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: 7/18/2018

Malaysia has approximately 25.08 million active internet users (79 percent of the population).  The population has extremely high rates of mobile phone penetration.  Of the 31.2 million Malaysians, 24 million are social media users, 21.6 million are unique mobile users, and 22 million use social media on their mobile devices.   

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 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.

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 . 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. 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 parliamentary session in July 2018.

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:

Alternative parcel delivery service, Pgeon highlighted trends in the Malaysian online shopping.  These include the most popular products, projected growth areas and trends for e-commerce.  

Top 3 most purchased categories of products are:

•    Hashion & Beauty
•    Electronics
•    Sports & Hobbies

Category of products likely to expand are:

•    Home décor and furniture
•    Household and groceries
•    Health and Supplements 

It is projected that by 2022, furniture and applicances will be come the most purchased online category and second favorite will be remain electronics & media. 
•    More than 95 percent are satisfied shopping online
•    Online money transfers are the preferred payment method
•    90 percent of Malaysians expect their purchase to be delivered within one week and 46 percent within 3 days
•    Majority of online shoppers are willing to pay more for quicker delivery,  63% of women are willing to wait up to 4 weeks


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 GrabCar and Grab Taxi) and online travel bookings, generated over US$3.5 billion in revenue in 2016. 

Cross-Border eCommerce

Malaysians' favorite countries for overseas online shopping are Singapore, Japan, the United States and South Korea. Popular online categories include:  daily supplies (39 percent), fashion & accessories (23 percent), special/rare items (20 percent), home appliances (7 percent), consumer electronics (7 percent) and food and health items (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 have 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.  Effective Januarry 1, 2017, the eTrade Incentive is RM5,000.  Out of those approved, 641 SMEs have completed their company’s  listing on the e-marketplace.  To learn more about Etrade, visit the About ETrade.

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.  The 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. 

eCommerce Services for Other Services

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 eLearning.  Every student, teacher and parent is given login access to VLE.  The laptops used are Google Chromebooks 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.

eCommerce Intellectual Property Rights

eCommerce activities fall under the perview 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
•    Shopee.com.my
•    11th Street.my
•    Gemfive.com
•    Q100.my
•    Hermo.my
•    Carlist.my

Online Payment

The following are the major on-line payment venders:
•    Pay Pal
•    IPay88
•    MOLPay
•    GHL e-payment
•    Codapay
•    Hellopay
•    Paymentexpress
•    Alipay
•    Braintree
•    2C2P

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. The market has grown from three major players to 20 mobile network operators. The three major mobile network providers in Malaysia are Celcom, Maxis, Digi and U Mobile. Overall,  active mobile subscribers in Malaysia total 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.

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.
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

Facebook is the most popular social media platform in Malaysian.  About 80 percent of the Malaysian population or close to 18 million users stream or download online video content each month.  Malaysians also have 1.6 times more friends than the global average.  Malaysians spend an average of 5.1 hours a day on the internet, an average of 2.8 hours a day on social networking sites and 47 percent access the websites from their mobile device.  Users are spending 7.2 hours a week watching videos on their smartphones, while watching 10.6 hours of television.  Whatsapp is widely used, and apps such as WeChat, Twitter and Instagram are gaining in popularity.  

 

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