September 28, 2020

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Malaysia Govt Hands Out RM450 Million to Boost E-Transactions

Malaysia Govt RM450 Million to Boost E-Transactions

The Malaysian government launched a program on 15 January 2020 handing a total of RM450 million to nearly half of its citizens, the government said, in a drive to increase digital transactions that will be a big boost for e-wallet companies.

The money will be distributed through a Southeast Asian e-wallet operator which is also a Singapore-based ridesharing company.

The initiative is backed by a Japanese multinational conglomerate holding company, a telecom company’s Boost; and Touch ‘n Go, which is backed by banking group CIMB and the financial arm of a Chinese tech giant.

Every Malaysian aged 18 years and above and earning less than 100,000 ringgit a year will be eligible to receive a one-time shopping handout of RM30 through one of the e-wallets, the finance minister said in a statement.

Up to 15 million Malaysians will benefit from the program, which was flagged in the country’s 2020 budget in October. The RM30 must be spent between 15 January and 14 March 2020.

The initiative is designed to widen digital payments adoption among Malaysian consumers and merchants, particularly among small retail businesses, the country’s Minister of Finance said.

Total digital payments in Malaysia are expected to grow 10.8% annually, reaching about $17 billion by 2023, according to a data portal.

The handout may also help the government deflect concerns over the cost of living, which late last year led the ruling coalition to lose a by-election by a bigger than expected margin.

The programme is part of the government’s commitment to fulfilling the shared prosperity agenda by reducing barriers to digitalization and improving financial inclusivity in the country.

Another benefit the program could see is offset concerns about the cost of living, which will help the government.

In 2019, the ruling coalition lost an election by a larger margin than expected over the issue.

There is a push for digital banking in many Asian countries, and the primary move is one toward a more modern form of banking over traditional in-person cash-handling.

Several groups in the area are vying for digital bank licenses in Singapore, and one Thai, which is over 100 years old, is modernizing with new apps and connectivity as well.

Pushing online transactions

Over the last few years, e-commerce has grown into one of Malaysia’s more significant industries to date.

According to the Department of Statistics Malaysia, income from e-commerce transactions between 2015 to 2017 has grown by six percent annually over the two years, with almost RM50 billion increase in revenue.

The availability of physical stores aims to showcase popular products and introduce new ones that appeal to local consumers, also, it allows the customer to have hands-on experience of the product before deciding to purchase on its online platform.

According to an earlier report by OpenGov Asia, Malaysia is currently seeing a growth in the number of people making purchases online and trusting e-commerce sites.

In addition, there are increasing numbers of merchants who are starting to sell their products online.

Accessible facilities to rural areas also provide opportunities for most Malaysians to shop digitally, thus enabling the e-commerce industry to grow rapidly.

In addition, the government’s initiative on e-wallets will be another factor that will drive growth and enable the development of a secure and seamless e-commerce industry.

Improved logistics capabilities and growth from the small and medium enterprise (SME) segment will also encourage the industry to maintain its expansion trajectory.