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Malaysia ecommerce expects 23% yearly growth until 2021

News, 06 June 2017
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KUALA LUMPUR: Malaysia's online retail market is forecast to grow 23% per year until 2021, largely down to electronics and media, according to a new report from management consultancy firm A.T. Kearney.

The firm's Global Retail Development Index, released this week, which explores "the geopolitical scene and how it affects business," according to co-author Hana Ben-Shabat. The report ranks the top 30 developing countries for retail investment.

Though the rankings are led by India in first place and China in second, Malaysia's relative wealth and citizens' high disposable incomes ($27,234 GDP per capita, compared to India's $6,658, and China's $15,424), a continuing influx of tourists and government investments in infrastructure have helped the country to retain the number 3 position.

While GDP growth slowed by 0.7 percentage points in 2016, retail sales grew 3.8% in part due to a 6.1% increase in private consumption.

For the categories driving Malaysia's serious ecommerce growth, electronics and media, the two combined can expect to account for 40% of total online sales in 2017. Here, specific government investments have spurred an increase in internet speeds; a recent report showed a 40% improvement in connection speeds, YOY.

In March, the government of Malaysia, in partnership with Chinese online retailer Alibaba, launched the 'world's first' digital free trade zone.

Speaking at a conference in Hangzhou, Jack Ma, Founder and Executive Chairman of Alibaba Group, reiterated the aim of "enabling SMEs and young people to thrive and enjoy in the fruits of the next phase of globalisation."

Dato' Sri Mohd Najib bin Tun Abdul Razak, Prime Minister of Malaysia, noted that Malaysians had "embraced the internet economy in a big way," adding his ambition for the country to lead the ecommerce market in the region.

"Alibaba Group is at the forefront of private sector development of e-commerce solutions and their ambitions to enable trade, particularly for SMEs, make them the perfect partner in this new initiative," Razak said.

Meanwhile, Southeast Asia's largest ecommerce platform Lazada, now controlled by Alibaba, saw the highest growth in the region with 100% sales growth in Malaysia in 2016.

Data sourced from A.T. Kearney, The Star, Malaysia Digital Free Trade Zone, Bloomberg; additional content by WARC staff

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