Jack Ma’s dream of using the internet to bring small businesses around the world into the global economy has taken a first major step toward becoming reality.
On Wednesday, the Alibaba executive chairman was in Kuala Lumpur to announce that Malaysia would host the first overseas e-hub for what Ma calls the Electronic World Trade Platform. The eWTP concept envisions the creation of digital free-trade zones where small and medium-sized enterprises (SMEs) can easily plug into global trade via e-commerce. The zone would offer simple and straightforward regulations, lower barriers for entry into new markets and provide small businesses with easier access to financing.
For the past year, Ma has been calling for the establishment of an eWTP, and the idea has since gained traction with business and government leaders. Last September, the eWTP was included in the official communiqué of the G20 summit in Hangzhou, Alibaba’s home base. But the new Malaysia location, a partnership with state-run Malaysia Digital Economy Corp. (MDEC), the country’s digital economy development agency, will be the first such e-hub to be set up outside of China.
What is the eWTP? Watch this video to find out:
“I laid out the vision for eWTP last year, and we, as a company, have taken on the responsibility to make this a reality,” Ma said in a statement. “The first e-hub under the eWTP outside of China will go a long way towards making global trade more inclusive and provide much needed support to a hugely important constituent: SMEs and the younger generation.”
Malaysia is tying up with Alibaba because the country is looking for ways to position itself as a fulfillment and logistics center, expand its internet economy and attract foreign investment, according to Alibaba’s statement. Part of those efforts have so far included the establishment of its own Digital Free Trade Zone, which aligns with the goals of the eWTP. Given those matching priorities, Ma and Prime Minister Dato’ Sri Mohd Najib Tun Abdul Razak, who was at the launch ceremony, agreed last October to set up the e-hub in Malaysia.
“Alibaba Group is at the forefront of private-sector development of e-commerce solutions, and their ambitions to enable trade, particularly for SMEs, make them the perfect partner in this new initiative,” Najib said of Malaysia’s DFTZ. “This is an exciting development for the country, and to be an early participant in eWTP will provide a plethora of opportunities for Malaysian organizations.”
During the launch ceremony, Alibaba and MDEC, affiliate Cainiao Network and Malaysia Airports Holdings Berhad, and Ant Financial and Malaysian banks CIMB and Maybank, signed memorandums of understanding to offer a greater range of services related to digital free trade.
Fast Facts about the Malaysia e-hub
The e-hub involves multiple partners carrying out numerous functions to facilitate cross-border trade. They include:
- an e-fulfillment hub based near Kuala Lumpur International Airport, which will function as a customs clearance, warehousing and fulfillment center for the region
- a one-stop, online, cross-border trading services platform that will link the Malaysian e-hub to the original one in Hangzhou, allowing for easier trade for SMEs between the two countries
- e-payments and financing to facilitate business-to-business trade for Malaysian SMEs
- training programs for startups and works to support Malaysia’s digital ambitions
The e-hub is just a first step in the move toward a more-robust eWTP. Alibaba and Malaysia expect further cooperation in the areas of logistics, cloud computing and online finance. Cainiao and Lazada Group, the leading Southeast Asian e-commerce company owned by Alibaba, will work with Malaysia Airports Holdings to set up an e-commerce and logistics hub at Kuala Lumpur International Airport Aeropolis as a part of the DFTZ.
Alibaba Cloud will build a cloud-computing platform in Malaysia to support SMEs, while also offering training to potential engineers in the country. Also, in addition to offering financial support for B2B trade between Malaysia and China, Ant Financial, CIMB and Maybank will look to offer payment services to China tourists visiting Malaysia.
Alibaba said it wants to establish these special trading areas in markets around the world, creating an “e-road” between them. Last year, the company helped to launch the China (Hangzhou) Cross-Border E-Commerce Comprehensive Pilot Free Trade Area, which will now be connected to the DFTZ in Kuala Lumpur.
“With innovation throughout the supply chain, support from governments and important private sector collaborations, we will achieve our aim of enabling SMEs and young people to thrive and enjoy in the fruits of the next phase of globalization,” Ma said.