MCMC begins public consultation on proposed new framework for licensing of courier services
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 (“Message of public interest”) On July 5, 2021 began a Public consultation on the proposed new framework for the authorization of courier services. The consultation ends at 12:00 p.m. on July 30, 2021.
Based on the results of the National Postal and Courier Industry Lab (NPCIL) carried out in 2020, the MCMC proposed the Pelan Kurier Negara accelerator (“PAKEJ»), A 5-year strategic roadmap, to achieve the following national aspirations:
- To get first class courier service;
- Improve the integration of last mile delivery; and
- Provide a smooth customer experience through innovation and digitization.
To this end, PAKEJ seeks to support the projected growth of the e-commerce industry from 14 packages per capita in 2020 to 30 packages per capita by 2025.
As a result, the MCMC plans to introduce a new messaging policy and licensing framework based on the following principles:
- New licensing policy and framework within current legal powers under the PSA and national policy objectives1 for the postal industry;
- Improvised messaging licensing framework to support PAKEJ’s results and aspirations – from a laissez-faire to a model of sustainability;
- Risk-based approach taking into consideration the impact of services on the national economy, security and society;
- A fair license fee structure to support the cost of regulation and industry development according to the changing industry landscape in an equitably distributed manner;
- Data based on market intelligence powered by the future National Parcel Exchange managed by MCMC; and
- Sufficient time for the transition process.
New licensing structure proposed
In the consultation paper, the MCMC proposes that the new courier service license structure include three courier service license categories, namely:
- N-Courier (National delivery service);
- U-Courier (Urban delivery service); and
- I-Mail (Support points (PUDO) and intermediate service.
The proposed criteria for the new categories of messaging service licenses are as follows:
- Minimum paid-up capital of RM 50 million
- Majority local equity requirement
- Ten years of license seniority
- No service network coverage restriction
- No parcel volume capacity restriction
- Paid-up capital – for international service (inbound and outbound), the paid-in capital requirement is increased from 1 million ringgit to 10 million ringgit. An existing licensee will have 3 years to comply with the new paid-in capital requirement. The paid-up capital for the domestic courier service remains unchanged at RM500,000 for license B (incoming international courier service and domestic courier service) and at RM 100,000 for license C (intra-state domestic courier service)
- Basket of services
- Five-year license term
- Maximum number of delivery branches – 50% of total districts in Malaysia
- Package volume capacity is limited to less than 50 million packages (not exceeding 2 kg each) per year
- Minimum paid-up capital of 100,000 RM
- Three-year license term
New annual fee model proposed
The MCMC has also proposed a new model for the annual fee for N-Courier and U-Courier licenses which must be calculated per item and applicable for a package (document or package):
Additional license termsThe proposed annual license fee for the I-Courier license will be a flat rate of RM 1,000.2
In addition to maintaining the existing standard license conditions, the MCMC proposes to introduce the following additional standard conditions for all courier service license categories:
- Compliance with registered industry code of practice;
- Compliance with the national parcel exchange requirement;
- Compliance with the national PUDO membership requirement;
- Compliance with the directive on sustainable development; and
- Compliance with the security directive (physical and cyber).
N-Courier license holders are also subject to a specific condition of Compliance with the Detailed Development Plan.
The MCMC also proposes to impose the following new special license conditions for the N-Courier and U-Courier licenses:
Special condition on network coverage and limitation
Special condition on the shareholding structure
Special condition on the basket of services
Special condition on the annual limitation of the handling volume for items not exceeding 2 kg
Special condition on Out-of-Home Delivery Points (OOH)
According to the MCMC, all existing licensees will be migrated to the new license framework by December 31, 2022, even if the terms of their existing licenses have not yet expired. By default, all existing licensees will be migrated to U-Courier licenses while the process for N-Courier will be through an application process under the direction of the MCMC. New independent PUDO players can apply through the normal process for I-Courier.
Existing license framework
The current license requirements for courier services are set out in the Postal Services (Licensing) Regulations 2015 [P.U.(A) 78/2015] (“Regulations“).
The new courier service licensing framework offered by the MCMC represents a paradigm shift for courier companies in Malaysia, as it approaches the business holistically through to prescribing parameters for network coverage and delivery points for certain categories of license holders.
The minimum share capital required for international services (inbound and outbound) will be increased tenfold from RM1.0 million under the regulations to RM10 million. However, existing licensees who migrate to U-Courier licenses will have three years to comply with the paid-up capital increase. In addition, courier companies that aspire to N-Courier licenses will need to increase their minimum paid-up share capital to RM50 million.
Changing from a model of fixed annual license fees under the Regulations to one based on the number of packages delivered may increase the cost of doing business for courier companies that process large volumes of deliveries.
It will be interesting to see the extent to which the MCMC’s proposals are adopted once the MCMC takes into account comments from stakeholders in the courier industry.