Budget 2022: Support Market Access For Made In Malaysia Products

Technology adoption and innovation are fundamental enabling factors that will catalyse growth across all sectors. This year, the Government has announced the Malaysia Digital Economy Blueprint (MYDigital) and 12th Malaysia Plan which both emphasise the importance on nurturing small and medium-sized enterprises (SMEs) and micro-entrepreneurs on eCommerce platforms and promoting cross border trade.

With Budget 2022 scheduled to be tabled, I would like to offer some of my suggestions, specifically in area of cross border trade and investing into our local SMEs that can further boost existing momentum to make the digital economy contribute 25.5 per cent to the country’s gross domestic product (GDP) by 2025.

CAPACITY BUILDING FOR SMEs

SMEs contribute a solid 38.2% of our national GDP with a value added of RM512.8 billion. 98% of employers registered with the Employees Provident Fund are SMEs highlighting their importance in job creation and opportunities to Malaysia.

Last year, we have seen how retailers take their businesses online to mitigate the impact of the pandemic. Government programmes, which have been spearheaded by MDEC, such as Go-eCommerce, eUsahawan, and Penjana have proven to be effective in supporting entrepreneurs expand their business digitally. As such, we hope to see these programmes be continued nationwide to reach more entrepreneurs.

Riding the success of these programmes, it is an opportune time to help the digitally trained entrepreneurs scale their business by tapping into the global markets. These programmes must be in a short-term incubator format where platform experts will hand hold these entrepreneurs to grow their export and eCommerce capabilities until they are confident enough to manage on their own.

It will also be essential for Budget 2022 to include dedicated development funds in helping realise the upcoming National eCommerce Strategic Roadmap 2.0 (2021-2025) to enable trade partners to seamlessly transact using digital mechanisms.

The national MSMEs digitalisation roadmap to drive digitalisation efforts will play an equally important role in strengthening frameworks for MSMEs digitalization process through, inter alia, Digital On-Boarding for Micro Businesses (DigitalNiaga), Digital Transformation Acceleration Programme (DTAP), and Warongku initiatives.

INCREASE MARKET ACCESS FOR ‘MADE IN MALAYSIA’ PRODUCTS

There is a sizeable potential in Malaysia’s furniture industry. In 2019, the furniture sector value stood at RM9.14 billion and RM10.63 billion in 2020. It is projected to rise to more than RM13 billion by year end. This is reflected on eBay’s platform as well where Malaysia is recognised as one of the key manufacturing hubs for Furniture product categories, which have predominantly been exported to United States, United Kingdom, Germany, and Australia.

We ought to expand our horizons to beyond our Southeast Asia markets and leverage opportunities in countries like Europe, the Americas, and Middle East. This is a similar sentiment that has been echoed in the recent Parliament sitting.

As the global community begins to ease the movement restrictions, there are signs of increasing demand for automotive and their components. Based on data form the 12th Malaysia Plan, exports of automotive parts and components increased to RM11.3 billion, from RM4.7 billion in a period of six years from 2014-2020. We are seeing a similar trend on eBay where most of Malaysian SMEs’ exports are predominantly in the automotive sector and is growing at a rapid pace.

In the upcoming Budget, we hope to see an outline on the government’s plan to pave the way for our ‘Made in Malaysia’ products to break through into different markets.

SECTOR-SPECIFIC COLLABORATIONS

Malaysia’s eCommerce cross border trade has been at a relatively nascent stage. Most of the efforts has been to promote digitalisation of retail businesses, which is no doubt an important priority.

Having said that, for the industry to truly maximise its potential, collaborations would have to go deeper to a micro level; that is to form sector-specific partnerships. In doing so, eCommerce becomes more of a channel and growth sectors become the areas of opportunity that the government can focus on growing.

Taking furniture as an example, a partnership with the Malaysian Timber Council to promote these ‘Made in Malaysia’ products in new markets via eCommerce would open doors for SMEs in the product category. This leverages bilateral partnerships between countries and eCommerce platforms to facilitate cross border trade.

In terms of automotive, Budget 2022 can also allocate funds for Malaysia to realise the National Automotive Policy 2020 with a focus on incorporating key technologies, including IoT, AI, sensor fusion as well as deep and machine learning aimed to increase the production of advanced critical parts and components locally to meet demands for the international market as well as standards.

With that, we are interested in seeing what the government has in store to engage the economic sectors more strategically.

GLOBAL SHIPPING CAPABILTIES

A common challenge that SMEs face when exporting their products is the unfamiliarity with export shipping documentations, taxations, and inability to access competitive shipping rates. If we are looking at stepping up our digital economy, this is a fundamental area that must be addressed.

An area for consideration is stronger partnerships between logistics providers and cross border trade players to simplify the process of global shipping for Malaysians SMEs. This could be further expanded into incentivising SMEs to export into different markets, thus contributing to Malaysia’s effort in market penetration.

We also hope to see progress in Government’s commitment to the OECD BEPS 2.0 initiative, its plans to improve the country’s tax incentive framework and the measures Government aims to pursue in reopening of economic sectors and the recovery of supply chains.


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