E-commerce and e-procurement for Malaysian GLCs

Malaysia is undergoing an e-commerce revolution, and e-procurement will be vital in realising the benefits for government linked companies

A future of e-commerce and e-procurement for Malaysian GLCs

The world is undergoing an e-commerce revolution. Global e-commerce sales are expected to top a huge US$2.29 trillion in 2017. That’s a 23.2% rise year-on-year as everything from biscuits to boats wing their way around the globe on the back of a single mouse click. Malaysia is no exception to this transformation, and the government is keen to ensure the nation is making the most of it, with Malaysia’s National e-Commerce Strategic Roadmap (NESR).

It’s estimated that e-commerce contributed around RM68 billion to Malaysian GDP in 2015, with targeted growth looking to catapult that to RM211 billion by 2020. That means by 2020, e-commerce will contribute a targeted 20% of GDP. The government is implementing a range of initiatives to support SME growth, including the ambitious flagship Digital Free Trade Zone (DFTZ) which has garnered a great deal of attention.

Alongside the exciting headline grabbing programmes however, there are the intricacies of key areas of the economy that will help enable the success of this transformation. That means encouraging the technological capabilities of our numerous government-linked companies (GLCs), and empowering them with unmissable opportunities such as those presented by e-procurement.

Supporting technology adoption in GLCs

Innovation and government linked companies aren’t always viewed together, but with the focus on increasing innovation in Malaysia’s economy, further supporting these companies to unlock their digital future is vital. The 10-year GLC Transformation programme which concluded in 2015 demonstrated the benefits of catalysing change in these organisations, and embracing digital technologies will be the next great challenge on this journey.

The 2018 budget showed the continued commitment to empowering a future of digital companies in Malaysia, something GLCs were quick to support. Encouraging their own digital uptake has been a goal that’s been widely promoted in the past, and that’s certainly true of e-procurement.

Procurement was identified as one of the key transformation sectors to empower modern, efficient GLCs in Khazanah’s guiding 2006 Red Book. The role of e-procurement in GLCs also forms a vital part of the NESR, with targets to raise adoption of e-procurement from a baseline of around 10-20% in 2015, to more than 50% by 2020. This use of e-procurement solutions will help deliver significant savings and huge efficiency improvements to GLCs.

Supporting digital growth means an economy that works together

Alongside the support for growing the digital opportunity in GLCs, these organisations are also predicted to play an important role in supporting digital growth in the foundations of our economy. GLCs can raise capital and share expertise with SMEs to ensure every spectrum of Malaysia’s economy is empowered and represented in the adoption of digital technologies and e-commerce.

With the crucial part that these GLCs play in the wider Malaysian business landscape, this adoption of e-procurement presents the opportunity for a wider knock-on impact. As organisations which interact with GLCs begin to be exposed to the benefits of these technologies, awareness of this opportunity will grow. That means not only can GLCs help create a more efficient economy directly, they’re laying the groundwork to promote wider adoption of e-procurement.

Efficient procurement will, and must, play a vital role in the realisation of Malaysia’s e-commerce growth ambitions. For GLCs in particular, e-procurement will have a transformational impact on this journey.

The opportunities of e-commerce present the potential for significant growth for the nation. While there are still challenges to be overcome around elements such as ‘last-mile’ delivery, the pieces of this hugely important jigsaw are clearly falling into place. Ensuring that jigsaw stays fixed may well be down to the role that efficient e-procurement solutions can deliver.