Globalisation – and the free movement of goods and services that comes with it – will march on with or without the support of the world leaders bickering in Vietnam this weekend over the future path for free trade.
It would appear to be so, at least for the 2,000 or so Malaysian small business owners who have signed up as the pilot users of Alibaba’s electronic world trade platform (eWTP) in the Southeast Asian country – the first of its kind outside China.
Powered by the Chinese e-commerce giant and with the backing of Prime Minister Najib Razak’s government, the cloud-based initiative aims to offer these small-time Malaysian merchants minimal tariffs, speedy customs clearance and state-of-the-art logistical support.
With an accompanying bricks-and-mortar logistics hub jointly developed by the Malaysian government and Alibaba – South China Morning Post’s owner – the initiative is touted as having the wherewithal to enable these minnow merchants to ship products from Malaysian speciality “Musang King” durians to bird’s nests anywhere in the world within 72 hours.
And on this “electronic road”, the anti-free trade rhetoric that reared its head at this weekend’s Asia-Pacific Economic Cooperation summit will have no place, according to the initiative’s chief architect and Alibaba co-founder Jack Ma.
The 53-year-old is a sharp critic of conventional free-trade deals – he views them as serving only large corporate players – but has a dimmer view of the trade protectionism that has become a mantra for populist politicians such as Donald Trump, the US president.
The “America-first” economic nationalism of Trump once again grabbed the headlines at the Apec summit in Danang that ended on Saturday.
“There are a lot of free-trade zones for efficient trade facilitation, but only for big companies,” Ma said at the eWTP’s launch on November 3. “There is no free-trade zone designed for small companies. I have been shouting everywhere, screaming, that every government should do it.”
Ma first mooted the eWTP concept at last year’s G20 summit in Hangzhou as a complement to the World Trade Organisation framework.
“The Malaysian digital free-trade zone model could be a model for other countries,” Ma said at the launch event. It was held at the first phase of the bricks-and-mortar facility located near Kuala Lumpur International Airport. The site is the airport’s former low-cost carrier terminal.
The eWTP was also seen as an important, private-sector led incubator for Beijing’s plan to recreate the ancient Silk Road trade route that once connected China with the rest of the world.
In an emailed reply to This Week in Asia, Ma said the Malaysian “baby” was the start of a global network of nodes that could transform trade patterns.
“The Malaysian eWTP is the first baby of this programme. We will try our best to make it succeed. Once the first baby succeeds, the rest will follow.”
While the global network may take two to three decades to come to fruition, the company was already on the look out for partner countries that would host its next e-hub.
James Song, who spearheads the eWTP initiative at Alibaba, told This Week in Asia talks were ongoing for the launch of new hubs, but their locations would stay a “secret” until agreements were inked.
And it was not only Alibaba insiders who touted the merits of the initiative.
Abdul Aziz Jamaluddin, a director of Malaysian bird’s nest processing firm PT Swift Marketing, said the emergence of the Malaysian eWTP was a game changer for the firm, which for years faced hurdles exporting to China because of language and other barriers.
The eWTP’s eServices platform, partly powered by artificial intelligence, has built-in mechanisms to deal with these issues.
Cargo heading in and out of the bricks-and-mortar facility, or “e-fulfilment hub”, have high priority at the airport with border clearance likely to take three hours instead of the usual six.
And merchants with stellar track records – including those with high credit ratings – are given extra privileges that enable their cargo to clear customs more quickly.
The e-fulfilment hub was expected to double the growth of Malaysia’s air cargo volume from the current 700,000 tonnes a year to around 1.3 million tonnes a year within a decade.
Deborah Elms, executive director of the Asian Trade Centre, said the platform could be a shot in the arm for smaller enterprises with international ambitions – especially those without the “knowledge or resources to do so well on their own”.
Industry insiders and merchants aside, Malaysia’s Najib, who has deepened ties with Beijing and Chinese corporations in recent years – attracting criticism along the way with his opponents – has emerged as the top cheerleader for the eWTP.
At the launch event, the premier told the backstory behind the conception of the Malaysian hub.
While Ma had canvassed various governments to pilot the initiative, it was Najib who volunteered his country as a test laboratory of sorts. “When we shook hands on November 4 last year, [Jack Ma] gave us a challenge to set up [the Malaysian eWTP], I took up the challenge,” Najib said.
The premier also pinned hopes on the e-hub boosting the country’s ambitions to become a leading digital-era logistics and transshipment base.
While Southeast Asia’s third-largest economy has made inroads in improving hub status – with upgraded ports and new rail lines underway – it has remained a distant second to Singapore. The Port of Singapore, which handled some 30.6 million containers last year, is the world’s busiest transshipment hub – the locale of choice where goods are transferred from one vessel to another before heading to its final destination.
By contrast, Port Klang, Malaysia’s busiest port, handled 13.2 million containers last year.
Malaysia had tried in the past to compete with Singapore over trade but the wide gap has remained.
The e-hub ambitions are set against this backdrop.
“This is going to be part of the Belt and Road Initiative … the ‘e’ part of it that will provide the growth, the potential, the catalyst, for us to change and redefine regional trade,” Najib said at the launch event attended by Ma and other government ministers.
The premier said the hub’s launch “fundamentally improved the competitiveness of Malaysian firms on the global stage, which will boost exports and bring wide-reaching economic benefits to society”.
It was expected to create 60,000 jobs and facilitate the movement of US$65 billion (HK$507 billion) worth of goods by 2025.
Asked by This Week in Asia about the prospect of Malaysia taking on regional rivals with the help of the Alibaba-led eWTP, Ma said the ultimate winner would be small enterprises. “The future is not a zero-sum game. It is how to work together to achieve a win-win situation,” Ma said.
“The Malaysian eWTP is the first outside China, but it won’t be the last. With the eWTP, Southeast Asia, and Asia at large stands to gain as the region becomes better placed to deal with globalisation.”
Elms, the Singapore-based trade consultant, said Malaysia had to be wary of the Alibaba-led eWTP becoming the only platform for small enterprises to engage in e-commerce.
“Like any monopoly, it means that Alibaba would have tremendous control over an increasingly critical part of cross-border trade,” Elms said. “It would give one company unprecedented influence over the lives of the vast majority of Malaysian firms.”
She added: “If Malaysia wants to make e-hubs successful, the best solution may be to allow other vendors to participate in the scheme or to allow others to set up similar hubs in the digital zones.”
But Song, the Alibaba eWTP director, said governments should not worry about Alibaba’s intentions.
“The platform is open to other big companies. For big companies, they are also facing the challenge from the internet age, so Alibaba with the e-hub in Malaysia is open to all kinds of [participation],” Song said.
Another question mark analysts have is whether Malaysia will continue to serve as a high-quality pioneer partner for the project. The country has faced persistent criticism over corruption and an inefficient bureaucracy. Ma told This Week in Asia he believed the “shared vision and trust” he had with Najib would make the project a long-term success.
“Based on the current progress, we feel the Malaysian government is open-minded, efficiently run, and eager to embrace change and innovation,” Ma said. Alibaba had not encountered inefficiency or corruption, and “our work has not been disrupted by any of these issues”, he said. ■