A Quick Assessment of Internet Usage in Malaysia

With the Movement Control Order (MCO), the whole Malaysian economic system basically halted except for certain services offering essentials like cooked food and fresh produce.

More than ever, the Internet is now playing a pivotal role which serves as the backbone that keeps the business world running during the MCO period.

  • The employees who are working from home rely heavily on various online conference call platforms to continue their business discussion. Platforms such as Google Hangout, Skype and Zoom are now the mainstream options for conference and business meetings.
  • E-commerce experience a sharp increase in sales as people are now turning to online grocery platforms to purchase their daily necessities. Taking an example from China, Carrefour China reported vegetable deliveries growing 600% year-over-year during the Lunar New Year period and JD.com saw an increase of 215% in online shopping grocery sales to 15,000 tonnes in just the first 10 days of February 2020.
  • Online entertainment services like Netflix are receiving higher viewership.

Some fast facts about the current state of the internet:

  • There are 7.75 billion people in the world, of which 4.54 billion are active Internet users. (58.6%)
  • The world is establishing full connectivity while just only 41.4% (3.2 billion) of people are still not connected to the Internet.
  • According to the Digital 2020 report by Hootsuite, Malaysia ranked top five globally and highest in Southeast Asia for social media penetration.
  • An average Malaysian internet user spends 7 hours and 57 minutes online every day, which equates to more than 100 days a year. This is greater than the global average time spent per user.
  • The Top 5 most visited websites in Malaysia are Google, Youtube, Facebook, Whatapps and Maybank2u.

Why the Internet is important for businesses?

Currently, 60% of the world population is now connected through the internet. Well-known retail websites or popular platforms amongst Malaysians like Lazada, Shopee, GrabMart, Grabfood, Foodpanda are currently experiencing high traffic especially now during the MCO period.

Online shopping is fast becoming a trend

The global retail e-commerce sales are US$3.535 trillion, and it is expected to exceed US$6.5 trillion by 2023, said Global Ecommerce report 2019.

Malaysia is one of the Top 5 fastest-growing e-commerce countries, which means that Malaysia has strong potential in the e-commerce market.  E-Commerce is a huge platform which is growing at an unprecedented rate all over the world. People of all ages now know how to shop online and prefer this than go to a physical store.

The rate of online shopping is increasing beyond measure rate and this is keeping e-commerce owners on their toes as they need to stay ahead of the competition.

According to the survey conducted by Hootsuite, the number of online purchases is increasing over the year. APRU is a measure of the revenue generated by each online consumer goods shopper, and in Malaysia, the average revenue that is generated has increased from USD64 in 2016 to USD185, an increase of about 3%, while the highest ARPU is generated in the US.

The recent COVID-19 pandemic has again highlighted the importance of the Internet in human life

Ever since the discovery of the first Covid-19 case, many countries have announced a lockdown following China. More than three billion people around the world were living under lockdown, according to the New Straits Times. Countries are using apps and data networks to keep tabs on the pandemic. The large-scale quarantines, travel restrictions and social-distancing measures caused by the Covid-19 crisis have led to a sharp decline in consumer and business spending. Consumers stay at home, businesses lose revenue, had to lay off workers, and all these causing the unemployment rate to rise sharply.

Malaysia has imposed an MCO in the middle of March 2020, to manage the spread of COVID-19 by restricting the movement of citizens. The Economic & Social Research Institute is predicting that the unemployment rate could rise to a new height at 18% by the end of the second quarter of 2020 – indicating over 350,000 people would lose their jobs.  Malaysia’s unemployment rate may rise further if the gross domestic product (GDP) growth falls between 0.8 and 1.2 per cent.

“The outbreak of Covid-19 which hit the country’s GDP is equivalent to an estimated 120,000 to 180,000 job losses, based on the value-added per employee and total GDP value for last year” said by Economist professor Dr Yeah Kim Leng.

Written by Sue Thin, Analyst at 27 Advisory. She is grateful to have a beach backyard to call home. Apart from appreciating nature, she is interested in everything related to fundamental & technical analysis and value investing.

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