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: 6/18/2017

Overview

Malaysia has approximately 22 million active internet users (68 percent of the population) and another five million are expected to go online in the next year. The population has extremely high rates of mobile cellular penetration, with nearly 150 mobile subscriptions per 100 people.  Of these mobile subscribers, 53 percent use smartphones.  
Malaysia’s e-commerce laws are based on a combination of the Electronic Commerce Act 2006 and the Electronic Government Activities Act 2007.  With the introduction of the Personal Data Protection Act 2010, Malaysia became the first ASEAN member country to pass privacy legislation. 

The Electronic Commerce Act 2006 is the key source of electronic commerce regulation for the private sector and contains broad (technology-neutral) provisions on electronic signatures.  Additionally, Malaysia enacted the Digital Signature Act 1997 which covers digital signatures.

The Consumer Protection Act 1999 (CPA) protects consumers against a range of unfair practices and enforces minimum product standards.  In 2007, an amendment was made to the CPA that expanded the scope to cover electronic commerce transactions; and in 2010 a new provision was introduced on the general safety requirement for services and the protection to consumers from unfair terms in a standard form contract. 

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 on 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.

In 2016, the Malaysian Ministry of International Trade and Industry (MITI) launched a new eCommerce Initiative with the goal to bring roughly 80 percent of small- and medium size enterprises into the world of eCommerce and to expand market access for more than 87 million digital customers in the ASEAN region.  See ECommerce Initiative 2016. This initiative is focused on accelerating seller adoption of eCommerce, increasing adoption of eProcurement by businesses, lifting non-tariff barriers (such as e-fulfillment, cross-border, e-Payment, and consumer protection), realigning existing economic incentives, making strategic investments in eCommerce players, and promoting national brand to boost cross-border eCommerce.

The Malaysian Government has pledged not to censor the Internet. There is no evidence of technological Internet filtering in Malaysia.  However, controls on traditional media spill over to the Internet at times, leading to self-censorship and occasional investigation of bloggers and online commentators

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 15.3 million online shoppers (50 percent of the population) and 62 percent of mobile users 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.
Online shopping trends:
  • Top 3 sectors using online shopping are:
    • Fashion & Accessories - 16 percent
    • Home and Living - 15 percent
    • Health & Beauty - 13 percent
  • Growing frequency of shopping on line:
    • 30 percent once a month
    • 15 percent once every 2 weeks
    • 14 percent once a week or more often
  • 80 percent of Malaysian online shoppers are using their mobile phones. 
  • 54 percent prefer to pay using online transfer (12 percent cash on delivery, 1 percent prepaid to account, 33 percent credit/debit card).
  • Travel payment is expected to grow to USD $4.41 billion/ RM 19.6 billion worth of online transactions in 2017.
  • Products-only online sales volume will grow to USD $1.12 billion/ RM4.99 billion in 2017, a 20 percent share of total e-commerce market size in Malaysia.
5 trends of the Malaysia e-commerce for in 2017:
  • Online shopping is positioned to keep on growing.
  • Payment methods will become more digital.
  • Customers are willing to shop new products categories.
  • Express delivery will become the norm.
  • Customers will look beyond price.

Domestic eCommerce (B2C)

The Malaysian e-Commerce 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 market from 0.5 percent of total retail spending in 2014 to five percent by 2020. This makes it an interesting time to assess the state of the market, in terms of government initiatives, consumer trends,  and incumbent players. 

e-Travel is the largest segment of the online business-to-consumer (B2C) market. The online business-to-consumer segment which includes mobility services (such as Uber, GrabCar and Grab Taxi) and online travel bookings, generated over US$3.5 billion in revenue in 2016.

The online purchase of goods will yield a further US$894 million, with ‘Electronics and Media’ being the most popular category among Malaysian consumers. Finally, e-services, including food delivery services and online dating, among others, will add another US$260 million.

Cross-Border eCommerce
Malaysians' favorite countries for overseas online shopping are the United States, Singapore, UK, China and Hong Kong. Popular online categories include:  daily supplies at 39 percent, fashion & accessories at 23 percent, special/rare items at 20 percent, home appliances at 7 percent, consumer electronics at 7 percent and food and health items at 4 percent.

B2B eCommerce

B2B eCommerce is one of the fastest growing sectors for small- and medium size enterprises (SMEs).  We are seeing an expansion in eCommerce as more SME take advantage of higher disposal income of the Malaysian population, better broadband service, and the proliferation of mobile devices in the country. eCommerce is helping SMEs, especially small businesses, compete globally by reducing some of the costs which allows the SME to focus on other areas of the business such as product development.

Since the inception of electronic trading or eTrade, there has been 835 SMEs from various sectors such as food and beverages, furniture, lifestyle, building materials, machinery and hardware, and auto parts that have been approved for the eTrade financial incentive.  These incentives ranges from RM1,000 to RM7,000.  Out of those approved, 641 SMEs have completed their company’s  listing on the e-marketplace.

Challenges

Current challenges for the eCommerce industry include a lack of understanding, limitations of competent personnel to conduct eCommerce activities, fear of cyber security threats, lack of digital marketing skills, limited production capacity, high fulfilment and logistics cost, lack of knowledge regarding market access and regulations in cross-border eCommerce.
The top eCommerce businesses are in consumer goods such as apparel, halal food and beverages, electronic and household items.

The government’s Economic Transformation Program includes an "Entry Point Projects (EPPs)” which is a “Virtual Mall” project.  This virtual mall aims to grow the internet-based retail market. The largest virtual mall platforms in Malaysia are ezBuy and Taoboa.  Alibaba from China is working with the Malaysian government to increase its presence in Malaysia. 
Typically an eCommerce ecosystem is made up of the following components:
  • eCommerce Platform
  • Oneline Marketing
  • Payment Gateway
  • Accounting Software
  • Inventory Management System (IMS)
  • Customer Relationship Management (CRM)
  • Marketplaces
  • Enterprise Resources Planning (ERP)
  • Channel Management Software

eCommerce Services for Other Services

The Economic Transformation Program (EPP) intends to upgrade internet connectivity for 500 hospitals and 8,000 clinics and provide five million patients with direct access to the Healthnet platform.  The platform provides a gateway for information sharing among healthcare providers and insurance companies, while offering patients better access to healthcare-related services and education.  Public healthcare facilities will be connected to MedikTV, the official broadcast channel of the Ministry of Health (MOH), which aims to educate the public on major healthcare issues.  The MedikTV project is driven by Medic Media Network Sdn Bhd.  Pemandu and MOH will continue to foster cooperative ties to ensure the successful deployment, management and utilization of the eHealthcare network within the budget allocated.  With close to 3,000 health facilities now connected, the rollout of cloud-based health applications will enable all Malaysian to enjoy a higher standard of service at these facilities.

The Ministry of Education has deployed more than 100,000 laptops (more than 2,400 mobile computer labs) to schools as part of its plan to ensure schools are equipped with the necessary ICT devices for the eLearning.  Every student, teacher and parent is given login access to VLE.  The laptops used are Google Chromebook with 4G and are the first in the world to be developed by Google and Samsung. At least 99.9 percent of schools have been connected with high-speed Internet connection of at least 4Mbps, while more than 8,000 schools have been connected with high-speed Internet connection of 2-10Mbps in the past two-and-a-half years.

The EPP focuses on building information structure for the Government that is centralized and outsourced.  This will ensure all Government facilities are connected and able to access necessary information. Efforts to achieve this include targeting 50 percent of all intra-Government transactions (e.g. job applications and internal circulars) to be completed online.  A zero face-to-face target was also set, aiming for 90 percent of Government-related counter services to be made online, with the remaining 10 percent to be completed via e-forms by 2020.  As Government services become increasingly digitized, this EPP will also look at addressing digital security concerns.

eCommerce Intellectual Property Rights
eCommerce activities fall under the perview of myIPO:

Popular eCommerce Sites

The few 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
  • Shopee.com.my
  • 11th Street.my
  • Gemfive.com
  • Q100.my
  • Hermo.my

Online Payment

The following are the major on-line payment venders:
  • Pay Pal
  • IPay88
  • MOLPay
  • GHL e-payment

Mobile eCommerce

M-Commerce 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. It has grown from three major players to 20 mobile network operators. The three major mobile network providers in Malaysia are Celcom (13.4 million), Maxis (12.4 Million) and Digi (10.9 Million). Overall, total active mobile subscribers in Malaysia are 41,324,700 and the mobile penetration rate is high at about 139 percent. The majority of customers are using prepaid services compared to post-paid services.
 

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.



Malaysia eCommerce Industry Trade Development and Promotion eCommerce