KUALA LUMPUR, Nov. 7 (Xinhua) -- Malaysia is projected to post one of the strongest e-commerce growth in Asia over 2018 to 2022 at 20 percent, underpinned by new government policies to boost consumer spending and young consumers, said a research house Wednesday.
"We forecast the country's consumer spending to grow by an average of 5.9 percent annually over the medium term (2018-2022), reaching a projected level of 296.3 billion U.S. dollars in 2022," Fitch Solutions said in a report.
The report added that the growth will be supported by the re-introduction of the less broad-base sales and service tax (SST) following a three month tax holiday as well as increasing minimum wages.
According to the report, Malaysia is currently a relatively small e-commerce sales market, with just 8.3 billion U.S. dollar worth of sales projected in 2019, ranking it eighth regionally in the research house's E-Commerce Index behind Indonesia, the largest market in Southeast Asia.
E-commerce demand in Malaysia is also set to be driven by the large percentage of young consumers, with 36 percent of the population falling into the young adult age group, said the report.
It opined that e-commerce enterprises already have the country on their radar, with China's e-commerce giant Alibaba setting up a Digital Free Trade Zone to make cross-region shipments more affordable for Malaysian small- and medium-sized companies.
It is also noted that a core element of the scheme is Alibaba's electronic world trade platform (eWTP) which is designed to ease trade between firms, and the virtual platform, due to take effect in 2019, will connect businesses, manage cargo authorizations and assist on customs.
Overall, Asia e-commerce will continue its rapid expansion, with Fitch Solutions e-commerce sales forecast for the region projecting a 14.2 percent increase in 2019, with an annual average increase of 14 percent estimated over the medium term (2018-2022).
"Southeast Asia remains our market to watch, with the sub-region attracting increasing investment from Chinese players," it said.