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E-commerce and International Trade The Case for Indonesia and Malaysia

E-commerce and International Trade  The Case for Indonesia and Malaysia
22 December 2023
Seema Narayan
E-commerce, International trade, Indonesia, Malaysia

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This study evaluates how e-commerce is reshaping international trade in goods for two Association of Southeast Asian Nations (ASEAN) Member States. E-commerce features in the analysis in two forms: (i) as a global trend in the e-commerce transition, measured as the total e-commerce sales as a percentage of total retail sales, and (ii) as the e-commerce ranking of the exporting and importing nations. We examine the relationship between the e-commerce and exports of Indonesia and Malaysia to their 200 or more trading partners, respectively, over 2014–2020. Our results suggest that the global transition towards e-commerce benefits the exports of both nations, although its mediating role for the bilateral supply chain–exports relationship is conspicuous for Indonesia only. Moreover, an increase in the e-commerce ranking of the two nations impacts their exports positively, but a higher e-commerce ranking of the trading partner countries adversely affects exports in Indonesia and Malaysia. We also find that interactions between e-commerce and supply chains can boost exports. However, in many cases, this occurs if e-commerce growth is falling. Our results imply that e-commerce enablers remain underdeveloped, and that cross-border e-commerce activities depend on existing trade enablers such as supply chain drivers. Therefore, the growth of e-commerce may have been partially responsible for the supply chain disruptions in Indonesia and Malaysia. We show that the results vary between Indonesia and Malaysia and by trading partner. We scrutinise our results using an array of robustness tests and provide policy implications for the two ASEAN Member States.

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