• Like
Nordin Malaysia
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

Nordin Malaysia

  • 1,972 views
Published

 

Published in Education , Business , Sports
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
  • excellent presentation from Malaysia -- Shariff K. Pakistan
    Are you sure you want to
    Your message goes here
No Downloads

Views

Total Views
1,972
On SlideShare
0
From Embeds
0
Number of Embeds
0

Actions

Shares
Downloads
34
Comments
1
Likes
1

Embeds 0

No embeds

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
    No notes for slide

Transcript

  • 1. W T O R E G I O N A L S E M I N A R O N E L E C T R O N I C C O M M E R C E Geneva, Switzerland  22 April 2002 Revenue Implications Of E-Commerce Government and Private Sector Experiences MALAYSIA Presentation by: Suhaimi Nordin Senior Manager - Borderless Marketing / E-Business Multimedia Development Corporation [email_address]
  • 2. Agenda
    • Background – Overview of Malaysia’s Broad Vision and Strategy
    • E-Commerce – The Scenario
    • Implications / Challenges of E-Commerce (The Malaysia Experience)
    • Closing Remarks
  • 3. VISION 2020
    • Vision 2020 – a national vision of creating a developed nation in our own mould
    • Characteristics of a Vision 2020 society:
      • Strong moral and ethical values self-regulating and self-managing empowered through information and knowledge based on the concept of the dignity of human-kind
    • Characteristics of a Vision 2020 economy:
      • Robust and resilient competitive and dynamic, but with fair and equitable distribution of wealth
  • 4. Vision of Knowledge-Malaysia by year 2020 Information Society Knowledge Society Values-based Knowledge Society 2020 Economic Social - - People are Integral - - Information and Communication Technology as an Enabler
    • Access to information
    • ICT as a sector and information as a commodity
    • Culture of a life long learning and innovation
    • United, moral and ethical society
    • Sustainable quality of life
    • Value creating knowledge products and services
    • Competitive Knowledge Economy
  • 5. Multimedia Super Corridor’s Vision – Conceived As the Next Engine of Growth for Malaysia
    • The MSC was set up based on:
      • The recognition that Malaysia was losing its comparative advantage in its traditional economic sectors;
      • Need to drive the economy towards higher productivity through technology and high value-added economic activities;
      • Knowledge Economy and converging technologies presented the best opportunities for socio-economic transformation.
      • The need for the adoption & application of ICT to enhance national competitiveness and to help bridge the Digital Divide.
  • 6. The MSC Strategy Create the ideal multimedia environment to attract world-class companies to use MSC as a hub Catalyze a highly competitive cluster of Malaysian multimedia/IT companies that become world-class over time MSC STRATEGY Go Global Lead Regional Create value from Information Age businesses Enhance domestic productivity
  • 7. The MSC – More Than Just a Technology Park
    • 15 x 50 km Corridor South of Kuala Lumpur
    • Special Cyberlaws, policies and practices tailored to enable smart partners to achieve maximum benefits of multimedia
    • World class infra-structure and next generation 2.5 - 10 Gb multimedia network
    • MDC - a premier one-stop shop to facilitate and promote the development and investment in the MSC
    PELABUHAN KLANG KLANG PETALING JAYA KLCC PULAU CAREY BANTING TELOK PANGLIMA GARANG TELOK DATOK BANDAR BARU NILAI KLIA SEPANG PORT DICKSON SEREMBAN BERANANG SEMENYIH COUNTRY HEIGHTS KAJANG SHAH ALAM 2 5 k m BANDAR BARU BANGI 2 0 k m S H A H A L A M E X P R E S S W A Y S O U T H K L A N G V A L L E Y E X P R E S S W A Y N O R T H - S O U T H E X P R E S S W A Y ED ER AL HI K L - K L A N G F G H W A Y N O R T H - S O U T H E X P R E S S W A Y C E N T R A L L I N K PULAU INDAH D E D I C A T E D H I G H W A Y AIRPORT CITY BANDAR SALAK TINGGI P U T R A J A Y A L I N K E R L R A A Y I L W Y W E S C O T A H S I G T H W A
  • 8. MSC Flagship Applications Telehealth Smart Schools Multipurpose Card R&D Cluster Electronic Government Worldwide Manufacturing Web Borderless Marketing Centre E-Business
    • OBJECTIVES
    • To Improve:
    • Access - any time, any where, any means
    • Convenience – inline to online
    • Efficiency
  • 9. Progress To-date
    • 670 MSC Status companies, 50 world class
    • Government Multi-Purpose Card (GMPC) Flagship Application Roll-Out
    • Growing investments in technology and high value-added economic activities
    • Rapid growth in sales and exports
    • New knowledge-based employment opportunities created
    • Growth in institutions of higher learning and supply of knowledge workers
    • Growth in SME participation
    • Spin-offs to economy including productivity increases
  • 10. World Class Companies With Regional Initiatives in the MSC
  • 11. Other World Class Companies in the MSC
  • 12. The MSC Vision: From Here To 2020 Leapfrog into leadership in the Knowledge Economy
    • 1 Corridor
    • 50 world-class companies
    • Launch 7 flagship applications
    • World-leading framework of cyberlaws
    • Cyberjaya as world-leading intelligent city
    • Web of corridors
    • 250 world-class companies
    • Set global standards in flagship applications
    • Harmonized global framework of cyberlaws
    • 4-5 intelligent cities linked to other global cybercities
    • All of Malaysia
    • 500 world-class companies
    • Global test-bed for new multimedia applications
    • International CyberCourt of Justice in MSC
    • 12 intelligent cities linked to global information highway
    Transform Malaysia into a knowledge society Phase 3 Phase 2 Link the MSC to other cybercities in Malaysia and worldwide Phase 1 Successfully create the Multimedia Super Corridor 1996 2020 2003 2010
  • 13. Agenda
    • Background – Overview of Malaysia’s Broad Vision and Strategy
    • E-Commerce – The Scenario
    • Implications / Challenges of E-Commerce (The Malaysia Experience)
    • Closing Remarks
  • 14. E-Business Within MSC Status Companies Companies with own transaction capabilities Developing solutions to enable E-Commerce 1997 1998 1999 2000 2001 2002 Forecast* MSC Status Co. directly involved in E-Commerce Businesses / No of MSC Status Companies 138 621 86 429 Percentage of E-Commerce related businesses 22% 20% 300 197 94 700* 34 11% 20 10% 35%* 245* 33 105 15 71 3 32 50* 195* Indicator 6 6% 0 6 19 1
  • 15. E-Business Within MSC Status Companies 33 (15 in Yr 2000) companies directly undertakes E-Commerce / E-Business with transaction capabilities There are 138 / 621 (22%) MSC Status Companies which are directly involved in E-Business / E-Commerce businesses. (As of 31 Dec 2001) 24% 76% 105 (71 in Yr 2000) companies develop and implement e-solutions to enable their customers to undertake E-Commerce Source: MDC
    • EC Technology Providers and/or System Integrators
    • EC Consultancy Services
    • Content Development
    • EC Training
    • E-Business software / applications development
    No. of Companies With Industry Focus Solutions Provider 23 Financial 19 Fulfillment 18 Software Apps Dev 16 Portal Dev 12 R&D Apps 10 CRM 6 Travel/Hotels 6 Manufacturing/ERP 5 Web Hosting 5 Insurance 3 Healthcare 3 Others 12
  • 16. asiatravelmart.com
    • Highlight:
    • AsiaTravelMart is a one-stop travel shop for hotels, air tickets, tour packages and other travel products
    • Offers more than 60,000 products from over 3,000 travel suppliers in more than 100 countries
    • Also, offers mobile-commerce transactions to WAP users (world’s first).
    • Awards, including PATA Gold 2000, Internet World Asia Industry Award, PIKOM Award and APMITTA Award
  • 17. SMEs - (smarttransact.com)
    • Highlight:
    • One Stop powerhouse for E-Commerce solutions: providing a complete set of software, infrastructure and services.
    • Established in 1999 with 3 staff and has grown to 130 staff (March 2001)
    • Recorded revenue of US$3 million (US$ 1 million profit) – March 2001
    • 95% of revenue came from overseas
    • Clientele spread worldwide including Ireland, U.S and Hong Kong
    • “ Internet Company of the Year” – Malaysia Internet Awards 2000
  • 18. SMEs - (watchesplanet.com)
    • Highlight:
    • Malaysian watch e-tailer (B2C) Watches are Duty-Free items
    • Started in 1998 with a capital of US$65,800, Year 2000 sales was US$1.1million.
    • Offers over 5,000 watches from 60 brands. Price average US$100 – US$2,000
    • 75% customers from North America
  • 19. Growth of Internet Subscribers in Malaysia (1995-2005) Source : MECRA (TMnet, Jaring, MaxisNet, TimeNet), PIKOM, MDC, MECM 25 90 210 442 892 1,852 3,111 4,225 4,837 5,525 6,005 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 Year (1995 – 2000) (‘000 million) Projected growth An Internet penetration of 20% of population will spur the growth of E-Commerce in Malaysia
  • 20. Total E-Commerce Revenue Growth for Malaysia (1997 – 2005) Source : IDC Internet Commerce Market Model, IDC 2001 eCommerce Revenue continue to grow US$384 million in 2000 to US$9.4 billion in 2005 US$383.5m US$675.6m US$million US$9,336.2b
  • 21. Agenda
    • Background – Overview of Malaysia’s Broad Vision and Strategy
    • E-Commerce – The Scenario
    • Implications / Challenges of E-Commerce (The Malaysia Experience)
    • Closing Remarks
  • 22. E-Commerce – Lessons Learnt There are many definitions for E-commerce. Examples: “ The electronic exchange of information goods, services and payments” but underneath the surface E-commerce is also: … the digitization of information ...Internetworking of human ingenuity creating a new socio-economic transformation … propelled by BRAINS instead of BRAWN … driven off by both technology push and business pull … the foundation of a new economic order Nations need to identify clusters for industrial development and reposition themselves to be at the centre of the virtual marketspace…
  • 23. E-Commerce Reduces Transaction Costs “ Transaction costs represent more than 50% of the activities within the US economy. Transaction activities are defined as defining, protecting, and enforcing property rights to goods (the right to use, the right to derive income from the use of, the right to exclude, and the right to exchange.” - Douglass North, US-economist and Nobel laureate Source: OECD 8.0 1.0 Airline Tickets 1.08 0.54 0.13 2.22 to 3.32 0.54 0.13 400-700 200-350 15.00 5.00 0.20-0.50 Banking Bill Payment Term Life Insurance Software Distribution US$ per transaction E-commerce reduces transaction costs ! Traditional System Telephone based Internet based
  • 24. The Destruction Of The Vertically Integrated Value Chain Integrated monolithic Vertical value chain Multiple product specialists collaborating within an e-business community, creation of alliances Domain: Closed Proprietary Network Domain: The Internet CHANGE These Companies can deliver products and services at a much lower cost and utilising fewer assets !
  • 25. New Infomediaries – “Hollowing-Out” Physical Economy ‘ Marketplace’ Digital Economy ‘ Marketspace’ Product e.g. Malaysian Consumers $$$ Foreign/Malaysian Consumers e.g. Malaysian intermediaries Multi Products INFOmediaries: Portals, Search Engines, Communities Gateways, Call/Service Centers Information Customisation Fulfillment Multiple Sources
  • 26. A Service Centric Model Infomediary leverages information by “BUYING at the point of LEAST COST and SELLING to the point of HIGHEST PRICE” INFOMEDIARY operating under the VIRTUAL VALUE CHAIN PHYSICAL INFRASTRUCTURE (i) Telecommunications (ii) Integrated Global Logistics Supplier A Country 1 Manufacturer B Country 2 Designer C Country 3 Distributor D Country 2 Customer E Country 4 Utilize : 1.Infrastructure to arbitrage cost, skills, productivity, taxes, etc. across multiple jurisdictions 2. Network and information 3. Channels of distribution
  • 27. E-Commerce Implications In Context Of Globalisation 1. First-mover enjoys entrenched position as ‘lock-in’ increases switching costs 2. There will winners and losers in Knowledge Age 3. Government interventionist policies are needed to correct for market imperfections 4. Capital will gravitate towards a few ‘hubs’ which have developed a critical mass of users and producers E-Business may be used to circumvent non-tariff barriers and gain access to the protected service sectors of emerging economies. United States of America Canada Australia New Zealand Japan United Kingdom Germany Singapore Ireland India Malaysia
  • 28. Major Concern – Impact of EC on Tax
    • Growth of virtual organisations as opposed to “standing agency”
    • Trading conducted electronically without physical presence of people or agencies
    • No clear definition of “transaction” for determining tax collection
    • Loss of revenue due to growth of tax evasion and black economy
  • 29. Policy and Regulatory Framework “ We need the government to raise awareness and promote Malaysian’s IT capabilities and competencies in the international market” “ We need government endorsement for our services to better promote our company in the global marketplace” “ E-commerce in Malaysia is uncertain, there are no clear guidelines for implementation” “ We are looking for financial incentives from the government for further development” Feedback from EC vendors and users
    • Standard guidelines for e-commerce, i.e. regulations
    • Endorsement of credible merchants
    • International promotion of local e-commerce products/services
    • Consumer protection
    • IP Protection and Enforcement
    • Grants and subsidies
    • Taxation
  • 30. Consumer Protection
    • Proper legal and regulatory framework vital in ensuring consumer confidence
    • Existing legal framework insufficient:
      • new Consumer Protection Act excludes electronic transactions
      • No vendor authentication
      • Lack of effective statutory remedies available to online consumer
    CONSUMER PROTECTION ACT Traditional transactions Electronic Transactions
  • 31. POLICY AND REGULATORY FRAMEWORK – Increasing Consumer Confidence
    • Expanding existing laws and enacting new Act to apply to electronic transactions
      • Laws should apply equally to online and offline transactions
    • Review role of Existing Regulator :
      • New or existing regulator with expanded scope
      • Minimal and light handed intervention
      • Register of E-Commerce vendors
    • Promotion of Self Regulation:
      • Accreditation agencies to encourage reputable vendors
      • Consumer Code for vendors
    • Consumer Guidelines for consumers
    CHALLENGES
  • 32. Intellectual Property Management & Commercial Code
      • Intellectual Property Management
      • Conflict between trademark rights and registration of domain names
      • Inequality of bargaining power in registration of domain names
      • Commercial Code
      • Application of general contractual principles to E-Commerce, particularly cross border transactions
  • 33. Intellectual Property Management & Commercial Code
      • Commercial Code
      • Enacting new laws based on UNCITRAL Model Law to apply contractual principles to E-Commerce
      • Intellectual Property Management
      • Accord Domain Name protection and management under the Communication and Multimedia Commission
      • Develop an IP management systems for the distribution and management of the intellectual property especially content services.
      • Educate consumer on the importance of the protection as well as its rules and regulation
      • Implement cyber laws that have already been implemented as well as keeping track of new technology to make a more proactive legislation
    CHALLENGES
  • 34. Dispute Resolution MALAYSIA LEGAL SYSTEM New System Jurisdiction of dispute Malaysian Court Choice of law Malaysian Law Evidence Act REFJA (Reciprocal Enforcements of foreign Judgement Act) REFJA is not enforceable in some major trading partners Evidence electronic document Choice of law foreign or local? Jurisdiction of dispute Local or foreign court? Existing System The nature of E-Commerce causes existing laws not able to cover the resolution process especially in cross border issues
  • 35. Dispute Resolution (Cont’d)
      • Amendments to the rule of procedure and evidence to allow for the evaluation of digital information
      • Establishing independent dispute resolution body to deal with E-Commerce effectively and expeditiously
      • Advance the enforcement of awards of such body transnationally
    CHALLENGES
  • 36. Taxing E-Commerce Transactions
    • Income Tax
    • Difficulty in applying “source based” concept to E-Commerce. How far would a Web page/Server constitute a physical existence
    • Provisions do not capture multi jurisdictional transactions
    • Difficulties of enforcement, e.g. Encryption technology and Audit trails
    • International cooperation is needed
    • Stamp Duty
    • Application of stamp duties apply to electronic documents - Stamp Act 1949 based on paper instruments
    • Difficulty of enforcement and compliance
    • Sales and Service Tax and Customs and Excise Duties
    • Record keeping requirements still based on paper medium
    • Enforcement provisions should provide for electronic records
    • Delivery of intangible goods increases the avoidance of duty
    • Provisions for compliance insufficient to capture E-Commerce transactions
  • 37. Taxing E-Commerce Transactions
    • Deeming provisions – The current Income Tax Act have to extend the source based tax regime to include income produced via ISP located in Malaysia
    • Stringent regulations as to identity – The authorities may want to consider the possibility of drafting legislation that would impose duty on the service provider to obtain the information of businesses registering with them
    • Wider powers of review – Wider audit power by IRB to investigate private documents that may include decoding any encrypted data or placing log file with the ISPs to monitor taxpayers activities on the Internet
    CHALLENGES
  • 38. Taxing E-Commerce Transactions (Cont’d)
    • Re-negotiate Double Tax Agreement (DTA) – The current DTAs are unclear as of whether websites or host server are permanent establishment that are subjected to tax
    • Electronic stamping – Extending the existing stamp duty to electronic documents
    • Monitor the flow of intangible goods – With the influx of intellectual property into the country, Royal Customs and Excise Department should monitor the size and growth of IP to ascertain whether to tax or not to tax
    • Technologically advanced IRB – The taxing authorities should upgrade their technical capabilities to deal with encryption technology and the paperless trail to further enhance their audit and investigative powers.
  • 39. Agenda
    • Background – Overview of Malaysia’s Broad Vision and Strategy
    • E-Commerce – The Scenario
    • Implications / Challenges of E-Commerce (The Malaysia Experience)
    • Closing Remarks
  • 40. In Conclusion
    • Recognise that E-Commerce will transform the national/global economic landscape and the emergence of new breed of companies providing services in the e-space.
    • The borderless nature of E-Commerce will expose to the impacts of liberalisation and globalisation and it is imperative for nations to be e-ready.
    • The need to focus and develop skills in knowledge intensive areas required by global markets e.g. EC Tax advisors, Lawyers etc.
    • Clear policy framework required to create climate for growth of ICT sector.
  • 41. Thank-You