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E-Commerce and Content Development
Strategic Directions and Success Strategiesof Electronic Commerce in Malaysia
March 2002
E-Commerce has got more to do about the management of People and Culture in adopting Technology rather than the
management of technology itself.
The National Electronic Commerce Strategic Directions established a comprehensive and robust strategic framework for actions. The report seeks to identify and describe the most prospective areas for national initiatives to begin the task of securing Malaysia's electronic commerce future.
In so doing the document also established a decision-making framework within which, from the platform of an initial tranche of special projects, Malaysia can be "strategically opportunistic" whilst remaining focused on a constant strategic intent, as global market circumstances evolve and take shape.
National Electronic Commerce Strategic Directions
1. Overview
2. E-Commerce in Malaysia“The tip of the Iceberg”
The Tip reveals says many things: -• Asiafeatures.com December 23, 2001: IDC (M) stated that
Malaysia is one of the few countries in the region to post a positive growth trend due to government fiscal policies & focus on IT development
• B2B revenue expected to grow 117.4% by 2002, reaching US$982m
• Internetnews.com September 3, 2001:IDC (M) forecasted Malaysia B2B e-commerce market expected to reach US$7.8 billion in 2005.
• CAGR of local Internet users is 20% for the next 5 years
Unknown Road Ahead. But what are the drivers?
FUNDING
People & Culture
Local ICT Demand
Entrepreneurship & Technopreneurship
E-COMMERCE
E-Commerce Infrastructure & Services
Service Providers - E-Commerce, Portals, Government Services
Application & Managed Services
Data Centre Facilities
Internet/Broadband Access
Telecommunications
Important elements for E-Commerce in A Country - The Big Picture
The Direct and External (In-direct) Attributes to E-Commerce
• Direct Attributes– Telecommunication Infrastructure– Internet/Broadband access Infrastructure– Data Center Facilities– Application and Managed Services– Service providers
• Externalities– Funding– Local ICT demand– Entrepreneurship and Technopreneurship
3. The Externalities Funding
Early Stage(Idea and Seed)
Start-up
No. of ICT
Companies
Expansionary
Pre-IPO
Early Stage(Idea and Seed)
Start-up
No. of ICT
Companies
Expansionary
Pre-IPO
Note: Explanation of development stages is attached as Appendix I
Profile of ICT companies in developing countries
Profile of ICT companies in developed countries
Strategic Funding policy in Early Stage
• Due to the nature of developing countries, more emphasis must be taken for Grants, Incubation and Angles funding.
• Failure of this would lead to mismatch in expectations by VC in the start-up to Pre-IPO
Early Stage(Idea and Seed)
Start-up
No. of ICT
Companies
Expansionary
Pre-IPO
Grants, IncubationAngels
VCs / Debt Funding
Incubation - The need to nurture and develop Technopreneurs • Reduction in cost and time to market will fundamentally increase the viability and value
of the Investment
Time Line
Operational Cashflow
0
Normal Approach
Skali’s SNAP
SNAP Value Added = Market/ Customers + Funding + Business Development + Skali Services
Local ICT Demand
Essential to the development of Technopreneurs and a vibrant E-Commerce community in any country. The Fueling of demand further fuels E-Commerce
Flagship Applications ComputerizationR & D Digital DivideOthers
• Government: During the Eighth Plan period, a total of RM5.2 billion will be allocated for ICT-related programmes and projects, as shown in table adjacent
SMEs - What have we learnt?
•Only 7% of SMEs are selling through the Internet. Of this, 49% responded that Internet selling is less than 10% of their total sales.•Only 13% of SMEs are purchasing through the Internet. Of this, 68% responded that Internet purchases are less than 10% of their total purchases.
Source: MDC, 2000
•Only 7% of LEs are selling through the Internet. Of this, 48% responded that Internet selling is less than 10% of their total sales.•Only 13% of LEs are purchasing through the Internet. Of this, 80% responded that Internet purchases are less than 10% of their total purchases.
• Large Enterprises: Create the Push – Enterprises will have drastic impact to grassroots and
vendors/ suppliers (SMEs) – What needs to be done
• Top-Down approach • What is the incentive? Tax incentive? • Increase public trust on the Internet• Reduction of set up cost• Inadequate legislation protecting IP rights• Immediate need to address security and privacy• Fast track the Insufficient customers/suppliers issues
Entrepreneur & Technopreneur
• Technopreneurs or IT-driven entrepreneurs is the key ingredient to EC. This group contributes business ideas & innovations to EC & ICT industry at large.
• Conducive & supportive economic system increase levels of entrepreneurial activity (Source: Ministry of Energy, Communication & Multimedia, NST Mar 2002)
• 94 Malaysian SMEs with MSC status and 247 IT SMEs in 2001
4. Direct Attributes
Important elements for EC in Malaysia are :-
• Telecommunications Infrastructure: privatised & regulated liberalised market that allows for better tariffs & efficient service
• Internet Access Infrastructure services: reliable infrastructure provided for Internet use in the country (Tmnet, Jaring, TimeNet Central, MaxisNet)
• Data Centre Facilities: centralised repository for storage, management, dissemination of information equipped with security and essential hardware requirements (Skali,Mimos,Netcel 360,DataOne)
Important elements for EC in Malaysia (cont’d)
• Application & Managed Services provides network & content management, hosting, managed storage & security (Skali,FreeNet,Netmyne)
• EC Infrastructure & Services that enables efficient & effective clearing & settlement processes within EC (eg. MEPS)
• Service Providers such as EC, contents, government services in various industry spaces (see Next Slide)
Example of Achievements - Service Providers in Malaysia
The government envisage to:
• Foster world class communication networks.• Direct Internet connection to US via a back bone network in Japan (45 Mbps).• Seamless connectivity.
Internet / Broadband Access Infrastructure
Internet Services:
Network Infrastructure:
• Capable of accommodating various Internet operation.• Encouragement of development broadband connection - affordable broadband connectivity. • State of the art technologies form the last mile up to the backbone to fulfill the needs of business operations.
Network Capabilities
Dial-up on demand, Leased line,
Wireless, Cybercafes etc
PC, Notebook, Mobile Phone,
PDA, Pocket PC, WebTV, Kiosks,
Appliances
Banking Network for e-Payment
Router10Mbps +
Gigabit
Ethernet
Fast
Etherne
t
• Fully switched Local Area Network
• Network management, monitoring and reporting
• Shared, dedicated and burstable bandwidth
• Telecommunication lines to the servers
Caging ECP
34 Mbps (E3)
INTERNET Router
155 Mbps
Internet / Broadband Access Infrastructure
Internet Charges:
USD 1 = RM 3.8
E-Commerce Infrastructure and services
Shopping Cart Software
EC Applications
Single or Multiple Merchants
per Web Server
Merchant Server
128 bit SSL
WAP server
WTLS
1024bit RSA+ 56bit DES+ MID/TID+ Dig. Cert.+ IP add+ Signature
ECP Merchant Server
• Enterprise servers/DB
• UNIX operating system
• Redundant ECP apps
• 3-layered firewalls
• Multiple authentication
• Physical securities
• High speed access
• 24-by-7 tech support
• On-line reporting
• Continuos enhancement
Banking network
• Full range systems and applications solutions
• Ability to manages the technological complexities
• Flexible commercial packages
What is the Vision?
Methodology to a National e-Commerce Plan
To drive the economy towards higher productivity and higher value added economic activities through technology !
What do we want to achieve with an e-Commerce Plan?
Create the idealtechnologyenvironment to attract inbound customers
Enhance andbuild critical
massCatalyze a highly
competitivecluster of
Malaysia ICTcompanies
Create value forinformation age
businesses
Leapfrog intosuccess in the Information Age
Go Regional
Go Global
Access the Externalities
Successfullycreated MSC MSC Flagships
Knowledge Society
Phase 1 - 1996The providence of;• 1 Corridor.• 50 World Class companies.• Launch 7 flagship applications.• Framework of cyberlaws.• Cyberjaya as leading
intelligent city.
Phase 2 - 2002The providence of;• Funding (MAVCAP).• ICT Demand Creation.• Marketing Opportunities.• Technopreneur development program.
Phase 3 - 2007The providence of;• 500 world class companies.• Build critical mass.• Global testbed for new apps.• Linked to 12 intelligent cities world wide.
Access the Internalities
The Government of Malaysia commits the following :-
• To provide a world-class physical and information infrastructure.• Allow unrestricted employment of knowledge workers.• Ensure freedom of ownership.• Allow freedom of sourcing capital globally for MSC infrastructure
and freedom of borrowing funds.• Provide globally competitive telecoms tariffs.• Ensures no censorship of Internet• Provide competitive financial incentives including no income tax or
an investment tax allowance for up to ten years and no duties on the import of multimedia equipment.
Response
1. Recognising Malaysia was losing its comparative advantage in its traditional economic sector;
2. The need to drive the economy forward with higher productivity;
3. E-Commerce through IT presented the best opportunities.
Objective :
1. Human Resource Development.
2. SMEs.
3. World class companies.
4. Rapid growth in sales and export.
5. Knowledge base employment - job creations.
Vision to Reality:
Strategies…
• Immediate term e-commerce strategies are as follows :-– Active user of ICT – Increase e-commerce awareness among the Malaysian export
community– Facilitate exporters’ entry into e-commerce and e-business.
• Long term e-commerce strategies are as follows :- – to build a critical mass of at least 70% e-commerce-ready exporters
among companies which are registered with MATRADE’s exporters registry.
– To accelerate the adoption of e-commerce among Malaysian exporters with focus on specific markets.
Malaysia’ e-commerce strategy is considered a model for other countries. The following strategy outlines challenges and opportunities for business and consumers. Strategic Action Plan needed is divided into four main components:
• Building trust in digital economy. – Security and encryption– Privacy: the protection of personal information
• Consumer protection– Legislation (Consumer Acts).– Public education.– Enabling technologies.
• Legal and commercial framework. – Recognition of electronic signatures. – Evidence rules for electronic records.– Liability.– Intellectual property protection.
• Network access and availability– Telecom investment. – Research network.– Localization and multilingualism.
Malaysia’s experiences...
Source: MDC, 2000
Malaysia’s experiences...
Source: International Data Corp.
5. Conclusion
To implement such successful e-commerce strategies, Malaysia need to encourage SME to export more through the use of e-commerce to develop an expert culture among enterprises and promote their products worldwide which in return increases the overall national trade.
Doing so, several factors are mandatory to drive the success, namely;
• Build critical mass.• Ready infrastructure.• Policy and Regulatory Framework.• Attracting inbound customers.