Written by Fatin Ismail
E-commerce has transformed the way businesses and consumers interact, enabling seamless trade across jurisdictions. In a single transaction, a seller may operate from China, a platform may be headquartered in Singapore, while the buyer resides in Malaysia. These digital transactions defy physical borders, yet the resulting harms, such as fraud, the sale of illegal products, or misuse of personal data, occur locally.
The Legal Gap
Despite the rapid growth of cross-border trade, Malaysia currently lacks a legislative framework that specifically governs cross-border e-commerce transactions. This creates a regulatory blind spot, allowing foreign online marketplace operators and sellers to evade liability simply because they do not have a physical or legal presence in Malaysia. When harmful, defective, or illegal goods are sold into Malaysia, or when personal data is mishandled by foreign platforms, affected consumers often struggle to identify, locate, or take legal action against these entities due to the differing jurisdictions in which parties are located. This leaves consumers vulnerable and domestic laws unenforceable against offshore actors.
The Enforcement Challenge
The absence of extraterritorial reach also hampers enforcement. Malaysian authorities currently lack the jurisdiction to compel cooperation, conduct investigations, or enforce compliance against entities based abroad. Consequently, foreign e-commerce platforms may disregard Malaysian requirements, including content takedown obligations, refund and product safety regulations, and duties of care.
This imbalance results in an uneven regulatory landscape where domestic businesses must comply with Malaysian laws, while foreign entities operating in the same market remain beyond effective reach.
Extraterritoriality
Extraterritorial provisions should be considered, effectively extending the application of its e-commerce laws to parties engaging in e-commerce in the Malaysian market. Such provisions would ensure that foreign platforms and sellers are legally accountable when conducting business with Malaysian consumers.
This approach aligns with international practices, particularly the Philippines Internet Transactions Act which explicitly allows for extra-territorial application.
Section 5 of the Internet Transactions Act states as follows:
A person who engages in e-commerce, who avails of the Philippine market to the extent of establishing minimum contacts herein, shall be subject to applicable Philippine laws and regulations and cannot evade legal liability in the Philippines despite lack of legal presence in the country.
Effectively, when any person who engages in electronic commerce within the Philippine market, to the extent of establishing minimum contacts in the country, that person shall be subject to applicable Philippine laws and regulations despite not being legally present in the country.
An extraterritorial provision as such would be beneficial if adopted in Malaysia.
Conclusion
In an era of borderless commerce, Malaysia’s legal framework must evolve to remain effective in protecting consumers and upholding market integrity. Establishing extraterritorial e-commerce laws would close existing enforcement gaps, promote accountability, and strengthen trust in Malaysia’s digital economy. Extraterritorial application of e-commerce laws would not only safeguard consumers but also ensure a fair and transparent playing field for all participants in the online marketplace.
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Published on 16 October 2025