Digital Free Trade Zone good for logistics sector, say analysts

KUALA LUMPUR: Malaysia Airports Holdings (MAHB) and Pos Malaysia Bhd will be the major beneficiaries of the proposed Digital Trade Zone (DFTZ).

This is the view of economic from AmInvestment Bank and HLIB Research, according to a report in The Sun daily.

On Wednesday, Prime Minister Najib Razak launched the DFTZ, an e-hub jointly established by Alibaba Group and Malaysia Digital Economy Corp.

The idea behind the hub is to lower trade barriers and expand the market for small and medium industries.

At the launch, MAHB and the logistics arm of Alibaba, Cainiao Network, signed a memorandum of understanding for the development of a regional electronic commerce and logistics hub in the KLIA Aeropolis by the end of 2019, with operations to be led by Cainiao and Lazada.

The Sun daily reported AmInvestment as saying it believed the DFTZ would boost the long-term outlook of Malaysia’s logistics companies due to the anticipated increase in the volume of goods moving through the zone.

It said the setting up of the DFTZ would be particularly positive on the long-term growth of MAHB, as the DFTZ would be located in the KL Aeropolis, previously the low-cost carrier terminal.

AmInvestment said it also expected the DFTZ to benefit Pos Malaysia’s subsidiary, KL Airport Services Sdn Bhd, which provides warehousing and logistics services at the Kuala Lumpur International Airport.

In a separate note, HLIB Research also said the MoU was for the MAHB. “We believe the initiative will attract strong demands from logistics players (domestic and international) for shares of land development earmarked under KLIA Aeropolis – Air Cargo and Logistics,” it said.

Despite the positive signs, however, AmInvestment maintained its “neutral” call on the transport and logistics sector.

“Although we believe the set-up of DFTZ will be positive on the long-term growth of MAHB and the overall logistics sector in the country, we believe it is still too early to quantify the impact of DTFZ, as it is only expected to be launched by end-2019,” it said.

The Star daily quoted Transport Minister Liow Tiong Lai as saying the initial phase of the DFTZ would be located on the 17.5ha site of the former low-cost carrier terminal. It will have a centralised customs clearance, warehousing and e-fulfilment facilities.

“When DFTZ is fully developed by 2025, the e-fulfilment hub is anticipated to handle and move up to US$65 billion (RM287 billion) worth of goods around the Asean region.”

The DFTZ will facilitate cross-border movement of goods as well as ensure seamless air connectivity, the report said.

“It could deliver packages within 72 hours to Asean countries through the air connectivity at KLIA and sea connectivity via Port Klang,” Liow was quoted as saying.

Meanwhile, Channel News Asia reported the DFTZ was part of Alibaba group executive chairman Jack Ma’s plan to build an Electronic World Trade Platform – a more inclusive, free and innovative global trading platform for SMEs, the young and consumers.

Ma said Malaysia was the first to take him up on his vision when he met Najib last year.

“People say ‘Why Malaysia?’ Of course, four months ago when I sat in Beijing… I did not think we could make it happen, but we made it. Malaysia is very business-friendly. It’s efficient. It’s much more efficient than I thought,” Ma was quoted as saying.

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