Exploring the Trade Potential of the DFTZ for Malaysian SMEs

Abstract

Despite the paucity of evidence in developing countries, these countries are keen to utilize e-commerce as a means for internationalizing their SMEs through exports. For Malaysia, the new government elected after the general elections in May 2018 (or GE-14) has continued to uphold the importance of developing a digital economy — an initiative that was promoted by the previous regime. The Digital Free Trade Zone (DFTZ) constitutes a key policy initiative in the raft of policies used to facilitate the digitalization of the Malaysian economy. It is also part of the Digital Silk Road that is envisaged by Jack Ma in his move to align his business expansion plans with the Belt and Road Initiative (BRI) of China. Jack Ma was appointed a special economic advisor to the previous government in November 2016 and the DFTZ was launched later in March 2017, in collaboration with Alibaba. An important component of this initiative is to utilize e-commerce as an enabler for SMEs to export. The objective of this paper is to explore the development of the DFTZ and its potential to encourage SMEs to exports.