Boosting E-Commerce in Asia

The growth of ASEAN is directly tied to the growth of trade in the region.

The growth of e-commerce has brought both opportunities and challenges to Southeast Asia. Though a powerful enabler for ASEAN’s Small and Medium Enterprises (SMEs) who today can instantaneously reach new markets, e-commerce has also created new challenges.

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ASEAN can grow e-commerce by combining the brainpower and collaboration of government and business.

Left unaddressed, these threaten the long-term viability of cross-border e-commerce.

Overcoming barriers in Asia 

According to the Organization of Economic Cooperation & Development and the World Trade Organization, due to e-commerce sales, international deliveries of small packets, parcels and packages have more than doubled in Asia between 2011 and 2016.

Although an undeniable growth opportunity, the surge in volume has created difficulties for border agencies, posts and express delivery services.  Today, Business to Consumer  (B2C) shipments out-number Business to Business (B2B) shipments by a significant proportion, resulting in resource constraints, increased costs and chokepoints at the border.

At the same time, these typically lower-value shipments face barriers ranging from x-ray screening, inspection and additional documentation to quantitative restrictions and extra border administration fees.

These barriers hurt ASEAN’s SMEs.  Not only do they make trade more complex, they destroy the customer experience for online shoppers and harm the reputations of ASEAN’s online retailers who now have failed to meet customer expectations for timely fulfillment. Indeed, in a survey conducted by JETRO amongst Asia Pacific companies in August 2017, SMEs cited “prompt customs clearance” as one of their top three concerns for e-commerce trade.

If e-commerce is to be the great global flattener and panacea for growth, governments must keep up efforts to further facilitate trade.  However, these efforts must also address the challenges that have emerged for border agencies.

Customs officers around the world today process thousands more low-value shipments per day, transactions made by new participants in international trade (online shoppers, SME retailers) who often are not familiar with the rules. A percentage of shippers also do not play by the rules.

The new reality in ASEAN 

Somewhere in the near future we expect shared data, analytics and technology to solve many of the challenges. But today, ASEAN can help by developing effective solutions combining the brainpower and collaboration of government and business.

One simple way of approaching this is to see how we can improve what we already have.

Could border processes be further simplified? Could we beef up compliance levels among online retailers and e-marketplaces? What capacity building programs can ASEAN implement to prevent the challenges that others are experiencing?

ASEAN’s businesses are calling for further streamlining of border procedures to make trade easier and improve the online shopping experience.

What if across ASEAN shipping goods below a certain value required no extra documentation?  What if purchases were delivered the same day and returns and exchanges were as simple as going to the store? 2018 is a great year to make this a reality.

Shiumei Lin is Vice President for Public Affairs & Sustainability for UPS Asia Pacific Region.

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