E-Commerce and Content Development Strategic Directions and Success Strategies of Electronic Commerce in Malaysia - PowerPoint PPT Presentation

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E-Commerce and Content Development Strategic Directions and Success Strategies of Electronic Commerce in Malaysia

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  1. E-Commerce and Content Development Strategic Directions and Success Strategies of Electronic Commerce in Malaysia March 2002

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

  3. 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.

  4. 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

  5. Unknown Road Ahead. But what are the drivers?

  6. 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

  7. 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

  8. 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

  9. 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

  10. 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

  11. 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

  12. 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

  13. 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

  14. 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

  15. 4. Direct Attributes

  16. 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)

  17. 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)

  18. 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.

  19. 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.

  20. 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

  21. Internet / Broadband Access Infrastructure Internet Charges: USD 1 = RM 3.8

  22. 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

  23. 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 !

  24. 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

  25. 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

  26. 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.

  27. 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

  28. 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.

  29. 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.

  30. 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.

  31. Malaysia’s experiences... Source: MDC, 2000

  32. Malaysia’s experiences... Source: International Data Corp.

  33. 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.