Who Protects Consumers On E-Commerce Platforms?

This is a podcast from BFM 89.9, the business station. [music] The big issue on BFM 89.9. [music] Good evening, it's 6.06 in New Wits right good and welcome to the show that puts you at the heart of the big issues shaping our world. Tonight the focus is on e-commerce and how better protection can be afforded to shoppers online. Now you eat two thirds of Malaysian shop online today because of how convenient it is. There's also though a risk in some of these transactions that trade-offs, the quality and safety of what you're getting can be doubtful, resolving disputes with sellers can often be tricky, especially with overseas vendors. And we know nothing about how our purchasing and financial data is protected or not. So tonight we're exploring emerging trends in e-commerce, how consumers at risk of unsafe practices and how to navigate consumer protection without sacrificing what is a thriving digital economy. You can share your thoughts and also ask our experts questions you can call double 733-2900. You can send us a voice note or WhatsApp at our you mobile number 018-789-889. Now joining me in the studio today Richard Wii is a lawyer with an international firm and also a regular voice on BFM and also Ganesh Kumar Banga who is an e-commerce chapter chair for Peacom which is the National Tech Association of Malaysia. Richard let's start with you because you know I think when we think about the space and I think the problem that's often signal is the lack of regulation or insufficient regulation. When you think of it you're a lawyer right? The world's changing so fast. The law on the other hand is always playing catch-up. Is this essentially the problem? Yes poron first things first thank you for having me today and yes poron sure that that is the problem. I think the e-commerce is so fluid. It's constantly changing and now with the advent of AI in the most of the platforms or e-commerce yes it's made it even more challenging to regulate it. And you know for you as a lawyer how much and I think also this would apply to the law makers right? How much of that technology do you have to understand? How much do you have to understand about the way algorithms work the way in which financial systems and payment gateways work in order that we come up with both protection that does not hinder the growth of the industry. But also is adequate to the needs of our citizens and to consumers. That's a really good question. If you don't mind I just give some quick background for why I'm here. I must thank BFM for having me here. But in 2024 the Ministry of Domestic Trade and Costs of Living will call them KPD and they engaged a commission study, they engaged my little friends in Frost and Sullivan and bought in my law firm to draft a new legal framework for e-commerce. Currently we only have this law the e-commerce act to 0 0 6 as the principal act which triggers and activates the operation of e-commerce in Malaysia without this act. We cannot have e-commerce in Malaysia. So during the study over the last 19 months or so which completed in December last year. We went through the usage of algorithms, artificial intelligence, we interviewed numerous platforms, vendors, consumers, technological partners on how e-commerce is operating. And from there we then trickle down towards the law. We look at what's happening in the current law state. The states of the law at the moment we have a seal of goods act, simple old fashioned act such as weighing act, even traditional acts like price, lease act, you know. All these had to be reviewed. I think my colleagues and I went through more than 50 arguments, old arguments to see how we can trick it and make it relevant to this. But yes, your spot on with all the adverts and the change and constant transformation e-commerce, the Ministry will, the government will always be playing catch-up. So it is very important what we did last year was try to future proof the next upcoming parliamentary bill. Hopefully we'll be able to give the government about 10 to 20 years space to keep this thing running before I think we have to review it again in 10 to 20 years time. What about just simple cutting pace from another country that's already done this? I mean, as an upside to cutting pace is the downside to it. If you were going to cut in pace, which country would you cut in pace from? Very good question, I do sure. When we were doing this short, we went through numerous jurisdictional approaches. The classic one of course was China. I mean, they are way ahead of us in the way they regulate e-commerce. But because the jurisprudence, the background, the basis of the nation is very much an autocratic system. They run quite firmly from central headquarters telling all the states what to do, any works, because it works for the nation. So we started that, we went to Philippines, Philippines had an internet transaction act in 2023. Very similar, as you know, Philippines and us, we share common legacy, common history, both nations have similar thinking people. So we went through the act pretty good, helpful. But it's called an internet transaction act for reason, because the act was to regulate the acquisition of the item body consumer and the delivery of the item to the consumer. We went through the ancestral rules. We met people in Switzerland. We met people in Brussels. We studied how the European Union needed it. We met people from UK. We met many people online. I think they have not met so many people in my life, but that 18 months, 19 months, we studied other institutions to see how they work. And then we tried to take what is relevant to our culture, our people, and what fit us. So when you look at the Malaysian situation, I mean, how unique is it? I mean, are we, is that landscape and you know, and Ganesh will come later to talk about, you know, the landscape of e-commerce in the country. But are we unique or is in fact this field really fairly universal? I mean, are most countries comparable because many of the platforms, of course, as we know, are international ones. They were created for a global audience. They speak the language of this global market. So, you know, what is unique for a country? Well, firstly, there is a lot of universal elements. If I can first state the universal elements, first there are usually six players in e-commerce. But the sixth one, when I reach there, you will see that it's kind of like, emerging to the fourth one. So the first player is always a consumer. We know consumer, no e-commerce. So the behavior of the consumer, the reaction, clearly we all changed during the pandemic. That was a clear game changer, the goalpost moved in the year 2020. So that's the first group, which includes people like you and me. Second group are the platforms. We call them the platforms. The platforms are usually domineering. We have international platforms, we have local platforms. And people tend to forget e-commerce. It's not just about going to a particular app to buy something. There are also a lot of apps where you download things, to watch things, to listen things, to acquire apps from phone. If you buy a certain phone from a certain nation, that phone comes to you and download that app. So you have to go to that app to buy more apps. That is e-commerce. Basically anything being sold online, it can be an e-commerce. So we have to look at that. So that is the platform which covers many places. The third one is the vendor. People sell on the platform. So this could be the anti-selling cloth downtown in Old Town or huge company with a tremendous factory down south producing items every minute. These are the vendors. Then the fourth one are the people who are like the, I would say, the FinTech providers, the payment system. But this fourth one, which is what I was referring to as number six, they have been embedded into very much into the platforms nowadays. But there are certain e-commerce platforms where they have no choice. They still have to rely on the third party, FinTech provider, e-wallet, e-payment, gateway etc. The next one, the fifth one, is the third mile provider. Every e-commerce required that one person to take the item from it to be the third mile. So in Malaysia is very unique. The third month is under the Postal Act, and the Postal Act is regulated by MCMC. It's a different ministry. The last player is the government, the regulators. And so these six are the common universe. Anywhere in the world, we see these six. In Malaysia, what is unique in Malaysia is that Malaysian people have begun the key is that we trust e-commerce. We have a point where we've never questioned the item. 'Oh yeah, this is probably correct.' And this is probably genuine, etc. etc. And I think Malaysians by nature, the other peculiar element of Malaysia is that we like to buy from two or three platforms. I think we know what platforms they are. So two platforms are very popular in Malaysia. But I think many Malaysians still don't realise that they are when they acquire download movies and songs. That's also e-commerce. So yeah, those are the universal elements and some peculiar parts from Malaysia. Okay, we're going to have to take a short break. Now, I've been speaking to Richard Wee, he's a lawyer in the field of e-commerce and regulatory frameworks that are going to govern this country and this wonderfully vibrant dynamic. We're also having on the show Ganesh Kumar Banga. He's an e-commerce chair, chapter chair for Picon, which is a national tech association in Malaysia. All this coming up after this short break, stay tuned. BFM 89.9. Blues, folk, metal, BFM 89.9. It's coming up to 6.20 and you're listening to the big issue with me. So tonight the focus is on e-commerce and how to better protect shoppers and businesses in this very dynamic field. Remember, you can always share your opinions or even ask our experts questions. You can call double seven double three two nine hundred. You can also send us a voice note or WhatsApp at our you mobile number zero one eight seven eight nine double eight double nine two. Help me with this very interesting conundrum that the country is now facing. It's the world in this is Richard Reeze lawyer and also Ganesh Kumar Banga. He is the chair of the e-commerce chapter of Picon, which is the national tech association of Malaysia. Again, gentlemen, thank you so much for being here. Ganesh, we haven't heard much from you yet. So I'm going to start with you around some very basic, you know, very basic facts about the e-commerce base in Malaysia. Could you just help us sort of help paint a picture of what the e-commerce base is like now? Sure. So I think the number of areas, the number of ways you actually have to look at the e-commerce industry. First of all, it's contribution to the economy if you look at it. So e-commerce is about 10 to 15% of retail and as a component of GDP, the whole digital economy today is about 25%. Roughly or slightly more than half of that actually is coming from e-commerce. So it's grown from a very small base to actually now a significant contributor to the digital economy and also the overall economy of Malaysia. And then if you look at where people are buying online or what type of online where they're buying, the marketplaces are still the highest contributor to that. So marketplaces contribute today, maybe 90% of B2C e-commerce. So that's consumers buying through marketplaces. Well, it's direct brand.com, people buying through web stores. The brand's own web stores is about 10% which is quite small. In more developed markets like US, it's actually 50% actually buying from their own brand.coms. And I think again talk more why it's important for consumers and also merchants to really have their own channels as well to enable consumers to buy directly from brands as well. Okay. If we can help us just sort of get more granular with the question of that 25% because it does seem huge. I mean, what goes into the calculation? Say if I go into a brick and mortar shop and I now pay by QR code, have I engaged in e-commerce? That's only e-payments. So e-payments are separate. Yes, but the digital economy, some of those transactions are using a QR code. The payment component does go into the digital economy. But that's just the percentage that the payment provider state. Not the whole volume yet. The reason is I asked is 25% sounds huge. And I was trying to wrap my head around this. So what is it that's changing? Do we have a sense, Ganesh, of when this happened? When did we have this explosion of e-commerce? Richard mentioned COVID as being a real game changer, a real shift. And maybe not just what was out there to buy and purchase from, but also in terms of consumer attitudes. Suddenly we were all forced to be whether we liked it or not online. So could you give us a sense of that history of the shape of e-commerce in the country? Sure. I think the real growth of e-commerce started roughly about 10 years ago. And then you started seeing it reach the inflection point. I'll call it the natural inflection point in roughly about 2008. I think the Malaysian government through the Malaysian Digital Economic Corporation, which I sit on the board of as well, actually started a lot of initiatives to promote seller adoption, to get more merchants to start selling online, Lazada and Shopys started coming into the market. And the digital free trade zone as well, with Jack Maid, that time coming to the country and promoting it, that really started us on the natural inflection point. And people started getting more use to buying online, especially in the urban areas particularly. Now then if you move forward, the pandemic really forced all of us to actually start buying online. And so in that couple of years that we were stuck at home and were forced to buy online, that really put us ahead of the bell curve. And then of course post pandemic, there was a bit of a slowdown, not that much. I think we double or triple during the pandemic, and then there was maybe a 10-20% slowdown in e-commerce. Then in the last couple of years, a new trend that has been coming up is social commerce. So with the advent of TikTok Shop, which I always say is one of the biggest innovations that e-commerce has had ever since eBay was created 20-30 years ago, was when TikTok Shop came in and influencers started really promoting e-commerce to the more rural areas, not just urban. So until the pandemic, the people that were buying online were mainly urban, but as it grew then the rural areas as TikTok Shop came in the market, people started buying more products through social commerce, being influenced by creators basically. And that started the next wave of growth. Now the next wave of growth I always say is going to be the next disruption facing e-commerce. Why is in those days when we actually doing the pandemic, when we actually bought products on Lazada or Shopping, we were actually buying products on the brands we were already familiar with. We were urban consumers, we were buying the same products from us, today we were buying them through Lazada or Shopping. But when it comes to TikTok Shop, the type of brands being launched on TikTok Shop, Bantung Jinger for example, Bantung Jinger doing the top sales at one point on TikTok Shop, this is a totally new brand that overnight can achieve millions of ringgit of sales. And so the type of brands now coming from TikTok Shop are the newer brands. And that's going to be a big disruption because that's actually going to eat the market share from established brands today. Okay, wonderful. You're paying a picture of not just the past but also the future. I've read about South Korean cosmetics and how TikTok Shop is so important to its growth. Richard, I want you to kind of help me reflect on this timeline that Ganesh has just given us. Government coming in, inflection points, all this. But where was the law in all this? Because now in 2026, thinking about better regulation of this field, why did it come earlier, Richard? What was adequate then that now become inadequate? Well, let's talk specifically about e-commerce law. So there is this specific law of 2006 e-commerce act, which I mentioned earlier is a trigger act. This is the act which allow e-commerce to come into Malaysia. If we remove the act, then all e-commerce businesses will stop. And then I think the act was actually, no, I think it is inspired by Ansythra. Ansythra is a United Nations rules which have set certain model rules for all over the follow. But there is another apple parliament called the Consumer Protection Act. The Consumer Protection Act empowers the ministry, in this case it is KPDN again, to come up with regulations which they have. So there is a 2012 regulation and recently there was a 2024 regulation which is still not in action yet. And that regulation is specifically about the behavior of the e-commerce industry on how the e-commerce players expect to comply to certain rules. For example, the 2024 rules, there is a suggestion to have all e-commerce platforms utilised the language of Malay language. But that is still not in roll out yet. So these are examples of specific laws of e-commerce in Malaysia. There is a few more, but I don't think we should go into that in detail. But we are dan saya juga menggunakan daripada saya. Sama-sama, antara tradisional kata-kata. Kata-kata dari kata-kata kata-kata, kita mempunyai kerja-kerja, dan kata-kata. Jadi, kemudian kemudian, apa yang saya kata sebagai tradisional kata-kata, kata-kata kata-kata dan mencari dari kata-kata dan mempunyai rancangan. Jadi, itu apa yang berlaku. Tapi, apa yang terjadi dengan apa yang terjadi dengan apa yang terjadi dengan apa yang terlalu di sini kalau kemudian kemudian kemudian, kita patut lihat di sini yang baru. Okey, kita akan kembali dengan kemudian kemudian, apa yang terjadi dengan kemudian, apa yang terjadi dengan kemudian kemudian kemudian, apa yang terjadi dengan kemudian kemudian, apa yang terjadi dengan kemudian, apa yang terjadi dengan kemudian, apa yang terjadi dengan kemudian, apa yang terjadi. saya akan menghubungkan keadaan-adaan. dia akan menghubungkan keadaan-adaan. dia akan menghubungkan keadaan. Sehingga orang lain yang berlaku, saya minta kenapa kamu berlaku, jika kamu berlaku, itu akan berlaku. Itu yang terspensi untuk menggunakan, untuk menggunakan, dan tidak berlaku dan berlaku. Dan kemudian, "Oh, ya, ya, bagus, bye-bye, bye-bye." Kemudian kamu berlaku, sebenarnya, itu sangat berlaku. Dan banyak kali, kita telah menonton, kita menonton bahawa, untuk menggunakan, dan orang yang berlaku berlaku terlaku, itu akan berlaku. Jadi, itu akan berlaku, dan itu akan berlaku, dan berlaku, berlaku, berlaku, berlaku, berlaku, berlaku. Right, jadi menggunakan, saya rasa tidak akan berlaku. Kenapa kamu berlaku? Kenapa kamu berlaku dan berlaku? Kerana-kerana kamu berlaku. Mereka ada banyak daripada anda, anda dah nampak kelihatan tentang kelihatan yang lain. Sama-sama untuk kelihatan besar dan kelihatan yang terdapat. Tapi apa yang anda lihat, ada masalah lain mungkin, kelihatan yang lain. Ya. Jadi, kelihatan yang bagus, kami tahu, dan kami ada melihat beberapa. Atau, kami ada beberapa daripada apa yang kelihatan di dalam kelihatan yang mempunyai kelihatan. Tapi apa yang penting penting di dalam kelihatan, kami juga ada beberapa daripada penyakitannya. Kita ada beberapa daripada apa yang di dalam kelihatan yang mempunyai kelihatan yang mempunyai kelihatan. So four example, one of the big issues today that is facing the e-commerce industry, the consumer at large may not realize it, but lot of merchants and SMEs today are actually having a lot of issues because, for example, the margins or the commissions charged by the marketplaces have increased significantly. The marketplaces use to charge five percent. Now they are charging close to 20, if not 25 percent. So if your e-commerce merchant and your actually earning, let's say, 40 percent and you are making a 20 percent margin, now at 20 percent, you make a 10 percent margin. That is actually impacting the industry significantly and they've increased it at a very rapid rate. This is in the last two years. And all the marketplaces are profitable today. The marketplaces today, actually in Malaysia, actually charge the highest commission fees, all of them operate across the region, but Malaysia actually has the highest commission fees. So I think that we did some surveys on this as well. And I think that's where we hope the government also can, to a certain extent, also regulate, I use the word regulate here. Or at least put guardrails around this marketplaces so that if they, if they have more predatory nature, use the word predatory nature in terms of changing their rules, they actually impact our sellers. You know, we have more than a million SMEs selling online today. So can you imagine if they start losing money, right? They could hire each SME. Highest five people that's, you know, 25 percent of our populations, livelihoods that get impacted, right? By this and all the large marketplaces in Malaysia are foreign owned. Yeah, I wanted to ask you about this though, you know, so could the platforms just say to the individual sellers? Well, if you don't like our terms, you go to the other platform, you know, you don't have to sell on ours. And I see the analogy with a lot of the e-hailing companies because they constantly shift the ground rules. Yeah, just to ask Richard, I mean, is it proper for government to regulate this particular relationship? I think it's a very interesting question that you've posed. Is it government, is it going to be in the law protecting sellers against and quotes predatory platforms? So I wouldn't get the word predatory platforms. Oh, predatory rules. The platforms might use. No, we were good word for the radio, but legally, of course, we would use that phrase. I think it's anti-trust issues. Monopolistic issues. Monopolistic issues. Exactly. So the anti-trust issues, the anti-monopoly rules in Malaysia, it's called competition law. We have a very, very effective myCC, Malaysian competition commission. I think they're hardworking, they're keeping an eye on all this all the time. And I'm not surprised if they will be looking at this because they just had a launch yesterday. They launched a market review for 2025 to this year to explain to the world what they have done so far. And what I understand is one of the things they are looking at is this. I believe so. So, okay, let me first answer the point that you brought up. If let's say one market places increases their fees, the consumer can go to the next market place. Unfortunately, what happens is when the first market place increases its fees, we're in two weeks, the second wheel and we didn't demand the third wheel. So they actually follow each other, right? It turns to this, it's only gop please. The word is cartel. Cartels, right? Okay. So it's actually what is happening today. And yes, my CC should look into that. The only problem is because this is the industry that is a bit hard to understand. So, but I know my CC has also a lot of initiatives to look at this sort of monoplistic behavior in the digital economy. And so I think that's something that I think the government, so that the only thing is let's say there is such a behavior on one aspect. That's why it's important for the government, I believe, to at least have some way to have some oversight. It may not be a license where it can be an oversight. I give you one example. The mobile wallet providers, they have to get approval from bank negara. They have to, the mobile wallet providers have to get approval from bank negara. The mobile wallet providers have to provide reports to bank negara because they're managing people's money. In this case, e-commerce marketplaces are where people buy products from millions of merchants, some of them, right? So, there should be a similar type of oversight. Similar to how bank negara governs wallet providers, digital wallet providers, digital e-commerce providers are also as big as some of these digital wallets. So, there should be a similar type of, I use the word oversight, right? Where the government can at least come in to provide some sort of, but govern. Okay, and before we can do this fascinating discussion, we need to take a short break. I'm speaking to Ganesh Kumar Bhanga, Chair of the e-commerce chapter of Pekong, which is a National Tech Association of Malaysia, and Richard, we a lawyer tonight, the focus is on e-commerce and how better to protect shoppers and businesses keep here on BFM 89.9. Bringing fresh meaning, BFM 89.9. It's 653 and it looks into the big issue with me Sharad. Tonight, the focus is on e-commerce and how to better protect shoppers and businesses. Remember, you can share your opinion with us in call, double 7, double 3, 2, 900, send us a voice note or WhatsApp, add 018, 79, double 8, double 9. Ganesh, platforms, regulating them is a bad at this point in time. And this is always the complaint, right? Governments coming in, I mean, this is a criticism of kind of conservative right wing folks, right? I'll say what happens in Europe, too much regulation, you're killing the baby, add it's in its infancy. Is there a problem here with that? When an industry actually contributes 10% of the economy of a country is no longer a baby, it's almost an adult, it's a teenager, if you may call it a teenager, there needs to be some form of oversight. I don't use the word regulations, I use oversight to ensure that they don't go in the wrong direction, especially when most of this market, actually all of the large marketplaces are not locally owned marketplaces. So in that kind of environment where they control so much of consumer data, they can basically control, they can basically channel traffic and our consumers, driven by foreign products. There, the government of Malaysia needs to have some form of oversight, may not call it regulation, but it needs to have some form of oversight. Over this large now, they're not small anymore, they're not a baby anymore, over this large construction. Maybe big babies then. Richard, what's your opinion? From a legal perspective, what is government empowered to do in a situation like this? Well, first we must look at platforms like Mr Bangalm called it Marketplace, but legally we are calling it the platforms. So the platforms, on one side of the platform, we have to first understand how they work. They have humongous costs issues, the bigger they are, the more costs they have to run. We understand their KYC costs is pretty imposing. They also carry the burden of the consumer expectation. They have to manage the vendor, expecting the people who sell, we call them a vendor. So they have their own challenges in all fairness to them. And what they will amount to claim, I'm not here to question a challenge time, but I can understand why they want to charge. So perhaps like Mr Bangalm said, we need to have some oversight. Now, how do we oversight? At the moment, to answer a question very quickly, before we go think time's coming up soon, we have laws already in existence, the current laws, the Trade Description Act, PDPA, the Electronical Communication Act, even the CMA, under the MCFC, we do have it already, but it's insufficient. So moving forward, under this force, the Sullivan report we have here, there are a few ways to regulate. One is to maybe create licensing, where all the providers need to go to a licensing. The other approach is to not di mana-mana yang kita kena, dan yang yang paling berlaku, di mana-mana yang terlalu berlaku, di mana-mana yang terlalu berlaku. Dan ada spektasian yang berlaku pada kumpulan, kumpulan dan platform. Kamu adalah peluang, kamu berlaku. Ada juga kecil untuk menggunakan. Jadi ini adalah semua kecil untuk menggunakan ekonomi yang terlalu berlaku. Tapi pada masa itu, mereka hanya ada keadaan saya sekarang, jika kumpulan yang berlaku pada kumpulan dan keadaan saya, Mr. Bagaçeng, akan mungkin terlalu kemungkinan saya, atau kemungkinan kemungkinan dan keadaan yang terlalu berlaku. Okey, jenimanya kita harus berlaku pada masa yang lain. Saya cuma nak beritahu keadaan yang terlalu berlaku pada masa yang lain. Apa yang terlalu berlaku pada masa yang lain. Saya rasa ia sangat penting untuk menggunakan, bukan hanya keadaan yang terlalu berlaku dari perjalanan. Karena hari keadaan yang terlalu berlaku pada masa yang lain, terlalu berlaku pada masa yang lain, terlalu berlaku pada masa yang lain, terlalu berlaku pada masa yang lain. saya akan menghantarkan konsumur dan seles. Saya rasa itu yang saya perlu beritahu Kudosa. seperti untuk melihat keadaan dengan New Act. Saya rasa industrinya ada banyak spektasian. dan semuanya New Act bergantungan. seperti untuk mempunyai bahawa. saya akan menghantar bahawa. saya akan menghantar bahawa New Act. saya akan menghantar bahawa New Act.