Deconstructing the DFTZ

This article first appeared in The Edge Malaysia Weekly, on November 6, 2017 - November 12, 2017.
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THE Digital Free Trade Zone was established to help small and medium enterprises (SMEs) export their products overseas with ease as well as enable global marketplaces to source from Malaysian manufacturers and sellers. It also aims to make Malaysia the regional fulfilment hub for global brands to reach Asean buyers, apart from nurturing an ecosystem that drives innovation in e-commerce and internet economy.

When launched in March this year by Prime Minister Datuk Seri Najib Razak and Alibaba Group founder and executive chairman Jack Ma, it was touted as the world’s first DFTZ. This has since been amended to the world’s first DFTZ outside China.

By the year 2025, it aspires to double the amount of SME exports to US$38 billion, create 60,000 jobs (direct and indirectly) and facilitate goods movement worth US$65 billion via exports, imports and transhipments.

Registering with the DFTZ will give SMEs access to the Malaysia Pavilion, a dedicated page in Alibaba featuring “Made in Malaysia” products. It will also give SMEs access to trained and certified e-commerce talent and a detailed analytics dashboard as well as access to traffic from Alibaba’s other marketplaces — Tmall, Taobao and 1688.

Upon registering, the SMEs will be onboarded with Alibaba.com, where they are eligible for turnkey services, special promotions for Malaysian brands, smart marketing and a seamless integrated platform. Then, they can start marketing their products, receiving orders and payments, and conducting the fulfilment process.

There are three components to the DFTZ — the eFulfillment hub, satellite services hub and eServices platform.

The eFulfillment hub, located at KLIA Aeropolis, will help SMEs export their goods easily with the help of leading fulfilment service providers. The hub’s warehouses are installed with the latest sorting, shelving and pick-pack facilities technologies.

The satellite services hub, located at Kuala Lumpur Internet City in Bandar Malaysia, will help SMEs connect with leading players that offer services such as financing, last-mile fulfilment, web hosting and insurance. Some of the facilities at this hub include office spaces, offline-to-online (O2O) showrooms, MICE (meetings, incentives, conferences and exhibitions) amenities and large open spaces for community activities.

Meanwhile, the eServices platform efficiently manages cargo clearance and other processes needed for cross-border trade. Services available include customs clearance, quarantine, permits and cross-border trade advisory.