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MDTCA Fuels Competitive Direct Selling Industry Within A Digital Economy
COVER STORY
MDTCA FUELS COMPETITIVE DIRECT SELLING INDUSTRY WITHIN A DIGITAL ECONOMY
Datuk Azman Mohd Yusof, Secretary General of the Ministry of Domestic shares his perspectives on the direction of the direct selling industry in Malaysia amidst a digital economy.
the direct selling industry has experienced positive growth patterns amid the COVID-19 pandemic over the last two years. Malaysia’s direct selling industry has been ranked among the top 10 globally – ranking sixth globally and fourth in Asia Pacific in terms of sales value according to 2021 Global Direct Selling Retail Sales Report produced by the World Federation of Direct Selling Associations (WFDSA).
Considering the excellent growth potential and economic contributions of the direct selling industry for Malaysia, MDTCA has set its eye on this industry as one of the key economic drivers that has to be further fuelled to harness its potential.
“The direction of the government for the direct selling industry is to reenergise, reactivate and rejuvenate the industry. Therefore, we are reviewing the policies and Acts as well as making allocations for training to drive the industry,” explains Datuk Azman.
He anticipates collaboration between MDTCA, the Direct Selling Association of Malaysia (DSAM plan and drive a more robust direct selling industry in the country.
COVER STORY
DIRECT SELLING INDUSTRY’S PROMISING OUTLOOK
Speaking about the industry’s promising outlook, Datuk Azman shared that the sales turnover for the direct selling industry in 2020 was recorded as RM25.7 billion, an increase of 19% from the RM21.5 billion recorded in 2019. He added that as of end-May 2022, sales turnover of the industry stands at RM11.4 billion and is projected to reach RM26.5 billion. He reveals that the sales turnover figure contributes to the national economy under distributive trade services, making it one of the main contributors to the economy.
“The total sales figures of 2021 for the direct selling industry is expected to contribute positively to our nation’s economy despite the country being hit hard by the COVID-19 pandemic. MDTCA is confident that this industry will continue to drive the revival and revitalisation of the Malaysian economy,” stresses Datuk Azman.
“MDTCA is glad to work with DSAM and industry stakeholders to regulate the industry and we look forward to implementing enhancements to the sector considering its significant role in the Malaysian economy,” he adds.
MDTCA is joining forces with DSAM as well as industry players through strategic partnerships, to enhance the competitiveness of innovative and sustainable businesses within the direct selling industry.
“Cooperation between the government and the two associations, DSAM and industry stakeholders is important for the ease of doing business, and to ensure that industry players always comply with Act 1993. DSAM and industry stakeholders need to play the role of advisors and facilitator to ensure that the direct selling industry remains relevant as an attractive business segment to venture into, as well as to generate high income,” Datuk Azman elaborates.
ISSUANCE OF MORE LICENSES
Datuk Azman says that in growing the direct selling industry, MDTCA under the Franchise Development and Direct Selling Division has processed and issued about 36 renewals of direct selling licenses with 15 new licenses issued for the period between January 2022 up to end-May 2022. He clarifies that a total of 395 companies are currently actively operating their businesses in domestic and international markets with a valid licenses under the Direct Sales and Anti Pyramid Scheme Act 1993 (Act 500).
According to Datuk Azman, MDTCA issued 30 new direct selling licenses in 2021 and a total
of 60 new licenses are expexted to be issued in 2022 and 2023.
MDTCA is constantly encouraging this industry to establish a strong market segment with ease of doing business, as it will help to grow the economy and provide job opportunities amid post-pandemic growth. This, in turn, will attract more members while also increasing sales in leaps and bounds.
DIRECT SELLING BLUEPRINT
In 2013, MDTCA introduced the Direct Selling Blueprint. When discussing about the momentum achieved by the blueprint since its inception, Datuk Azman explains, “I am happy to say that the blueprint has achieved its goals. Every consecutive year throughout its course, the Malaysian direct selling industry sales exceeded targeted sales figures.”
“For instance, in 2019 alone, the Malaysian direct selling industry achieved sales of RM21.54 billion, exceeding the targeted RM18.5 billion. In 2018, the industry achieved sales of RM17.93 billion, exceeding the targeted RM17 billion,” he adds.
This achievement has added positive value to the Malaysian economy as well as introduced of innovative products in the market through the direct sales platform.
The latest blueprint for 2021 to 2025 has been formulated to ensure the development of a planned and structured direct selling industry; and to enhance the capacity and competitiveness of the industry in the short and long term, by taking into account the digital economy, innovative products and good business practices as the main focus areas.
DIRECT SELLING INDUSTRY AND DIGITALISATION
Datuk Azman stresses that the direct selling industry has to actively participate in the digital economy with innovative products and good business practices in order to keep up with the pace of digitalisation in the business world. This includes jumping on the band-wagon of ongoing trends of online transactions and e-Commerce activities.
In considering the unethical practices taking place on e-commerce platforms where sales of direct selling products are concerned, he adds that MDTCA would like to propose that the agreement between the company and their agents be effectively streamlined. This is to safeguard and ensure that the products and services offered to customers remain exclusive on any business platform. In addition to that, an end-to-end system would fare very well for direct selling businesses.
“The direct selling industry is unique because of the exclusivity rights granted to each company in marketing their products. In this regard, with the existence of online transactions and e-Commerce platforms becoming more rampant nowadays, there needs to be regulatory governance,” Datuk Azman says.
He continues that digitalisation remains one of the key pillars of the blueprint. One of the digitalisation initiatives under the blueprint is to fully utilise the online BLESS system, while also forging strategic partnerships between government and industry players to develop and promote digital business operations.
“Under the Shared Prosperity Vision 2030, Malaysia is moving towards the process of integrating digital technology in all areas of the economy. The digitalisation element has been addressed in the blueprint which was launched in April 2022, therefore all parties need to be committed towards creating inclusivity and quality economic growth, through creative and hightech initiatives within the industry,” highlights Datuk Azman.
MOVING FORWARD
Datuk Azman points out that in order to establish a more robust industry landscape, direct sellers and consumers, must ensure that the interests and rights of licensed traders as well as consumers are protected.
“As long as they comply with existing regulations and laws, the Ministry will continue to support the direct selling industry,” he stresses.
He advises industry players to produce high quality products and services at affordable or reasonable prices, and customise products and services for the local and international markets, as this is important for the industry to remain sustainable and relevant.
“On behalf of MDTCA, I wish to see the direct selling industry continue to excel, be viable, benefit people and contribute to a better economy in the future. Finally, I wish DSAM and industry players all the best.
