its close connection with a US$400 billion (RM1.67 trillion) company will virtually ensure that DFTZ will be successful.

“DFTZ will act as a regional distribution hub for Alibaba, becomes part of its logistic supply chain to the e-commerce sector which will encourage companies from Malaysia and China.

“Our local companies will leverage on this platform provided by Alibaba, to reach the world markets,” Yeah said.

He said the tough pre-requisites to become a DFTZ-registered company will ensure that those companies gain a valuable branding standard that is accepted globally.

Datuk Seri Ivan Teh – Fusionex
We believe this initiative marks the beginning of a revolutionary way to perform trade regionally and globally, at speed and at scale, says Teh (Pic by Ismail Che Rus/TMR)

Meanwhile, Fusionex Group CEO Datuk Seri Ivan Teh said the e-services platform will facilitate trade and allow transactions to take place faster, more cost effectively, more reliably and more efficiently.

“This visionary initiative by the Malaysian government and Alibaba will pave the way to a seamless digital trade platform that will help remove unnecessary barriers, reduce costs and minimise or avoid unnecessary delays and encumbrances.

“We believe this marks the beginning of a revolutionary way to perform trade regionally and globally, at speed and at scale,” he said.