On the local front, PwC's Chin concedes that e-commerce is still in its infancy.
Although Malaysia was among the region's first to adopt the Internet, its take-up rate has been slow. There are only four ISPs in the country and Internet penetration hovers at about 6 percent; significantly lower than countries like Hong Kong, South Korea, Taiwan and Singapore. Malaysian businesses also appear to be dependent on paper shuffling and physical middlemen to smooth over deals rather than on transparent electronic agents for procurement purposes.
However, Chin believes that projections of exponential e-commerce growth in Malaysia--by one estimate, about US$4.2 million in 1999 jumping to US$47.4 million in 2000--are "not unrealistic". "Companies here are aware that there are abundant opportunities in electronic payment and procurement systems. What is needed is the courage to turn the business upside down and inside out. The bundling of online commerce with physical interaction--the clicks-and-mortar combination--will likely accelerate e-commerce," he notes.
Skali's Azmi also says the inherent need for human interactions will not disappear. "The physical aspect is still necessary. Even for e-companies, meeting potential partners in person at least once is a norm. But dealing with regular suppliers and customers for B2B need not be done physically. Purchase orders are already now often sent by fax, mail or email. Meetings are generally for major problem solutions or for valuable socializing," he adds.
Security and credit card fraud are oft-cited reasons for not porting existing businesses on the Internet. Although Malaysia was one of the first in the world to adopt a Digital Signature Act in 1997, online verification systems have yet to catch on.
Richard Jacobson, senior Internet analyst at IDC Asia Pacific, says research suggests that electronic payment is not a pre-requisite for e-commerce. "Only a very small percentage of e-commerce transactions currently are direct, such as credit card payments over the Web. Even projections up to 2004 suggest that in Malaysia, direct transactions will constitute only 34 percent of total e-commerce. In order for companies to succeed in the e-commerce world, there must be some level of flexibility and openness. If you restrict your potential customers to just one form of payment, you will be short-changing yourself," he observes.
Although it is early days yet for e-commerce in Asia, the consensus is that companies that immerse their entire organization in the technology and rapidly adopt new economy business practices will stand to gain the most. The less optimistic analysts predict that some "creative destruction" can be expected along the way. The rush by so many players to get in early in "Internet time", armed with vague projections, will eventually lead to a fall-out, say these analysts.
Already, in mature markets in the U.S., there are signs that a shakeout has begun.
Whether companies will sink or thrive in the current upheaval is anyone's guess. The truth is no one has all the answers. But sitting on one's hands while the world is learning to swim with the New Economy tide may be asking to be swept away.
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