The SME Association of Malaysia is urging the Federal Government to prioritise disbursement of incentives for local e-commerce enabler companies over foreign ones proposed under the Short-term Economic Recovery Plan (PENJANA).
Its president Michael Kang Hua Keong emphasised that, with the booming e-commerce market since the movement control order (MCO) was implemented, greater importance should be placed on local players to further drive the domestic e-commerce industry forward.
Earlier this month, Prime Minister Tan Sri Muhyiddin Yassin had announced that the government would be collaborating with private companies to run a ‘Shop Malaysia Online’ campaign.
Its intention is to further encourage online shopping with promotional codes and various discount vouchers being provided through e-commerce platforms. Under this campaign, the government would allocate RM70 million to be matched by e-commerce platforms, with the campaign running from August to September 2020.
Kang said that, although the government should be commended for this initiative, “execution is vital as the scheme could, paradoxically, end up being a ‘double-edge sword’ that could also kill local e-commerce players due to the overwhelming strength of foreign ones.”
“To put it bluntly, our local e-commerce enabler companies are not as strong as foreign e-commerce players operating in Malaysia with the latter’s vast financial war chest, cross-border expertise and technologies. That said, Malaysia also has a strong ecosystem of local enablers including few companies that have been internationally recognised,” said Kang.
“Hence, the ‘Shop Malaysia Online’ campaign is an opportunity for local players to catch up with these foreign e-commerce giants.”
Meanwhile, Malaysian Cross-Border e-Commerce Association president Chin Chee Seong said that the association does not endorse foreign e-commerce players being entitled to such incentives.
“It has come to the association’s knowledge that foreign e-commerce players have already been allocated the financial incentives prior to local industry players being engaged on this matter,” said Chin.
“If foreign e-commerce platforms were entitled to the financial incentives, it would mean that Malaysian taxpayers are effectively funding their operations to penetrate Malaysia’s e-commerce industry even further at the expense of local players,” he added.
“By providing financial incentives to these foreign players, Malaysia is effectively subsidising foreign traders and their vast resources, including global e-commerce giants, to compete with our local SMEs.
“Should this materialise, Malaysia is shooting ourselves in the foot with this move being devastatingly counter-productive with what PENJANA is trying to achieve,” emphasised Chin.
Chin who is also a former Chairman of PIKOM (Malaysia’s National Tech Association) recommended that, with the execution plan being finalised, the local e-commerce industry players including associations be consulted for a pragmatic approach to ensure a ‘win win’ situation for both local players and Malaysian consumers.
Chin suggested for an approach that mirrors the success of #MYCYBERSALE, an annual national initiative managed by PIKOM in collaboration with MDEC which has already been successful for six years running.
“#MYCYBERSALE has been very successful in catalysing the growth of the national e-commerce industry,” said Chin.
“The operational model and brand is already there, and Malaysia does not need to reinvent the wheel for the PENJANA e-commerce scheme.”