Impact of E-Commerce to Malaysian Economy

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E-commerce is the new buzz word. With the advent of the Internet, the development of e-commerce in both the developed and developing economies has developed at a rapid pace. Developing countries such as Malaysia are catching up fast as there are already 1.2 million Internet users. The private sector and the Government have taken initiatives to implement e-commerce. Physical and legal infrastructure for e-commerce in Malaysia have been put in place. The rapid adoption of e-commerce in the developing economies in general and Malaysia in particular has been made possible by the rapid development and high investment in communication technology and infrastructure, cheaper cost of computers and software as well as the availability of IT manpower. In Malaysia, the establishment of the Multimedia Super Corridor and the provision of IT training at local institutions of higher learning will accelerate the application of e-commerce. Furthermore, the development of e-commerce in Malaysia is in line with the country's long-term strategy to develop a competitive economy based on the K-economy concept. The recent Bank Negara Malaysia's approval for domestic banking institutions to offer Internet banking services with effect from June 2000 will boost the development of e-commerce in Malaysia.

Developed economies have shown that e-commerce will eventually have a far-reaching effect on the world economy because it will revolutionize the way businesses and consumers conduct their business transactions. The wide-spread impact of e-commerce is due to lower transaction costs. Using the transaction costs theory, studies have shown that e-commerce will reduce transaction costs of firms and hence final product prices. According to the transaction costs theory, price of a product has three elements: production costs, coordination costs, and profit margin. As firms find better ways to coordinate their activities through electronic...
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