MCMC Commences Public Consultation on Proposed New Courier Service Licensing Framework
13 July 2021
Key Contacts:
The Malaysian Communications and Multimedia Commission (“
MCMC”), the regulatory body responsible for the administration of the postal services industry in Malaysia under the Postal Services Act 2012 (“
PSA”) on 5 July 2021 commenced a
Public Consultation on the Proposed New Courier Service Licensing Framework. The consultation closes at 12.00 noon on 30 July 2021.
Based on the outcomes of the National Postal and Courier Industry Lab (NPCIL) carried out in 2020, the MCMC has put forward the Pelan Accelerator Kurier Negara (“
PAKEJ”), a 5-year strategic roadmap, to achieve the following national aspirations:
- To achieve first-class courier service;
- To improve integration of last-mile delivery; and
- To provide seamless customer experience through innovation and digitalisation.
To this end, PAKEJ seeks to support the projected growth in the e-commerce industry from 14 parcels per capita in 2020 to 30 parcels per capita by 2025.
Accordingly, the MCMC plans to introduce a new courier licensing policy and framework based on the following principles:
- New licensing policy and framework within the current legal remits under the PSA and the National Policy Objectives1 for the postal industry;
- Improvised courier licensing framework to support PAKEJ’s outcomes and aspirations – from a laissez-faire to a sustainability model;
- Risk-based approach taking into consideration the impact of services to the national economy, security and society;
- Fair licensing fee structure to support the cost of regulating and developing the industry based on the changing industry landscape on a fair distributed manner;
- Data driven based on market intelligence powered by the future National Parcel Exchange managed by MCMC; and
- Sufficient period for the transition process.
Proposed New Licensing Structure
Under the consultation paper, the MCMC proposes that the new courier service licensing structure comprises three classes of courier service licence, namely:
- N-Courier (National Delivery Service);
- U-Courier (Urban Delivery Service); and
- I-Courier (Pick-up Drop Off Points (PUDO) and Intermediary Service.
The proposed criteria for the new classes of courier service licences are as follows:
N-Courier
- Minimum paid-up capital of RM50 million
- Majority local equity requirement
- Ten years licence tenure
- No service network coverage restriction
- No parcel volume capacity restriction
U-Courier
- Paid-up capital - for international service (inbound and outbound), the paid-up capital requirement is increased from RM1 million to RM10 million. An existing licensee will be given a 3-year time frame to comply with the new paid-up capital requirement. The paid-up capital for domestic courier service remains unchanged at RM500,000 for Licence B (inbound international courier service and domestic courier service) and RM100,000 for Licence C (intra-state domestic courier service)
- Basket of Services
- Five years licence tenure
- Maximum number of delivery branch offices - 50% of total districts in Malaysia
- Parcel volume capacity is restricted to less than 50 million parcels (not exceeding 2kg each) annually
I-Courier
- Minimum paid-up capital of RM100,000
- Three years licence tenure
Proposed New Annual Licence Fee Model
The MCMC has also proposed a new annual licence fee model for N-Courier and U-Courier licences which is to be calculated based on per item basis and applicable for a package (document or parcel):
| Annual parcel volume |
Proposed annual licence fee (for each domestic and international item not exceeding 2 kg in RM) |
| Less than 1,000,000 |
Flat-rate of RM2,500 p.a. |
| 1,000,000 to 100,000,000 |
0.05 |
| Next 100,000,000 |
0.04 |
| Subsequent 200,000,000 |
0.03 |
The proposed annual licence fee for I-Courier Licence will be a flat-rate of RM1,000.
2
Additional Licensing Conditions
In addition to maintaining the existing standard licence conditions, the MCMC proposes to introduce the following additional standard conditions for
all categories of courier service licences:
- Compliance with the registered industry code of practice;
- Compliance with the National Parcel Exchange requirement;
- Compliance with the National PUDO Affiliation requirement;
- Compliance with the Sustainability Guideline; and
- Compliance with the Security Guideline (Physical and Cyber).
Holders of N-Courier licences are also subject to a special condition on Compliance to the Detailed Development Plan.
The MCMC also proposes to impose the following new special licence conditions for N-Courier and U-Courier licences:
Special condition on network coverage and limitation
| N-Courier |
U-Courier |
I-Courier |
| To establish distribution/ delivery branch in every district in Malaysia (min. 95% of total districts in Malaysia) |
Number of distribution/ delivery branch limited to 50% of total districts in Malaysia |
Not applicable |
Special condition on shareholding structure
| N-Courier |
U-Courier |
I-Courier |
| Foreign shareholding shall not exceed 49% but an exception may be given to a company listed in Bursa Malaysia |
No shareholding restriction/ requirement |
No shareholding restriction/ requirement |
Special condition on Basket of Services
| N-Courier |
U-Courier |
I-Courier |
|
Scope of services
- International inbound and outbound
- Domestic (On demand)
- Domestic (Hub and Spoke)
- PUDO (Over-the-Counter)
- PUDO (Automated Parcel Locker)
|
Scope of services
Tier 1
- International and domestic
- PUDO (Over-the-Counter)
- PUDO (Automated Parcel Locker)
Tier 2
- Domestic
- PUDO (Over-the-Counter)
- PUDO (Automated Parcel Locker)
Tier 3
- Domestic within a state
- PUDO (Over-the-Counter)
- PUDO (Automated Parcel Locker)
|
Scope of services
- PUDO (Over-the-Counter)
- PUDO (Automated Parcel Locker)
- Other intermediary service e.g. p-hailing platforms
|
Special condition on Annual Volume Handling Limitation for items not exceeding 2 kg
| N-Courier |
U-Courier |
I-Courier |
No limit
|
50 million parcel volume per year (subject to review) |
No requirement |
Special condition on Out-of-Home (OOH) Delivery Points
| N-Courier |
U-Courier |
I-Courier |
| Minimum 5,000 points within three years |
No requirement |
No requirement |
Transition
According to the MCMC, all existing licensees will be migrated to the new licensing framework by 31 December 2022 even though the tenure of their existing licences have yet to expire. By default, all existing licensees will be migrated to U-Courier licences whilst the process for N-Courier will be done through an application process under guidance by the MCMC. New independent PUDO players may apply under the normal process for I-Courier.
Existing licensing framework
The current licensing requirements for courier services are set out in the
Postal Services (Licensing) Regulations 2015 [P.U.(A) 78/2015] (“
Regulations”).
Comments
The new courier service licensing framework proposed by the MCMC represents a paradigm shift for courier services companies in Malaysia as it addresses the business in a holistic manner down to prescribing parameters for network coverage and delivery points for certain classes of licensees.
The minimum share capital requirement for international services (inbound and outbound) will increase ten-fold from RM1.0 million under the Regulations to RM10 million. However, existing licensees who are migrated to U-Courier licences will be given three years to comply with the increased paid-up capital requirement. Further, courier companies that aspire for N-Courier licences will have to raise their minimum paid-up share capital to RM50 million.
The shift from a fixed annual licence fee model under the Regulations to one that is based on the number of packages delivered may increase the cost of doing business for the courier services companies that handle large volumes of deliveries.
It will be interesting to see the extent to which the MCMC’s proposals will be adopted after the MCMC has considered the feedback from stakeholders in the courier services industry.
Alert by Fariz Abdul Aziz (Partner) and Sheba Gumis (Partner) of the Corporate Practice of Skrine.
This alert contains general information only. It does not constitute legal advice nor an expression of legal opinion and should not be relied upon as such.
1 According to the consultation document, the National Policy Objectives for the postal industry are to: (1) safeguard the provision of affordable and quality universal service; (2) promote the growth of a competitive and innovative postal services industry; (3) establish Malaysia as a major global centre and hub for postal services; (4) regulate for the long-term benefit of the user; (5) promote a high level of consumer confidence in service delivery by the postal services industry; (6) ensure the security of postal service industry workers and the security of postal articles and the postal network; (7) respond to the technical, economic and social environment and needs of consumers; and (8) ensure fair competition amongst the parties involved in the postal services industry in Malaysia.
2 The MCMC has also proposed a new annual licence fee model for Universal Service licences, i.e. 0.5% of the gross annual turnover of postal service.