The following article is authored by Andrew Kam, Rashila Ramli and Sity Daud.

Since the onslaught of the COVID-19 pandemic in Malaysia began in late January 2020, the government and businesses have had to improvise to keep the economy afloat. Movement and quarantine restrictions led to a “new normal” for business and consumers through digitization and e-commerce. The Malaysian government has recognized and utilized this rise in e-commerce as a tool of inclusiveness by empowering local micro, small, and medium enterprises (MSMEs). Enabling MSMEs to adopt a digital platform may allow small business to be more resilient to economic change, especially amidst COVID-19, and subsequently reduce wellbeing gaps within the country.

We looked into the role of e-commerce as an inclusive recovery opportunity in Malaysia and found four major issues. Our subsequent solutions address these issues so that e-commerce can be part of an equitable recovery as Malaysia deals with the pandemic shocks. These solutions can also be used by other governments and policymakers who are seeking to use e-commerce as a tool to increase inclusiveness for their COVID-19 recovery plans.

Addressing physical infrastructure and connectivity
 

Internet access and usability has been stressed significantly by the unprecedented increase of digitalization during the pandemic. As indicated by the Malaysian Communications and Multimedia Commission (MCMC), during the current pandemic, internet traffic has increased by 30-70% while internet speed reduced considerably by 30-40%.
 

There needs to be more investment to enhance existing infrastructure throughout Malaysia, especially for those in the informal sector. Action can include retrofitting existing relevant policies like the National Fiberisation and Connectivity Plan to provide high speed connectivity among MSMEs and local consumers.
 

Uptake by the informal sector and maintaining local demand
 

The quick rise of e-commerce in Malaysia puts MSMEs and the informal sector who do not adapt to the changing trends of digitalization at risk. Further, increased access into e-commerce for consumers can lead to crowding out local players in favor of big and/or international companies.

The Malaysian government has been proactive with these concerns through digital campaigns like “Buy Malaysia” and #SayaDigital to encourage local demand and empower Malaysians to surge the country towards a digital transition. The government should continue to support and empower local players through these market pooling and education campaigns. Further, rapid study assessments are needed to evaluate the uptake of these initiatives among local businesses and consumers. These evaluations should include analysis on how these initiatives can increase inclusive recovery rather than further spread welfare gaps.
 

Social protection in the gig-economy
 

The shift to digitalization has promoted a gig-economy model that emphasizes work adaptability and flexibility. The growth of gig and informal work enhances the source of income as well as increases the use of e-commerce transactions. However, Malaysia lacks explicit social protection for informal and gig-workers.
 

These workers often have limited access to healthcare and access to social insurance. Thus, although the pandemic opened up opportunities for gig-economy growth, it has placed these workers in a sector even more vulnerable to economic shock, especially those without any social protection. The Malaysian government has recognized the need  to protect gig workers and is planning to incorporate social protection measures in the 12th Malaysia Plan (2021-2025).  

There needs to be explicit policy in place to protect the welfare of these workers. Policy should incorporate models that have been mandated for full-time workers that were established pre-COVID.
 

Concluding remarks

To ensure the success of existing e-commerce initiatives and new solutions, implementations have to be assessed critically on effectiveness in reaching their target groups, such as MSMEs and the informal economy. As the digital economy is very dynamic, the country must have its finger on its e-commerce pulse and make timely changes accordingly when the situation warrants it.

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References:
 

Jendela Jalinan Digital Negara (2020). National Digital Infrastructure Lab Report, 3 September 2020. Malaysian Communications and Multimedia Commission.

Palansamy, Y. (2019). PM: Gig economy to be included in the 12th Malaysia Plan, 22 Oct 2019. Malay Mail.

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This article was written by Sity Daud, Andrew Kam, and Rashila Ramli, members of the Malaysian Social Science Association (PSSM) in collaboration with the Institute of Malaysian and International Studies (IKMAS) and the Universiti Kebangsaan Malaysia (UKM).

 
The authors are responsible for the facts contained in the article and the opinions expressed therein, which are not necessarily those of UNESCO and do not commit the Organization.