Describes how widely e-Commerce is used, the primary sectors that sell through e-commerce, and how much product/service in each sector is sold through e-commerce versus brick-and-mortar retail. Includes what a company needs to know to take advantage of e-commerce in the local market and , reputable, prominent B2B websites.
Last Published: 8/19/2019

Overview
Malaysia is an attractive market for eCommerce in Southeast Asia due to its dynamic economy and developed infrastructure for digital technologies. Malaysia has ~ 25.84 million active internet users (80 percent of the population) and the population has extremely high rates of mobile phone penetration.  Of the 32.25 million Malaysians (January 2019 data), 25 million are social media users, 40.24 million mobile subscriptions , and 24 million use social media on their mobile devices.  

Malaysia’s eCommerce sector is on a growth trajectory and is already benefiting from the implementation of programs under the National eCommerce Strategic Roadmap’s (NeSR) six thrust areas. The National eCommerce Council (NeCC), comprised of various ministries and agencies was established to drive the implementation of the roadmap towards doubling Malaysia’s eCommerce growth rate to reach a GDP contribution of USD 53 billion by 2020. The roadmap outlines the Government’s intervention in six thrust areas:

  1.  Accelerate seller adoption of eCommerce

  2.  Increase adoption of eProcurement by businesses

  3.  Lift non-tariff barriers (e-Fulfillment, cross-border, e-Payment, consumer protection)

  4. Realign existing economic incentives

  5. Make strategic investments in select eCommerce player(s)

  6. Promote national brand to boost cross-border eCommerce


See: National eCommerce Strategic Roadmap Overview
The relevant laws governing Malaysia’s eCommerce and online businesses are set out in a number of different statutes and regulations. Of particular significance to eCommerce in Malaysia are:

  • Electronic Commerce Act 2006 (ECA), which recognizes the validity of electronic contracts and signatures.

  • Digital Signature Act 1997, which covers digital signatures.

  • Personal Data Protection Act 2010 (PDPA), which governs the use of personal data (including the personal data of website users).

  • Consumer Protection Act 1999 (CPA), which applies to all goods and services offered to consumers in trade (including any trade transaction conducted through electronic means) where goods/services are primarily purchased, used or consumed for personal, domestic or household purposes.

  • Consumer Protection (Electronic Trade Transactions) Regulations 2012 (ETT Regulations) which regulate operators that supply goods or services through a website or online marketplace.

  • Trade Descriptions Act 2011 (TDA), which prohibits false trade descriptions and false or misleading statements, conduct and practices in relation to the supply of goods or services (including through electronic means).

  • Sale of Goods Act 1957 (SGA), which governs contracts for the sale of goods in Malaysia.

  • Communications and Multimedia Act 1998 (CMA), which regulates the multimedia and communications industry in Malaysia, including content applications service providers (such as website operators).

The Malaysian Communications and Multimedia Commission (MCMC) regulates the Information and the Communication industries. 
The MCMC also issues content and broadcasting guidelines.  See Multimedia Guidelines and Content Code.

The Inland Revenue Board of Malaysia created Guidelines of Taxation for Electronic Commerce.  The guidelines cover the scope of charge, the tax liability for business, treatment of server and website and an examination of business models.  See Guidelines on Taxation of ECommerce.

The Malaysian Government has pledged not to censor the Internet. There is no evidence of technological Internet filtering in Malaysia.  However, there are controls on traditional media spill over to the Internet at times, leading to self-censorship and occasional investigation of bloggers and online commentators.  In 2018, Malaysia passed a law regulating “fake news”, which holds websites as well as online posters liable for what the government determines to be fake news.  The new government has announced its intention to repeal the law, which is slated to be introduced during the first parliament session in July 2018. The Repeal Bill passed in the House of Representatives, but the Senate rejected it in September 2018; the government is expected to push it again at an unannounced date.
Digital Free Trade Zone (DFTZ)

DFTZ is an initiative by the Malaysian Government focused on the development of an ecosystem and a catalyst to the booming internet economy and eCommerce activities in Malaysia. Spearheaded by Malaysia Digital Economy Corporation (MDeC), the DFTZ was reviewed and refocused to serve two overarching goals: 

  1. Creation of an E-Fulfillment hub: Development of KLIA Aeropolis into a logistical hub with the goal of establishing Malaysia into a regional eCommerce fulfilment hub. 

  1. Grow Malaysian SMEs: The DFTZ is seen as a mode to drive export of Malaysia SMEs via eCommerce With the new Government in power, the Prime Minister announced that the government reviewed the DFTZ initiative and decided that it will remain in place.  For the 2019 Malaysia’s Budget, the Finance Minister highlighted the government’s continuous efforts in improving Malaysia’s eCommerce industry through the allocation of USD 20 million for the first phase of the DFTZ at Kuala Lumpur International Airport (KLIA).  

See: Digital Free Trade Zone (DFTZ)

Current Market Trends
As a result of Malaysia’s internet and mobile connectivity, as well as public sector encouragement, Malaysia has high rates of eCommerce usage. Malaysia boasts 16.53 million online shoppers (50 percent of the population) and 62 percent of mobile users use their devices to shop online. Online shoppers are motivated by price advantages, product range, and availability of reviews. Malaysian shoppers look for free shipping, convenience, and exclusive deals offered by online stores.
Percentage of internet users who report performing each activity in the past month (January 2019)*

  • Search online for a products or service to buy – 88%

  • Visited an online retail store on the web (any device) – 88%

  • Purchased a product or service online (any device) – 75%

  • Made an online purchase via laptop or desktop – 44%

  • Made an online purchase via mobile device – 58%


Top most purchased categories of products are:

  • Fashion & Beauty

  • Electronics & Physical Media

  • Food & Personal Care

  • Furniture & Appliances

  • Toys & Hobbies/ Sports

  • Travelling (including accommodation)

  • Digital Music

  • Video Games


Malaysian online shoppers’ profiles

  • Men tend to shop online more than women

  • East Malaysians are 2.6 times more likely to shop online than Peninsular Malaysians

  • 59% of online shoppers shop at least once a month

  • 80% shop on their smartphones

  • 48% of fashionistas are young and single women

  • The main factor that Malaysians consider when shopping online is the price

Payment and delivery in Malaysia

  • More than 95% of Malaysians are satisfied with their online shopping experience

  • Online money transfers are the preferred payment method

  • 90% of Malaysians expect their purchase to be delivered within one week, 46% within 3 days.

  • A majority of online shoppers are willing to pay more for quick delivery

5 trends of the Malaysian e-commerce market in 2019

  • Online shopping is poised to keep on growing

  • Payment methods will become more digital

  • Customers are willing to shop in new products categories

  • Express delivery will become the norm

  • Customers will look beyond price.

*ASEAN UP Report, Top 10 eCommerce sites in Malaysia 2019, May 2019

Domestic eCommerce (B2C)
The Malaysian eCommerce market is gaining in attention and support from the government. Rising incomes, growing smartphone and internet penetration are all factors that will grow Malaysia’s online marketand revenue is expected to show an annual growth rate (CAGR 2019-2023) of 11.4%, 

Total Malaysian eCommerce revenue across all product categories is USD 1.31 billion and is expected to grow to USD 2.53 billion by 2022. Electronics & Media is currently the leading product category in Malaysia, accounting for USD 477.7 million, followed by Furniture and Appliances, which generates USD 356.3 million in sales. By 2022, Furniture & Appliances will become the most purchased online category, with an estimated value of USD 1.02 billion, and second favorite, Electronics & Media, will have an expected worth of USD 629.2 million.

Cross-Border eCommerce
Malaysians' top countries for overseas online shopping are China, Singapore, Japan, the United States and South Korea. Credit cards are the preferred payment method for about 80% of the cross-border transactions, and American and Chinese web shops are very popular amongst Malaysian consumers. Malaysia has a large number of free trade agreements that allow foreign business access, but there are still some minor hurdles when accessing the market. 

B2B eCommerce
B2B eCommerce experienced high growth in the past 5 years, with the Malaysia market expected to grow to USD 3.4 billion by 2020.
B2B eCommerce is one of the fastest growing sectors for small- and medium size enterprises (SMEs).  . SMEs in Malaysia has  a high adoption of new technologies  and Malaysia is ranked fourth among nine APAC countries surveyed in digital platform implementation and third in adopting Industry 4.0 technologies. Nearly 61 per cent of local SMEs are optimistic that the e-commerce platforms will help contribute to increased revenue growth. Sixty-nine per cent of Malaysian SMEs have incorporated Industry 4.0 technologies into their operations such as mobile payments, automation software, and Big Data and Analytics in particular and shows a significantly high adoption rate of mobile payments among Malaysian SMEs at 90 per cent.

Challenges
eCommercein Malaysia is relatively strong, but enforcement of existing regulations need improvement. Current challenges for the eCommerce industry include challenges in the adoption of the latest trends, or tools in technology,cyber security threats, lack of digital marketing skills, limited production capacity, high fulfilment and logistics cost, and lack of knowledge regarding market access and regulations in cross-border eCommerce. eFulfillment also plays a critical role in shaping the customer and end-consumer experience to ensure the efficiency of the  eCommerceecosystem.

eCommerce Services for Other Services
Malaysian shoppers do most of their shopping through mobile phones. But on top of formal channels like marketplaces and  eCommercewebsites, about a third of Malaysians prefer shopping through social media channels like Facebook and Instagram. Flights, hotel, and music are some of Malaysians’ most popular online purchases.

eCommerce Intellectual Property Rights
eCommerce activities fall under the preview of the Malaysian Intellectual Property Corporation (MyIPO)-   Rights (www.myipo.gov.my/en/home/).

Popular eCommerce Sites
The most popular eCommerce sites that Malaysian visit are:

  • Mudah.com

  • Lazada.com.my

  • Zalora.com.my

  • Lelong.com.my

  • eBay.com.my

  • Amazon.com.my

  • Fave by Groupon

  • Taobao.com

  • Alibaba.com

  • Fashionvalet

  • Shopee.com.my

  • 11th Street.my

  • Gemfive.com

  • Q100.my

  • Hermo.my

  • Carlist.my

  • Carousell Malaysia.my


Online Payment
The following are the major on-line payment venders:

  • Pay Pal

  • IPay88

  • MOLPay

  • GHL e-payment

  • Codapay

  • Paynet

  • Hellopay

  • Paymentexpress

  • Alipay

  • Braintree

  • 2C2P


Mobile eCommerce
MCommerce is growing rapidly in Malaysia. The increase of mobile network operators, the ubiquity of commercial banks offering M-Commerce services and the increase in market size, all demonstrate that the M-Commerce sector is growing. However, there are several challenges facing this industry: the level of security, the improvement of technology and the level of consumer satisfaction.

The development of M-Commerce in Malaysia is in line with the growth of mobile network operators. The six major mobile network providers in Malaysia are Celcom, Maxis, Digi, U Mobile, Unifi and YES. Overall, active mobile subscribers in Malaysia total 40.24 million and the mobile penetration rate is high at about 125 percent. The majority of customers are using prepaid services compared to post-paid services. Malaysia's 4G progress is marching steadily forward. 4G's reach is the best it’s ever been in the country with five of Malaysia's six operators able to provide an LTE connection more than 75 percent of the time. 

Digital Marketing
Due to the high level of connectivity and the growing use of mobile eCommerce, companies are now using the technology more effectively to target a broader consumer base.  Facebook and Google are the most used platforms. Established digital marketing companies in Malaysia include:

  1. Lion and Lion

  2. JustSimple (M) Sdn Bhd

  3. Webnatics Sdn Bhd

  4. Locus-T Online Sdn Bhd

  5. Mediawork Digital

  6. Exabytes Digital Marketing

  7. Nexus Mediaworks International Sdn Bhd

  8. Consider iProspect

  9. Silver Mouse Sdn Bhd

  10. Gapture Malaysia Sdn Bhd


Major Buying Holidays
Malaysia has three yearly nationwide sales events:

  • Malaysia Super Sale (March 1-31)

  • Malaysia Mega Sale Carnival (June 15-Aug 31)

  • Malaysia Year-End Sale (Nov 1 –Dec 31)


Social Media
Social media continues to be a huge driver of online purchasing decisions. With at least half of Malaysians buying products after social media discovery, the channel has been well-proven. Social media selling has quickly become one of the most important factors in a purchasing decision. The top 10 social media platforms in Malaysia :

  1. Youtube- 93%

  2. Whatsapp – 91%

  3. Facebook- 91%

  4. Instagram – 70%

  5. FB Messenger – 64%

  6. WeChat- 47%

  7. Twitter – 44%

  8. Linkedin- 29%

  9. Skype – 26%

  10. Pinterest- 25%

Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.


More Information

Malaysia eCommerce Industry Trade Development and Promotion eCommerce