SEPTEMBER 25 — Imagine a Malaysian shopper opening Pinduoduo and seeing an item sold directly from China for only RM1. Shipping may even be free, and payment takes only seconds. The product can then travel thousands of kilometres and arrive at the buyer’s doorstep without the consumer ever dealing with a Malaysian importer, distributor or retailer. This shows how much e-commerce has changed since Malaysia introduced the Electronic Commerce Act in 2006. It also explains why the government’s plan for a new E-Commerce Bill is timely.

The bigger challenge, however, may not be writing more rules. It is making sure those rules can still work when millions of small transactions move across borders at digital speed. Malaysia can require regulated products to meet SIRIM-related requirements and other standards. It can prohibit restricted goods and place more responsibility on online platforms. Yet somebody still has to determine whether the exact item bought by the consumer has met those requirements. If that question is asked only after payment has been made and the parcel has reached Customs, enforcement is already arriving very late.

Take electrical appliances as an example. Malaysia’s Energy Commission regulates many household electrical products because they connect directly to the country’s electricity system and can create risks such as fire or electric shock when they are unsuitable or defective. Malaysia’s domestic electricity supply is nominally around 230V at 50Hz, while China commonly uses 220V at 50Hz. The two countries also use different plug and socket systems. This does not mean Chinese-made electrical appliances are unsafe, because Chinese manufacturers already produce large volumes of products specifically for Malaysia and other international markets.

The real issue is that a product made for the Chinese domestic market may look almost identical to one made for Malaysia while having different plugs, cords, specifications or approval status. A Malaysian buyer may see the same colour, shape, wattage and brand name. The product may also have thousands of positive reviews. Yet the consumer cannot easily determine whether that exact model was intended and approved for the Malaysian market. A travel adapter may make a plug fit a Malaysian socket, but that does not prove the appliance itself has met Malaysia’s safety requirements.

Tyres show the same problem in a more serious way because failure can occur at highway speed. Malaysia and China do not have identical road conditions, weather exposure or driving environments. Malaysia experiences high temperatures throughout the year, frequent heavy rain and long periods of wet-road driving. JPJ therefore applies mandatory standards to new and rethreaded tyres through its Component Type Approval framework. Again, this does not mean a tyre made in China cannot be used in Malaysia. Many major manufacturers produce in China and sell compliant products around the world.

The question is whether the exact tyre bought by a Malaysian consumer meets the standards required here. A consumer can compare tyre width, diameter, tread pattern and price online, but cannot judge structural endurance, ageing behaviour or regulatory conformity from photographs and reviews. Smartphones show another version of the same issue. A China-market phone may look almost identical to the international version, but the software can be different. Some China-market Android phones may not include Google Play Services in the way Malaysian consumers expect, while Malaysia also has its own certification requirements for communications equipment.

Once a marketplace accepts a Malaysian delivery address, many buyers naturally assume the product is suitable for Malaysia. That assumption may often be correct, but being deliverable to Malaysia and being suitable or approved for Malaysia are not always the same thing. This is where certification and product approval still matter. Consumers cannot reasonably be expected to understand every technical requirement before buying an inexpensive product online.

The debate about cheap cross-border goods can also become too simplistic. Low prices do not automatically mean unfair competition. If a Chinese manufacturer can produce a fully compliant product more cheaply because it has larger factories, better automation, cheaper procurement or more efficient logistics, Malaysian consumers should benefit. Local retailers cannot expect the government to preserve every layer of the old distribution system simply because technology has made direct purchasing easier.

The problem changes when one business must complete testing, certification and approval before reaching Malaysian consumers, while another route allows a similar product to be purchased before equivalent compliance has been verified. In that situation, part of the price advantage may no longer come from productivity alone. It may come from a different regulatory pathway. This is where regulatory arbitrage can create an invisible cost advantage.

Malaysia is not handing money to the foreign seller, but the seller may be operating under a different enforcement pathway from a Malaysian business that must comply fully before selling. The purpose of the new E-Commerce Bill should therefore not be to protect Malaysian sellers simply because they are Malaysian. It should make sure Malaysian standards follow the product regardless of who sells it. If a foreign manufacturer meets the same requirements and can still sell more cheaply, consumers should be free to choose the cheaper product.

The difficulty is that Malaysia’s traditional import system was built around identifiable importers and relatively concentrated commercial shipments. A company brings goods into Malaysia, deals with Customs and the relevant regulatory agencies, obtains approvals and remains identifiable if something goes wrong. Direct cross-border e-commerce changes that structure because what once might have entered as one commercial shipment can now arrive as thousands of individual parcels sent directly to Malaysian homes.

Customs cannot reasonably open every charger, appliance, tyre, cosmetic product or other parcel entering the country. Modern trade already depends on advance shipment information and risk-based enforcement because inspecting every item would bring the system to a standstill. Yet knowing that a parcel contains an electrical appliance is still different from knowing whether the exact model has Malaysian approval. The larger the parcel volume becomes, the less efficient it is to wait until the product reaches the border before asking whether it should have been sold to the Malaysian consumer.

The better place to ask that question may be on the platform itself. Before an overseas seller pack an item, the marketplace already knows the listing selected by the consumer, the seller, the buyer’s country, the price and usually the shipping method. Platforms already use this information to personalise search results, calculate delivery charges and determine what users can access. My own experience with Pinduoduo provides a simple example.

When I used a Malaysian account and searched for cigarettes using the Chinese term “香烟”, the normal product listings were unavailable and a warning appeared instead. One personal search cannot prove how effectively the platform manages every restricted product, but it does show that destination-based controls are technically possible. If a platform can recognise a Malaysian user and restrict access to one product category, the same capability could be considered for regulated products.

A regulated electrical appliance could be linked to its Malaysian approval information, while a tyre could be linked to the relevant component approval. When a Malaysian consumer attempts to buy the product, the platform could check whether the exact model is eligible for direct sale here. If the approval is valid, the transaction can proceed normally. If approval is required but cannot be verified, the product should not enjoy the same frictionless direct-shopping route until compliance has been established.

Malaysia would not need one enormous agency controlling everything sold online. Existing regulators should continue deciding the standards for electrical products, automotive components, cosmetics, communications equipment and other regulated goods. What is needed is a stronger digital connection between those regulatory decisions and the point where the transaction takes place. Consumers and Customs officers should not have to search several databases manually when a platform could receive a simple digital answer on whether a regulated product is eligible for direct Malaysian sale.

A risk-based approach is also important. A hair accessory should not be treated like a tyre simply because both are imported from China. Malaysian SMEs themselves buy packaging, equipment, components and samples from overseas platforms because lower input costs can help them become more competitive. Making every foreign product slower or more expensive could protect one group of Malaysian businesses while raising costs for another. Regulation should therefore follow the risk and regulatory status of the product rather than the nationality of the seller.

The new E-Commerce Bill should not be judged simply by how many new obligations it contains. A platform licence may identify the company running the marketplace, but it does not automatically tell regulators whether one particular charger, tyre or phone model satisfies Malaysian requirements. The real implementation test comes before the parcel reaches Customs. When a Malaysian consumer clicks “buy” on a regulated product from an overseas marketplace, can the system determine whether that exact product satisfies Malaysian requirements before payment is accepted?

If the answer eventually becomes yes, Customs can remain an important final enforcement layer without being expected to discover every problem after the parcel has already entered the logistics network. If the answer remains no, Malaysia may end up with a stronger law while regulators continue chasing the same problem after digital commerce has already moved ahead. Cross-border platforms can already recognise Malaysian shoppers, recommend products, process payments and arrange international delivery within seconds.

Malaysia’s regulatory system does not need to compete with that technology, but it needs to connect with it. The real test of the new E-Commerce Bill is therefore not how many more rules Malaysia can write. It is whether the right rule can reach the product before the product reaches the Malaysian consumer.

* Dr Chong Say Lee is a UUM triple-alumna and a part-time lecturer for Professional and Continuing Education (PACE) at Universiti Utara Malaysia.

** This is the personal opinion of the writers or publication and does not necessarily represent the views of Malay Mail.