CHAPTER 1: OVERVIEW OF PROMOTING CROSS-BORDER E-
1.3 INTERNATIONAL EXPERIENCE IN PROMOTING CROSS-BORDER E-
E-commerce has strongly contributed to Vietnam's economic development.
Therefore, the development of e-commerce systems, especially cross-border e- commerce is an important issue on which the Government has always focused. In the context of Vietnam's global economic integration, this will be a great opportunity for building and developing a sustainable e-commerce system.
Although Vietnam has not achieved great achievements like some other countries in the world, this is an advantage of the latecomer that Vietnam can learn from their experiences and methods and avoid the mistakes. In fact, each country has different economic and social characteristics, so the model and strategy for e-commerce development will also be different. However, if we apply the appropriate ways, Vietnam can still inherit lessons from countries that have developed high-level e-commerce
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systems. Singapore and Malaysia represent the largest e-commerce markets in South East Asia. They account for more than 50% of total online retail sales in the region despite being home to just 8% of the Southeast Asian population.
1.3.1 Experience from Singapore a) The current situation of Singapore
Despite its small geographical footprint and a population of just 5.6 million, Singapore is a major e-commerce market in South East Asia. Singapore is one of the developed countries in e-commerce with a 2020 revenue of $6,029 million (Gogloble, 2020). The Singaporean B2C market is worth 4.9 billion USD (2020) and is expected to grow at a compound annual growth rate of 8.35% to 2021. Cross-border shopping makes up a significant part of the overall e-commerce market, at 29% of total spend. Singapore online businesses see a world of opportunity for cross-border sales.
According to The Visa Global Merchant E-commerce Study (GME Study), e- commerce leaders globally view international expansion and finding new cross-border customers as critical to driving growth, particularly heading into the prime holiday shopping period. While 87% of leaders surveyed believe expanding cross-border e- commerce is one of their company’s highest growth opportunities, 96% of Singapore business owners agree that having an international presence is key to their company’s success in the years ahead.
Nowadays, 66% of businesses that sell online have international customers. These sales account for nearly 31% of those businesses’ revenues. In Singapore, almost 72%
of e-commerce businesses are already engaging in cross-border sales. On average, these sales account for over 35% of revenue. Unlike any other countries surveyed, 50% of those e-commerce businesses found cultural barriers to be an issue when expanding overseas.
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Table 1.2: Singapore’s Leading e-commerce players (2020)
Rank E-commerce Platform
Monthly Web Visits Percentage Increase Q1 2020 Q2 2020
1 Shopee 5,963,300 10,879,900 82%
2 Lazada 7,786,700 8,570,000 10%
3 Qoo10 6,646,700 7,447,400 12%
4 Amazon.sg 2,833,300 3,653,333 29%
5 EZBuy 1,031,900 1,681,800 63%
Source: iPrice Group (2020) b. The strengths of Singapore’s cross-border e-commerce
Firstly, the growth of Singapore’s e-commerce market is supported by the country’s excellent internet technology. Fixed internet connections are almost triple the speed of the global average. The country enjoys highly reliable secure information and communication technology infrastructure. These factors have promoted high internet (87%) and mobile penetration (75%) levels among citizens.
Secondly, the growth of the online shopping market in Singapore is encouraged by a young, tech-savvy population with 80% of Singaporeans are aged under 54, and a growing middle class. The country is one of the wealthiest nations in the world as the seventh-highest gross domestic product per capita globally. Its consumers have high disposable income with which to apply to electronic retail.
Thirdly, Singapore has the most mature e-commerce payment infrastructures in Southeast Asia. Singapore’s various payment systems are reliable and the overall credit card penetration is very high, which is attractive as a target market for cross-border e- commerce.
Fourthly, Singapore has strong, cost-effective logistics for cross-border e- commerce with small geography and an efficient port.
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Sixthly, Singapore stands out in the Asia region with strong clarity and consistency of the customs and borders process. Customs and tax procedures are straightforward and corruption is at a global record low.
In addition, Singaporeans are more tech-savvy and have shown more willingness to engage in cross-border e-commerce. There are rooms for cross-border consumer protections to improve.
1.3.2 Experience from Malaysia
Malaysia is a country located in Southeast Asia. Deloitte (2020) reports that the contribution of e-commerce to Malaysia's GDP has grown steadily, reaching $28 billion in 2018. In 2020, the Malaysian e-commerce market value reached $4.3 billion and is predicted to grow to $8.1 billion by 2024. In Malaysia, 40% of all e-commerce transactions are cross-border.
Source: Globaldata.com (2020) Firstly, Malaysia has a developed logistics system. To increase freight volume and structural e-commerce growth, Malaysian logistics has evolved in recent years. Large-scale e-commerce platforms such as Lazada and Shopee have set up their
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14.2
19.7
24.2
30.2
0 5 10 15 20 25 30 35
2016 2017 2018 2019 2020
Figure 1.1: Malaysia E-commerce value (MYRbn) period 2016-2020
E-commerce value
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warehouses across Malaysia to help provide platform-operated logistics distribution.
These leading platforms are snatching up as many merchants as possible, even offering free shipping and warehousing.
Secondly, Malaysia focuses on controlling taxation Malaysia currently imposes two taxes relevant to overseas companies wishing to sell their products in the country: import tax and sales & service tax (SST). Only import tax is charged on cross- border e-commerce products, and SST is not charged on these. That is an advantage for businesses, and an opportunity to promote cross-border eCommerce in Malaysia.
Thirdly, developed payment infrastructure. In Malaysia, bank transfers and digital wallets are the most preferred payment method. Interestingly, credit cards are the most preferred payment method in Penang (28%), Perlis (40%), Selangor (25%), and WP Kuala Lumpur (34%). Digital wallets, known as complete digital in Malaysia, are the fourth most-used payment option. However, their usage is predicted to grow by 53%
by 2021, at which point it will take a 16% share of the Malaysian payments market.
1.3.3 Lessons for Vietnam in promoting cross-border e-commerce
Currently, many countries recognize the benefits of e-commerce to the whole society, such as e-commerce can enhance the competitiveness of the economy, and at the same time bring the ability to improve the environment. E-commerce will create the premise for early access to the digital economy or knowledge economy. E-commerce stimulates the development of the information technology industry - one of the important industries in the modern economy. However, for developing countries such as Vietnam, if there are no proper strategies, it will reduce competitiveness and lag behind. With a population of nearly 100 million people, Vietnam is considered one of the countries with a fairly decent digital economic growth rate in the ASEAN region. From the experiences of the above countries, lessons for Vietnam in promoting cross-border e-commerce are as follows:
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Firstly, for the development of the e-commerce development strategy, Vietnam should always pay attention to building a national e-commerce development strategy with long-term oriented goals for e-commerce development. The national e-commerce development strategy is built independently of the country's other socio-economic development strategies.
Secondly, enact the law on e-commerce. The developed countries in the world such as Singapore and Malaysia, when talking about the development of cross-border e- commerce, all have a consistent view on the importance of the legal system. Legal and regulatory documents need to be systematic, consistent, transparent, and correct, without causing difficulties in understanding and applying the law. At the same time, the Government must have a clear assignment of functional agencies and departments in e- commerce management.
Thirdly, information technology is always a determinant of the development of nations. Without investment in science and technology, Vietnam would not be able to catch up with the global trend and reduce its competitiveness with other countries in the world.
SUMMARY OF CHAPTER 1
In chapter 1, the author focused on five main sections: theoretical basis related to e-commerce and cross-border e-commerce, the background of cross-border e- commerce promotion, experience from leading countries in that industry (Singapore and Malaysia).
From that, the author find out the lessons for Vietnam, supporting the promotion process.
Based on chapter 1, chapter 2 will conduct an analysis of the current situation of cross- border e-commerce in Vietnam.
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