Alibaba plans for regional distribution hub in Malaysia

Chinese e-commerce giant inks agreement with Malaysian government to set up a logistics centre that will serve as a fulfilment hub for the region and will be the first of such facility outside of China.

Alibaba Group has unveiled plans to set up a distribution centre in Malaysia as part of a wider agreement to build up a digital trading network in the country.

Expected to be ready by end-2019, the new facility would be located near the Kuala Lumpur International Airport and serve as a regional e-commerce and logistics hub. It would operate as "a centralised customs clearance, warehousing, and fulfilment facility...to deliver faster clearance for imports and exports", Alibaba said in a statement Wednesday.

The regional hub would be the first of such facility located outside the Chinese e-commerce operator's domestic market. No financial details were provided with regards to its investment in Malaysia.

The logistics centre was part of a wider agreement between Alibaba and the Malaysian government to establish Electronic World Trade Platforms (eWTPs), an initiative first mooted last year by Alibaba's founder and executive chairman, Jack Ma.

"[The digital hub] will go a long way towards making global trade more inclusive and provide much needed support to a hugely important constituent--SMBs (small and midsize businesses) and the younger generation," said Ma, who believed digital free trade zones could function as e-commerce hubs that connected global markets.

Apart from the fulfilment hub, there also were plans to build a cross-border online trading platform to connect suppliers and SMBs between China with Malaysia, as well as establish e-payments and financing services to facilitate business-to-business trade for Malaysian SMBs. Training programmes would be developed to nurture startups and develop skillsets that support the country's digital economy development, Alibaba said.

The various initiatives also would involve the Chinese e-commerce's subsidiaries and partners, including logistics company Cainiao Network and Southeast Asian e-commerce portal, Lazada. In addition, Malaysia Airport Holdings and the country's two largest banks--CIMB and Maybank--signed agreements to be part of the eWTP rollout.

Together with Alibaba's Ant Financial, the two Malaysian banks would evaluate partnership opportunities in e-payment and financing, focusing initially on inbound Chinese tourism and trade promotion by SMBs in Malaysia.

Alibaba's cloud business unit, Alibaba Cloud, also would build a platform to support Malaysian SMBs, offering services in the areas of big data and Internet of Things (IoT), amongst others.

According to Alibaba, the initial deployment efforts would begin before end-2017.

In a separate announcement, Lazada said it now offered Alibaba's Taobao marketplace in Singapore, allowing consumers in the city-state to buy selected products from the online platform. A dedicated website was launched with an initial 400,000 Taobao products, with more expected to be added over time.

While Singapore's online shoppers already could buy directly from Taobao, several would do so via third-party services that offered help with language translations, payments, as well as delivery. This made returns difficult to process or unavailable as an option.

Items purchased from the Taobao Collection would ship with a flat delivery fee of S$2.99, according to the website.