KUALA LUMPUR: Electronic commerce (e-commerce) specialist Dagang NeXchange Bhd (DNex) expects the cost of trade and logistics to be lowered by 2% to 4% following the implementation of the goods and services tax (GST) on April 1.

DNex group executive director Datuk Patrick Wong said this will improve the country’s global competitiveness and help attract more foreign direct investment as corporate tax rates would be reduced.

Although he did not specify the exact cost for Malaysia, it is believed to be in line with the regional average of between 14% and 15%.

“This (regional average) is much higher than the costs that we see in developed markets. For example, in the US the total logistics cost would be between 5% and 7% and that is partly due to the efficiency in the systems that they have implemented,” Wong told a press briefing yesterday.

“This [lowering of trade and logistics cost], among other issues, is what will be discussed at the Pan Asian E-Commerce Alliance (PAA) meeting next week,” he said.

Apart from facilitating better cross-border trades via the PAA meeting, Wong also said he hopes to advance the growth of small and medium enterprises and their contribution to the logistics sector, which is still quite low.

DNex (fundamental: 2.6; valuation: 0.5) is hosting the 49th PAA steering committee meeting next week, a regional cooperation that serves as a platform for members to discuss matters relating to cross-border trade.

An alliance of 11 countries authorised by the customs and other trade regulatory agencies in their respective economies, the PAA was founded in 2000 and current members comprise Thailand, China, Singapore, Malaysia, the Philippines, South Korea, Japan, Macau, Hong Kong, Taipei and Indonesia.

DNex group managing director Zainal Abidin Abdul Jalil said the main aim of the PAA meeting would be to find more effective ways to move goods across borders and to improve the efficiency of the systems already in place.

“The strategic intention is to eventually lower the cost of logistics, in line with some developed markets, where we see their costs at a lower percentage compared to their turnover,” he said.

DNex shares closed unchanged at 30.5 sen yesterday, giving it a market capitalisation of RM236.45 million.

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This article first appeared in The Edge Financial Daily, on April 8, 2015.