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Business

Malaysia gets Alibaba on board to promote e-commerce

Jack Ma will counsel development of Digital Free Trade Zone

Prime Minister Najib Razak, left, with Alibaba’s Jack Ma in Kuala Lumpur on Wednesday

KUALA LUMPUR -- Malaysia has enlisted Alibaba Group Holding in its effort to double e-commerce growth by 2020 to ensure it makes a fuller contribution to economic development.

With deals signed on Wednesday, China's Alibaba, the world's largest online transaction company, will establish a logistics hub at Kuala Lumpur International Airport (KLIA), assist Malaysia in talent development, and develop a mobile payment platform.

Jack Ma, Alibaba's co-founder and executive chairman, has been appointed as a digital economy advisor to the government.

According to a medium-term government-authored roadmap, Malaysia aims to increase e-commerce annual growth from 10.8% to 20.8% between 2015 and 2020.

Jack Ma, Alibaba's executive chairman, has decided to establish the company’s first hub outside China in Malaysia.

"The growth of e-commerce is inevitable," Prime Minister Najib Razak told a business forum on Wednesday. He said Malaysia must embrace the trade of goods and services online as a "new and vital sector of the economy" if it is to be globally competitive. He noted that e-commerce accounts for only 1% of global trade with Southeast Asia, and said this should be seen as an opportunity for Malaysia.

"Alibaba is the most exciting word in business," said Najib at another event also attended by Ma. "Everyone wants to partner Alibaba, and we are the first outside China to do it."

The prime minister was talking about the Electronic World Trade Platform, or eWTP, which offers cross-border online trading infrastructure to connect small and medium enterprises to consumers in emerging countries. eWTP, the brainchild of Ma, aims to develop e-trade rules and best practices in developing the e-commerce platform.

"If we can build an inclusive platform for businesses and young people to trade and do business freely, openly and fairly, this will be fundamental to the world economy over the next 30 years," said Ma.

The eWTP infrastructure fits into Malaysia's Digital Free Trade Zone, a virtual and physical economic space created to drive e-commerce. The government believes it is the only sector in the economy likely to generate double-digit annual growth.

Alibaba will support the zone's development by investing in an 80,000-sq.-meter distribution center in partnership Malaysia Airports Holdings at Kuala Lumpur International Airport (KLIA).

The hub is located in KLIA Aeropolis, a multi-billion dollar real estate development intended to transform the area surrounding the airport into a dedicated city. Ma promised to make the Alibaba warehouse there into a regional hub, its first outside China. The two companies have an option to expand the logistics hub up to fourfold using land adjacent to an existing distribution center.

Separately, Ant Financial Services, a unit of Alibaba, has entered into agreements with two Malaysian banks, Malayan Banking and CIMB Group Holdings, to develop Alipay mobile payment services in Malaysia. Both will serve as settlement banks to facilitate Alipay transactions.

CIMB said it has selected a number of companies in the country, including casino operator Genting Malaysia, YTL, and FamilyMart, as pioneer merchants to accept Alipay mobile wallet payments.

Neither company has disclosed their actual proposed investments. "These are long-term and ambitious plans," Daniel Zhang, Alibaba's chief executive, said during a press conference.

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