Malaysia goes back to basics
Anita Devasahayam , 1-Dec-2001

Web commerce continues to elude Malaysians throughout 2001 due to the economic slowdown that was further compounded by the Sept 11 terrorist attacks in the US.

Though Internet population is on a steady rise, purchasing power did not shift in tandem with the online environment. With the downturn, Web commerce sites that lacked fundamentals collapsed silently unlike content plays that shuttered with a clang. A check at Malaysia’s E-Commerce Hub revealed that 30% of the sites listed were no longer active.

“It took Malaysians a long time to embrace the idea of automated teller machines (ATMs) to dispense cash. It will take them longer to warm up to the idea of buying stuff online and feel assured that it is a secured environment,” said Via Communication Network’s CEO
Alvin Foo.

Foo had set up a portal 18 months ago only to see it go up in smoke. “Users are not all that ready as we think them to be. Many sooner go to the store than buy online unless the product and price is compelling enough for them to switch.”

Indeed, players in the arena wised up amid the rising number of dotcom fatalities, choosing to move on instead of dwelling over spilt milk. Some introduced Web hosting services while others looked further afield.

“The consolidation is a natural process of growth in any industry. As a result, some may cease operations, others become bigger,” said Aimi Aizal Nasharuddin, executive director of e-business services provider SKALI.

In retrospect, he pointed out that Malaysia underwent a radical change shifting from an industrialised economy to an IT era. “With so many dotcoms mushrooming in mid-1997, every business was coming out of its traditional shell and transforming into another dotcom hype, which made the much vaunted e-commerce more in demand than ever.”

Perhaps the singular factor that bankrolled many businesses is the National PC Ownership campaign that kicked off in February 2000, said a local computer vendor. To date, 94,000 out of 124,000 applications have been fulfilled.

Government statistics show that the current computer ownership rate is eight people per 100 population. It is expected to double by December and hit 30 by 2005. (The world-class standard is 40.) The PC penetration rate in rural areas has also gone up by 5% to 35%.
The challenges for the coming year, said Liew Chew Keat, founder and managing director of local search engine, will be surviving the global economic slowdown and bolstering consumer confidence.

Besides, the government should take another look at lowering the Internet access cost in order to spur growth. “By pushing the idea of a flat rate for Internet will help to increase the [amount of] IT knowledge among Malaysians as a whole. That is not easy to achieve when every minute online is chargeable,” he added.

Institutions too can do their bit to push e-commerce without compromising business interests. For instance, bankers can reduce the deposit required for Internet-related accounts. “It is completely understandable for a bank to protect their investments but it does not justify to open an RM50,000 (US$13,161) account to sell products worth RM50 (US$13). The bank should not hold us ransom for running our [’Net-based] business.”

Such travails do not deter long-time players in the e-commerce scene. Even with the 2001 gross domestic product (GDP) growth forecast which had been revised for the second time since March--to 1–2% because of the “greater-than-expected” slowdown in the world economy--the show will go on.