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How Malaysia’s Budget 2020 is Shaping eCommerce and Digital Transformation

On October 11, 2019, Malaysia’s then-Minister of Finance, Mr. Lim Guan Eng, announced the nation’s budget plan for 2020 — with clear signs of commitment to strengthening eCommerce and digital transformation in the country. 

Among the key highlights is the allocation of RM10 million for eCommerce training, reflecting the government’s recognition of the sector’s potential.

As a solution provider in the eCommerce industry, we’re optimistic about these initiatives and the positive impact they will bring — not just to eCommerce players, but to complementary sectors like shipping, logistics, and digital payments, while boosting the overall value for online buyers and sellers alike.

Let’s take a closer look at how Budget 2020 is designed to impact Malaysia’s digital economy:

1. Promoting eWallet Adoption

A one-off payment of RM30 via eWallet was announced for Malaysians aged 18 and above. 

This incentive was aimed at increasing the adoption of digital payments and encouraging more consumers to experience cashless transactions, serving as a small but strategic step towards building a digital society.

2. Digitalizing SMEs

To accelerate the digitalisation of SMEs and start-ups, the government introduced a grant of RM5,000 per business to support the adoption of ERP (Enterprise Resource Planning) and e-POS (Electronic Point of Sale) systems. 

This initiative, running for five years and limited to the first 100,000 eligible applicants, was created to help businesses streamline operations and enhance competitiveness in the digital economy.

3. Boosting eCommerce Growth

An additional RM10 million allocation to MDEC (Malaysia Digital Economy Corporation) was made to support eCommerce sellers and platforms. 

The budget covers training, platform improvements, and initiatives to enhance e-Marketplaces and social media selling — crucial steps to help businesses scale and succeed in Malaysia’s growing digital landscape.

4. Supporting Women Entrepreneurs

Recognising the growing number of women-led online start-ups, a total of RM500 million was guaranteed in financing for women entrepreneurs. 

According to government data, over 100 women-led start-ups achieved RM23 million in combined revenue within six months — demonstrating the potential of women-led businesses in driving the country’s eCommerce sector forward.

5. Building a 5G Ecosystem

To position Malaysia at the forefront of connectivity, RM50 million was allocated to develop the 5G ecosystem. 

Half of this budget went towards promoting digital application pilot projects, supporting fibre optic and 5G infrastructure development — both of which are key to enabling faster, more reliable online transactions and digital services in the years ahead.

6. Expanding Internet Access

A total of RM250 million was allocated to improve broadband access, particularly in rural and remote areas such as Sabah and Sarawak. 

By expanding connectivity nationwide, this effort aims to empower more Malaysians to access digital services, fostering greater inclusivity and opening up new opportunities for eCommerce businesses.

7. Introducing Digital Tax

To create a level playing field in the local digital economy, a 6% digital tax was introduced for foreign digital service providers operating in Malaysia. 

This initiative not only protects local businesses but also helps the government generate additional revenue from international digital players active in the Malaysian market.

In Summary

While Malaysia’s Budget 2020 included many other allocations and incentives, these highlighted initiatives play a crucial role in supporting start-ups, SMEs, and the broader eCommerce ecosystem. 

Together, they pave the way for Malaysia’s ongoing digital transformation, promoting growth and competitiveness in the digital economy.

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