What is a Digital Free Trade Zone

A digital free trade zone is an e-hub is  designed specifically for small businesses with services provided for such as logistics, payments, financing and inspections. This concept was proposed by  Alibaba founder Jack Ma and is part of his ambition, raised last year (in 2016), to build a global e-commerce platform, called the Electronic World Trade Platform. It would serve the interests of SMEs that have been left out of the world's free trade regime in the past.

Note that the idea of a Digital Free TRade Zone has existed as early as 2002, as documented in The John Marshall Journal of Information Technology & Privacy Law. Read http://repository.jmls.edu/cgi/viewcontent.cgi?article=1146&context=jitpl

In most countries SMEs contribute more than 50 percent of GDP and an even higher percentage of employment. But SMEs face challenges such as poor access to global markets, complex regulations and certifications designed for big companies, and a lack of access to financing.

Malaysia is expected to announce details of its planned Digital Free Trade Zone in April 2017, as it seeks to boost the country’s burgeoning e-commerce sector.

The Malaysian Digital Free Trade Zone,  to be spearheaded by the Malaysia Digital Economy Corporation (MDEC) will among other things, knock down tariffs imposed on items being shipped into the Malaysia that are priced over RM500.

International Trade and Industry Minister II Datuk Seri Ong Ka Chuan said the challenge now would be to get other countries Malaysia commonly did e-commerce deals with to get onboard with its Digital Free Trade Zone.

“This is a free trade agreement, we want to liberalise e-commerce because at the moment we only have a very basic policy.

“We want to do away with tariff barriers but not only our country has to do this, we have to talk to all other countries so that Malaysian products can go there and their products can come into our country freely,” he said.

Malaysian e-commerce currently contributes a measly 8.8% to the country’s annual gross domestic product (GDP). China’s Internet economy accounts for 20% of the People’s Republic’s GDP.

Benefit of using Digital Free Trade Zone

Whether you are large corporations looking to start your e-commerce initiative, or an SME which is leveraging on digital, or even a consumer who wants to buy cheaper products online – you should benefit from the incentives including tax exemptions, especially if this digital free trade zone works similarly to other free trade zones in the real world.


Digital Free Trade Zone in Sarawak?

Setting up more locations including some in Sarawak as “Malaysia digital hub” will provide startups, innovators and technopreneurs with a platform to collaborate with like-minded digital organisations. This will create an ecosystem that will continuously bring fresh and disruptive ideas to the market, and accelerate the creation of new products and services. 

Meanwhile, to succeed and leapfrog their competitions in this digital era, it is imperative for businesses in Sarawak especially, to integrate software into all aspects of their operations and embrace digital transformation.