The pandemic has led to a sharp growth in the global e-commerce market, as consumers shifted towards online shopping due to lockdown and movement restrictions. Currently, Malaysia’s e-commerce market is valued at USD 4 billion, while Southeast Asia and China have a combined value of USD 1.6 trillion. As the global e-commerce market is expected to grow to over USD 3 trillion in the next five years, Malaysia’s Micro Small Medium Enterprises (MSMEs) need to maximise their export opportunities through cross-border e-commerce and free trade agreements.
Prior to exporting, MSMEs should ensure they have the necessary documentation and information to provide to customs declaration at the border. In addition, they need to consider the duties and taxes payable when their products enter the country of destination. Shipments with values below the de minimis threshold may enter duty or tax free. MSMEs also need to be aware of the border restrictions and controls for certain commodities.
The Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) are free trade agreements (FTAs) that cover the Asia Pacific region. These FTAs increase ease of trade as only one certificate of origin document is needed for all countries under the FTA.
The RCEP was effective in Malaysia since March 2022, and will eliminate 92 percent of tariffs over a period of twenty years. The RCEP covers fifteen participating economies, which includes Malaysia, Australia, Brunei, Cambodia, China, Indonesia, Japan, Laos, New Zealand, the Phillipines, Singapore, South Korea, Thailand, Myanmar and Vietnam.
Meanwhile, the CPTPP was effective in Malaysian since November 2022, and will eliminate 98 percent of tariffs over a period of ten years. As a result of the CPTPP, Malaysia has established free trade for the first time with Canada, Mexico and Peru. The CPTPP is effective in Malaysia, Japan, Vietnam, Brunei, Singapore, Australia, New Zealand, Canada, Mexico, Peru, Chile and the United Kingdom. The United Kingdom has recently joined the CPTPP on 16 July 2023.
When exporting to key markets outside Asia, MSMEs need to consider that most consumers worldwide are sourcing and buying from business abroad for the best deals. This applies particularly to European consumers, who prefer to shop online as it is more convenient to have their items delivered. Products are also usually cheaper online and there is a better selection of products. Moreover, it is quicker and easier to shop and find good deals online.
MSMEs who require more information on export requirements may reach out to MATRADE for assistance.
MATRADE FTA Brochure: Link
MATRADE Headquarters,
Menara MATRADE,
Jalan Sultan Haji Ahmad Shah,
Off Jalan Tunku Abdul Halim,
Kuala Lumpur 50480,
Malaysia
E: info@matrade.gov.my
T: +603-6207 7077
Sources:
MATRADE Webinar (Maximising Export Opportunities for Malaysian MSMEs Via E-Commerce and FTAs)