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As eCommerce businesses operating in Indonesia, one of the questions you’ll frequently be asking is how you can grow your audience. To that, one of the markets that you could ship to is Indonesia’s neighbour, Malaysia. Malaysia has well-developed infrastructure, good eCommerce penetration and in certain segments, shares similar product preferences to consumers in Indonesia.
In 2019, eCommerce adoption in Malaysia stood at 62.3 per cent. Malaysians also tend to be price-conscious, love promos and discounts, and during Ramadan some Malaysian shoppers love colour coordinating their families’ outfits for attending open houses.
YouTube, Whatsapp, Facebook and Instagram are the top social media platforms and messaging apps among Malaysian audiences.1 Malaysians are also increasingly becoming mobile-first with We Are Social’s Digital 2020 report highlighting that more online purchases are done on mobile devices compared to desktops.
Most Malaysians are quite receptive to many Indonesian products. Fashion, cosmetics, home and living and also pantry items from Indonesia have the potential to do really well in Malaysia. Specifically, modest fashion items like those from HIJUP, halal cosmetics and also some packaged Indonesian snacks can be quite popular in Malaysia. To find out more details about what makes Malaysian online shoppers tick, check out our eCommerce Guide to Malaysia, updated for 2020.
Specifically, modest fashion items like those from HIJUP, halal cosmetics and also some packaged Indonesian snacks can be quite popular in Malaysia. To find out more details about what makes Malaysian online shoppers tick, check out our eCommerce Guide to Malaysia, updated for 2020.
The Klang Valley region in Malaysia is a highly developed metropolitan area responsible for most of the country’s GDP and business activity. It also has the highest adoption rate for eCommerce and is where most of your online store’s customers will be residing.
Your logistics supply chain from Indonesia to Malaysia can vary depending on your requirements and location but would usually go through similar delivery stages. For this example, we’ll go through how B2C parcels and B2B shipments will be transported from Jakarta to a destination in the Klang Valley, and to East Malaysia’s Sabah or Sarawak.
First mile delivery in international shipping, being the first stage of the logistics supply chain, is where the shipment leaves the merchant’s address. This starting address is also known as the origin. The origin address can be a storefront, office, or warehouse. Prior to your goods leaving your storage facility, the product has to be packaged and labelled appropriately to facilitate smooth cross border shipping.
While transporting your goods, your packages may go through bumpy rides from events like turbulence. Thus, having extra padding is recommended for fragile items, like using bubble wrap and packing peanuts. This is to prevent your goods from bouncing around within the packaging or the package getting deformed during shipping. You can learn more about these best practices in our article on packaging.
On top of that, you need to ensure that your shipping labels and customs documents are labelled clearly and accessible for customs inspection. We have a guide on labeling your shipments which you can also find in our resources for B2C shipping to Southeast Asia.
When you’re ready to hand over your shipments to your logistics partner, you can choose to have it picked up from your address or drop off your shipment at your shipping partner’s designated drop-off points. Most shipping partners have a cut-off time for submitting orders to have enough time to optimise their delivery routes.
B2C parcels will typically be consolidated at a transportation hub along with other packages heading to the same country prior to customs clearance in Indonesia. B2B shipments, on the other hand, can be transported directly to the customs warehouse at the relevant origin airport or sea port since they already make up a larger weight and volume compared to individual B2C shipments.
Depending on where your address is located, your parcel may need to be transported via a domestic flight to an international airport or port. For our example where our origin is in Jakarta, the shortest direct flight into Malaysia is from Soekarno-Hatta International Airport. It is also the busiest airport in Indonesia.2 As for ports, international shipments typically leave from Tanjung Priok in North Jakarta.
When your parcel arrives at the port or airport, Indonesian customs officers will inspect the shipment to determine if it’s exportable from Indonesia. This is where they will first inspect your parcel’s shipping labels and documentation. To check if your B2B parcels require any special permits for export, you may look up Indonesia’s Customs website.3
When it comes to freight, shipping your goods from Indonesia to Malaysia can be done via air freight or sea freight.
For merchants shipping B2C parcels, air freight is the faster option, especially if you don’t have a consistent order volume and need your parcels to reach the destination country quickly.
To ship into the Klang Valley, your shipment will leave via Soekarno-Hatta Airport (CGK) and then enter Kuala Lumpur International Airport (KUL). Usually, airfreight’s speed makes it the preferred option for eCommerce merchants who want to test the market, as inventory will mostly be held in Malaysia.
However, due to the limited number of flights due to the COVID-19 pandemic, prices for air freight have increased from the lack of cargo space. The limited number of flights may also cause delays and affect the delivery timing for shipments.
On the other hand, sea freight is generally more cost-effective for shipping in bulk. Bulk sea freight can be done via full container load (FCL), or in less than container load (LCL). In the case of FCL, your order occupies the entire container while in LCL’s case your order will be consolidated together with other shippers’ orders to fill up the container.
However, sea freight is slightly slower than air freight. When managing your inventory, you’ll need to take into account the estimated delivery date so that you can plan out your supply chain accordingly.
The Klang Valley’s main port is Port Klang (MYPKG), with your goods leaving the Port of Tanjung Priok (IDTPP) if you’re shipping via sea freight from Jakarta. In some cases, there will also be sea freight shipments with East Malaysia in mind. Some businesses prefer sending shipments to Port Klang first before the orders continue moving to either Port of Kuching in Sarawak or Port of Kota Kinabalu in Sabah. This transport mode is usually preferred if you can work with a reliable sales forecast for Malaysia, as sea freight is suited to delivering large amounts of inventory at once. This forecast will allow you to make use of a local distribution centre within Malaysia for faster last mile fulfilment.
With the COVID-19 pandemic around, sea freight could be good alternatives to air freight considering the shortage of available international flights. While slightly slower compared to pre-COVID air freight timings, they are still preferable to facing possible air freight delays during this period. If you’re shipping B2C, the process is similar to shipping via air freight. Check with you shipping partner if they offer this option for you.
Once your item arrives in Malaysia’s airport or port, your shipment will be transported into a customs warehouse for clearance. This warehouse is where the customs officers will inspect your shipments and shipping documents and determine if they are allowed to enter Malaysia.
To clear customs for import into Malaysia, you or your shipping partner would generally need to provide the following documents:
If your item is below Malaysia’s de minimis rate of MYR 500, then there is no need to pay import duties and taxes to the customs office. The de minimis rate refers to a value threshold where no duties and taxes are charged if the shipment’s CIF value, which includes your good’s price, shipping fee, and insurance costs if any, is below that point. However, this only applies to goods that are delivered via air freight. If you’d like a more detailed guide on dealing with customs clearance in Southeast Asia, you can check out our customs clearance resource.
On the other hand, if your goods exceed the de minimis threshold, import duties and taxes will be levied on your shipment. You would have to pay a sales and services tax (SST) of between 5 and 10 per cent. The import duties charged to your order depends on the product category as declared by the harmonised systems code (HS code). You may find out the percentage of your import duties paid through the Royal Malaysian Customs Department’s website.4
If you’re shipping a B2C parcel, you can choose to either pay for the import duties and taxes yourself or let your customers pay for the import duties and taxes. This is determined by the incoterms Delivered Duties Unpaid (DDU) and Delivered Duties Paid (DDP). While we strongly encourage you to opt for DDP to keep your shipping experience smooth for your B2C customer, it helps to familiarise with what these arrangements mean.
Once your shipment has cleared customs, it will enter the distribution stage of the shipping journey. If the consignee’s address is within West Malaysia, your B2B shipments can be delivered directly to the address.
However, B2C parcels need to be at a transport hub to sort them out before the last mile journey can begin. However, if the address is in East Malaysia such as Sabah or Sarawak, an additional domestic flight will be needed before your shipments, be they B2C or B2B, can be sorted and delivered.
The last mile delivery stage is where your parcel will be sent from the destination warehouse to your consignee’s address. In Malaysia, this stage of the delivery is done via vans. During the last mile delivery stage, your logistics service provider will ensure that your shipment is received by your consignee.
Now that you know the full process of shipping your items from Indonesia to Malaysia, you’re in a better position to choose a suitable shipping partner who can cover the entire logistics supply chain from first mile to last mile. When choosing a logistics service provider, it helps to consider the cost, speed, delivery experience, and your whole supply chain before committing to a shipping solution.
To impress your potential customers in Malaysia, it helps to have a reliable eCommerce shipping partner with local expertise that can deliver on time. That way you can impress your customers with your hottest items in stock while wowing them with efficient delivery speeds.
If you'd like to find out more about how we can solve your SEA e-commerce cross-border delivery needs, come and have a conversation with us.
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