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Alibaba kicks off plan for frontier-free trade

Alibaba has kicked off its grand plan for global trade without frontiers, signing a bilateral deal designed to ease the passage of goods shipped by smaller businesses between China and Malaysia.

The pact, established as a public-private partnership in Malaysia’s digital free trade zone, is focused on infrastructure, including a fulfilment centre and co-operating on electronic payments and financing.

Daniel Zhang, chief executive of the Chinese ecommerce group, said discussions with the Malaysian government were continuing to ensure participants would be granted the best trade terms.

The move sees a Chinese private company seize the initiative on dismantling borders at a time when global free trade pacts are being thwarted and protectionism is the new mantra of the US under Donald Trump.

The bilateral pact is the first of a patchwork of agreements that ultimately aims at enabling small and medium sized businesses to trade freely across the globe and further the ecommerce group’s ambitions of securing 2bn customers in the next decade.

First hatched by Alibaba founder and chairman Jack Ma at the G20 summit in Hangzhou last year, the electronic world trade platform (eWTP) is envisaged as a set of international rules to pull down barriers to ecommerce and help small and medium-sized enterprises conduct cross-border trade.

Mr Ma sees the initiative operating as a sort of parallel World Trade Organisation for SMEs, with business in the lead and governments playing a supporting role rather than being in the driving seat.

As in the case of Malaysia, which is embracing the eWTP as part of its own economic and strategic goals, governments would need to create virtual free trade zones for SMEs where — ultimately — SMEs can sell goods to consumers overseas with low or zero import duties and speedy customs clearance.

Malaysia becomes the first participating country outside China, where a hub has been developed on Alibaba’s home turf of Hangzhou, and a third is expected to follow shortly.

Najib Razak, Malaysia prime minister, said the country’s role as an early participant would “provide a plethora of opportunities for Malaysian organisations”.

Mr Ma said the addition of Malaysia on the eWTP “will go a long way towards making global trade more inclusive and provide much needed support to a hugely important constituent: SMEs and the younger generation”.

Via FT