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E-Commerce and Content Development Strategic Directions and Success Strategies of 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. 1. Overview

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E-Commerce and Content Development

Strategic Directions and Success Strategies

of Electronic Commerce in Malaysia

March 2002


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E-Commerce has got more to do about the management of People and Culture in adopting Technology rather than the management of technology itself.


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1. Overview

National Electronic Commerce Strategic Directions

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.


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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



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FUNDING

Service Providers - E-Commerce, Portals, Government Services

E-Commerce Infrastructure & Services

Application & Managed Services

Local ICT Demand

People & Culture

Data Centre Facilities

Internet/Broadband Access

Telecommunications

Entrepreneurship & Technopreneurship

Important elements for E-Commerce in A Country - The Big Picture

E-COMMERCE


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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


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3. The Externalities

No. of

ICT

Companies

Pre-IPO

Funding

Early Stage

(Idea and Seed)

Expansionary

Early Stage

(Idea and Seed)

No. of

ICT

Companies

Start-up

Profile of ICT companies in developed countries

Start-up

Expansionary

Pre-IPO

Profile of ICT companies in developing countries

Note: Explanation of development stages is attached as Appendix I


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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

Grants, Incubation

Angels

No. of

ICT

Companies

Early Stage

(Idea and Seed)

VCs / Debt Funding

Start-up

Expansionary

Pre-IPO


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Operational

Cashflow

SNAP Value Added =

Market/ Customers + Funding + Business Development + Skali Services

Skali’s

SNAP

Normal

Approach

0

Time Line

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


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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

  • 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


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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.

  • 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.

Source: MDC, 2000


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  • 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


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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



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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)


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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)


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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.


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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.


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34 Mbps (E3)

Gigabit Ethernet

Fast Ethernet

Router

Router

10Mbps +

155 Mbps

ECP

Dial-up on demand, Leased line, Wireless, Cybercafes etc

INTERNET

Caging

  • Fully switched Local Area Network

  • Network management, monitoring and reporting

  • Shared, dedicated and burstable bandwidth

  • Telecommunication lines to the servers

PC, Notebook, Mobile Phone, PDA, Pocket PC, WebTV, Kiosks, Appliances

Banking Network for e-Payment

Network Capabilities


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Internet / Broadband Access Infrastructure

Internet Charges:

USD 1 = RM 3.8


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WAP server

Single or Multiple Merchants

per Web Server

EC Applications

Shopping Cart Software

E-Commerce Infrastructure and services

  • 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

Merchant Server

WTLS

ECP Merchant Server

128 bit SSL

1024bit RSA

+ 56bit DES

+ MID/TID

+ Dig. Cert.

+ IP add

+ Signature

  • Full range systems and applications solutions

  • Ability to manages the technological complexities

  • Flexible commercial packages

Banking network


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Methodology to a National e-Commerce Plan

What is the Vision?

To drive the economy towards higher productivity and higher value added economic activities through technology !


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Catalyze a highly

competitive

cluster of

Malaysia ICT

companies

Create the ideal

technology

environment to

attract inbound

customers

What do we want to achieve with an e-Commerce Plan?

Go Global

Enhance and

build critical

mass

Leapfrog into

success in the

Information Age

Create value for

information age

businesses

Go Regional


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Access the Externalities

Knowledge

Society

  • Phase 3 - 2007

  • The providence of;

  • 500 world class companies.

  • Build critical mass.

  • Global testbed for new apps.

  • Linked to 12 intelligent cities

  • world wide.

  • Phase 1 - 1996

  • The providence of;

  • 1 Corridor.

  • 50 World Class

  • companies.

  • Launch 7 flagship

  • applications.

  • Framework of cyberlaws.

  • Cyberjaya as leading

  • intelligent city.

  • Phase 2 - 2002

  • The providence of;

  • Funding (MAVCAP).

  • ICT Demand Creation.

  • Marketing Opportunities.

  • Technopreneur

  • development program.

MSC Flagships

Successfully

created MSC


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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.


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Vision to Reality:

Objective :

1. Human Resource

Development.

2. SMEs.

3. World class companies.

4. Rapid growth in sales and

export.

5. Knowledge base

employment - job creations.

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.

Response


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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.


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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.


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  • Legal and commercial framework. other countries. The following strategy outlines challenges and opportunities for business and consumers. Strategic Action Plan needed is divided into four main components:

    • Recognition of electronic signatures.

    • Evidence rules for electronic records.

    • Liability.

    • Intellectual property protection.

  • Network access and availability

    • Telecom investment.

    • Research network.

    • Localization and multilingualism.


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Malaysia’s experiences... other countries. The following strategy outlines challenges and opportunities for business and consumers. Strategic Action Plan needed is divided into four main components:

Source: MDC, 2000


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Malaysia’s experiences... other countries. The following strategy outlines challenges and opportunities for business and consumers. Strategic Action Plan needed is divided into four main components:

Source: International Data Corp.


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5. Conclusion other countries. The following strategy outlines challenges and opportunities for business and consumers. Strategic Action Plan needed is divided into four main components:

  • 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.


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