The A to Z of the DFTZ

Launch of Digital Free Trade Zone Malaysia

Photo Credits: vulcanpost.com

Last month, I was invited by the Prime Minister’s Office to attend (more like I crashed) an event in Mandarin Oriental KL. It was the launch of the Digital Free Trade Zone, or in short (but equally as tongue-twisting), the DFTZ. Of course, I was super stoked because Jack Ma was going to be there! And, as expected, he got on stage and gave a truly incredible speech. The way he spoke with such confidence and command was on a whole other level – no wonder he’s worth USD28.3 billion (YES THAT’S OVER RM120 BILLION)!

 

Mr. Ma, who is the appointed DFTZ Advisor, started off his speech by saying that he had been thinking of this digital platform for over 10 years and when he met with our Prime Minister, Dato’ Sri Najib Tun Razak, it only took them 10 minutes to come to an agreement: Malaysia will be the hub of trading where SMEs (Small and Medium Enterprises) can conduct digital business like never before.

Jack Ma Appointed As The Advisor of DFTZ

So there’s me, sitting in the crowd – plain old ‘not-worth-28.3-billion-dollars’ Leonard who has completely no clue what exactly DFTZ is. I heard about it last December but there wasn’t much information on it at that time. Even during the launch, I felt like the details were very vague. But then at the dialogue session organized by SME Malaysia, I was made aware of what DFTZ really is, and what some of its benefits and consequences might be.

To break it down for you, I’ve come up with an A-to-Z on the important terms, facts and figures relating to DFTZ. Basically, everything you need to know about this new age in Malaysian business:

 

ALIBABA founder and executive chairman, Jack Ma is the appointed advisor of the DFTZ and responsible for developing Malaysia’s digital economy.

 

In BUDGET 2017, the project was first announced by Prime Minister Najib Tun Razak.

 

CATCHA Group is the master developer of the KLIC (see K)

Patrick Grove of Catcha Group with Prime Minister Dato Sri Najib Razak

DIGITAL marketing is the end goal. Businesses are predicted to move towards online platforms to ease transactions in the near future.

 

The DFTZ is part of Jack Ma’s plan to build an ELECTRONIC World Trade Platform (eWTP) where the world’s economy can move towards digitalizing businesses.

 

This will be the FIRST Alibaba e-hub outside it’s home base of China. This aims to lower trade barriers so that global markets are more accessible by up and coming traders of this generation.

 

The GROSS development value of KLIC (see K), which is set to launch in late 2019, is estimated to be USD1.13 billion.

 

HUBS (eFulfillment Hub and Satellite Services Hub) make up the physical zones (see Z) of the DFTZ.

 

The INTEGRATED airport city, KLIA Aeropolis, is a planned integrated airport city that will serve as the regional e-commerce and logistics hub for all business in the DFTZ.

 

JOBS created directly and indirectly by the DFTZ are expected to increase to 60,000 by 2025.

 

KUALA Lumpur Internet City (KLIC): a premier 500,000 square feet hub for global and local internet-related firms targeting the Southeast Asian region. KLIC will serve as a centre for SMEs and startups intending to innovate and get on board eCommerce.

 

LOCATIONAL differences will be no longer hinder business opportunities, thanks to the DFTZ. “For instance, a trader in Kota Belud would have an equal opportunity to market or sell his items, as a trader from the Klang Valley. This is the future of the digital economy.” – Abdul Rahman (Minister in charge of the Economic Planning Unit)

 

MALAYSIA Airports Holdings Berhad, together with Cainiao Network, will develop KLIA Aeropolis (see I).

 

The DFTZ is a component of the NATIONAL E-commerce Strategic Roadmap which aims to double Malaysia’s e-commerce growth from 10.8% to 20.8% by 2020.

National eCommerce Strategic Roadmap

National eCommerce Strategic Roadmap

 

ONE point one three billion US dollars is the estimated gross development value of KLIC that is set to launch in late 2019.

 

PROGRAMMES that will help move towards the country’s goal of making 2017 the year of the Internet Economy have been allocated a budget of RM162 million.

 

QUALITY facilities and services can be enjoyed by businesses within the DFTZ, such as transport (POS Malaysia, sea and air cargo) as well as high-tech e-Services with access to global service providers.

 

Complex REGULATIONS, processes and barriers will be eliminated by the DFTZ. “… and eventually further encourage businesses and traders to connect and collaborate in cross-border trading.” – Prime Minister Najib Tun Razak

 

SMEs and eCommerce businesses are the main beneficiaries of this digital hub.

 

By the year TWENTY TWENTY, the DFTZ is expected to contribute USD47.68 billion to the nation’s GDP.

 

A UNIFIED government services platform will be established to provide a more convenient process for all registrations and legal formalities.

 

The VALUE of exports is expected to increase to USD25 billion by 2025 as a result of the DFTZ

 

The DFTZ is the WORLD’S first e-commerce platform for SMEs to conduct businesses and services.

 

X-mptions (close enough, I guess!) for taxes will be among the many incentives given to businesses in the DFTZ.

 

The YOUNGER generation of business-starters are highly encouraged to build their businesses in the DFTZ due the predicted boom of the future digital economy.

The DFTZ provides physical and virtual ZONES to facilitate the convergence of SMEs. Beyond the jargon, this means that they will be holding live events and creating online resources that help SMEs get on the digital bandwagon and capitalise on its opportunities.

 

And, in short: “We want to help SMEs overcome the complex regulations, processes and barriers, and eventually further encourage businesses and traders to connect and collaborate in cross-border trading” – Prime Minister, Dato’ Sri Najib.

 

It all sounds very grand. But beyond all the fancy words, the key question remains – will the DFTZ make a difference? Will it really offer all the benefits it claims to bring? Or is this all just a bold, airy-fairy idea?

 

Here are few concerns shared among those present at the DFTZ dialogue, which I was present at:

 

  • The concept may be more beneficial to overseas investors than Malaysian SMEs
  • There may be overcrowding of SMEs in the DFTZ, as all would want to be a part of it (because of all the advantages it claims to offer)
  • Overcrowding would inevitably lead to dominance from certain firms, and so there would be a certain degree of unfairness as opposed to the fairness (hence, free trade) it boasts to offer SMEs
  • How exactly can SMEs gain a competitive edge from the DFTZ?

 

In a nutshell, we’re back at the typical Malaysian roadblock, where grand ideas are not (yet) matched up by efficient execution. After all, the “Digital Free Trade Zone” may be marketed as a first of its kind in the world, but peel back the layers and all it is set of incentives designed to boost the digital economy in the country. And what we really need to know is the “how”, not just the “what”. For example, KLIA Aeropolis will ease and speed up transportation – but how exactly, we are not told.

 

As with every new idea or concept, there will be upsides and downsides. There may be quite a few doubts on the DFTZ but ultimately, this broadens the horizons for us and opens doors to new markets. Most importantly, it sends a signal (to us, and the world) that Malaysia is the right place to be if you’re thinking digital. In my opinion, this one positive outweighs all the negative (for now) as it offers a really promising platform to build upon.

 

So what are you waiting for? It’s time for you to take the initiative, whether you’re an aspiring entrepreneur, an existing business owner or a new arrival to the country. Take advantage of this chance to develop your skills, broaden your contact base and expand you opportunities, all while helping Malaysia realise this ambitious idea. Remember that all the effort that has gone into the DFTZ is to create success stories that Malaysia can speak about around the world, and that you have just as much of a right as anyone else to be that success story. So challenge yourself and rise up to the challenge.

 

Doubts may exist, but for now lets get behind the DFTZ and turn a compelling idea into a winning reality.

 

 

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