Finally, it’s official.
On 3 November 2017, Prime Minister Datuk Seri Najib Tun Razak and Jack Ma, Alibaba Group’s Executive Chairman hit the traditional Malay gong three times as a symbol to proudly officiate the world’s first ever Digital Free Trade Zone (DFTZ) at the KLIA Aeropolis DFTZ Park in Sepang, Selangor.
Isn’t it impressive?
Perhaps, if you are reading this, you may wonder, ‘How is it going to impact me?’ Here, in this article, I’ll briefly explain what DFTZ is, which parties are ones who stand to gain the most from DFTZ and more importantly, how you can position yourself to benefit, directly or indirectly, from DFTZ.
First of all, What’s DFTZ?
DFTZ is an initiative of our government to develop a friendly ecosystem to further grow the booming internet economy and e-commerce activities in our country. Spearheaded by Malaysia Digital Economy Corporation (MDEC), the DFTZ will consist of three key components:
- e-Fulfilment Hub
It involves the development of KLIA Aeropolis into an aviation, air cargo and logistics hub in Malaysia and the ASEAN region. It helps local businesses, particularly small and medium enterprises (SMEs) to export their goods faster and more efficiently.
- Satellite Services Hub
It involves the development of Kuala Lumpur Internet City (KLIC) at Bandar Malaysia. It envisions to be the Silicon Valley of Southeast Asia, gathering both local and global e-commerce players, technology firms, and aspiring entrepreneurs into the internet ecosystem.
- E-Services Platform
It involves the development of an integrated and accelerated trade facilitation platform that provides end-to-end business support for cross-border trade, market access to global customers, and seamless and streamlined digital experiences to multiple users of the DFTZ.
Here’s the next question: ‘Who benefits the most from DFTZ?’
Thus, I’ll list down five principal beneficiaries who are expected to be reaping the most from this initiative and more importantly, share my personal views on how you can position yourself to be a gainer of the DFTZ.
Beneficiary #1: The Alibaba Group
Please bear with me as I start with the obvious.
Presently, Alibaba is the main strategic partner of the DFTZ. It has massive involvement in the establishment of DFTZ. This includes Lazada, Cainiao and of course, Alipay. I’ll elaborate more of their individual engagements in Beneficiary #2. But here, suffice to say, Alibaba can gain market access to a massive population of 625 million in Southeast Asia, some 45% of the total population of China presently.
Beneficiary #2: Government-Linked Corporations
Alibaba, through various subsidiaries, has formed strategic collaborations with several government-linked companies (GLCs) which include:
- Pos Malaysia Bhd
Our national courier is the operator of a warehousing facility within KLIA Aeropolis where its primary user is Lazada. This is the first phase of the DFTZ development. Presently, Alibaba has 83% shareholdings in Lazada after investing US$ 2 billion into it.
- Malaysia Airport Holdings Bhd (MAHB)
It involves the setting up of a regional e-commerce logistics hub by MAHB and Cainiao. It is the second phase of the DFTZ development and is scheduled to be operational in 2019. Cainiao is a subsidiary of Alibaba Group which operates a logistics data platform in China.
- Maybank and CIMB
Maybank and CIMB are working with Alipay to enable alternative cashless payment facilities among merchants in Malaysia. It allows both banks to capitalize on an estimated 3 million Chinese visitors who are spending as much as RM 9 billion during their visitation in our country.
Beneficiary #3: Local Businesses & SMEs
You could be a direct beneficiary of DFTZ if you are a business owner who operates in the Klang Valley. Obviously, how you might benefit would differ as it is dependent on the nature of your trade and industry.
1. Traders & Manufacturers
If you have a trading office, a warehouse, or a manufacturing plant based in the Petaling District (Shah Alam, Subang Jaya, and Petaling Jaya), you could stand to gain the most out of DFTZ. Why? The reason is that the Petaling District is situated right at the center of DFTZ where you can reach all of the three main infrastructures of DFTZ under one-hour drive.
We’ve produced a short video to map out the DFTZ, highlight the three infrastructures and briefly explain on the connectivity of the Petaling District in the DFTZ.
2. Retail, Hospitality & Tourism
Clearly, we want Chinese tourists to spend more money in Malaysia. It is why more local merchants, especially in the Klang Valley, are now using Alipay to accept payments. Today, Alipay terminals are available at Sunway Resort Hotel, Sunway Pyramid Hotel, Sunway Clio Hotel, hotels, spas, and retail operations owned by YTL Hotels & Properties, Resort World Genting and the associated merchants within the Genting Integrated Tourism Plan.
3. Business Support Services
The success of DFTZ requires an array of business support services which include warehousing, fulfillment, freight forwarding, last mile delivery, payments, insurance, financing, legal, IT, human resources, training and the list goes on. In short, the DFTZ is expected to create more business opportunities within the Klang Valley which lead us to Beneficiary #4.
Beneficiary #4: Malaysian Jobseekers
The DFTZ targets to double the growth rate of SME’s goods exports to an ambitious US$ 38 billion by 2025. In addition to SMEs, the DFTZ aims to attract multinational corporations (MNCs), global brands and marketplace owners to have market access in the ASEAN region by having a presence in the DFTZ.
As such, the DFTZ is expected to create 60,000 jobs, mainly highly skilled and valuable employment among job seekers who want to build a real career in Malaysia. Of course, the number of individual beneficiaries will be much higher if we include aspiring local entrepreneurs who intend to establish their e-commerce businesses within the DFTZ. Evidently, the DFTZ is one of the initiatives of our government to elevate Malaysia into a high-income nation.
Beneficiary #5: Property Investors
Here, I’ll address two groups of property investors.
1. Residential Property Investors
Based on the National Property Information Centre (NAPIC), the Petaling District is the largest real estate market in the wealthy state of Selangor. The DFTZ is an effort that could elevate the prosperity of people residing in the Petaling District to greater heights through job and business creation. It would attract and boost the number of potential tenants, home buyers and even property investors in the Petaling District.
2. Commercial Property Investors
There are SMEs, local businesses and MNCs who choose to remain asset-light by leasing their business premises instead of purchasing them. Thus, the DFTZ could drive demand for strategically located commercial properties such as industrial buildings, warehouses, and offices to complement their business needs. It would attract more wealthy investors to consider investing in commercial properties in the DFTZ.
If You’re a Serious Investor …
Definitely, I would keep abreast of the developments of the DFTZ. If you are looking to invest in a commercial property, you may consider how your potential tenants would benefit from the DFTZ. You’ll assess various factors such as the property’s location, its connectivity, and its functionality.
Do consider assessing a commercial unit at Sekitar26 Enterprise under Paramount Property. Evidently, it is located at the center of the DFTZ and is easily accessible via six major highways, i.e., KESAS, LKSA, Elite (connect to KLIA Aeropolis), LDP, NPE, Federal Highway (connect to both Klang and Bandar Malaysia).
Paramount Property also has some other projects that could benefit from DFTZ, including Sejati Residences in Cyberjaya and Greenwoods in Sepang that are located within the triangle of DFTZ.
If you would like to know more about Paramount Property projects, please kindly sign-up your interest form below:
This article is sponsored by Paramount Property, an award-winning developer with more than 35 years of proven track record in the property development industry in Malaysia. Some of their other notable projects include Paramount Utropolis in Glenmarie, Greenwoods in Salak Perdana, Kemuning Utama in Shah Alam, and Sejati Residences in Cyberjaya.