Malaysia’s courier, express, and parcel sector is a central pillar of the modern economy. It underpins e-commerce, supports domestic and cross-border trade, and enables millions of consumers and businesses to participate in digital markets. Over the past decade, delivery services have expanded rapidly, contributing significantly to GDP growth and employment, particularly through micro, small, and medium enterprises (MSMEs), which make up the overwhelming majority of firms in the sector.
In response to rising logistics costs and competitive pressures—especially on smaller operators—policymakers have begun considering new regulatory interventions. These include a mandatory minimum price for courier services and the introduction of a centralized “buyer choice” list that would limit courier selection to manually approved providers. While these proposals are presented as tools to stabilize the industry and protect MSMEs, this report finds that they risk doing the opposite.
Drawing on economic theory, international evidence, and Malaysia’s own policy experience, this report argues that a price floor and manual courier allocation would raise costs for consumers, reduce delivery volumes, harm small businesses, and increase the risk of corruption and political favoritism. Rather than strengthening the sector, these measures would undermine competition, innovation, and long-term economic resilience.
Malaysia’s nicotine market reflects a structural imbalance between regulation and consumer behaviour. Legal cigarettes now account for only a fraction of total consumption, while illicit cigarettes dominate the market, alongside growing use of e-cigarettes, vapes and heated tobacco products.
This shift is driven by policy design. When legal products become less accessible or more expensive, consumers do not stop consuming nicotine. They switch to substitute products, often outside the regulated system.
In its current framework, Act 852 applies identical registration requirements, advertising bans, and tax rates to combustible cigarettes and demonstrably safer alternative products including vapes and heated tobacco.
At the same time, nicotine pouches are not treated within the same regulatory framework. They are currently misclassified as medicinal poisons under the Poison Act 1952, placing it outside Act 852’s scope.
This creates a regulatory inconsistency and contradicts the scientific evidence, which consistently shows that combustion, not nicotine, drives almost all smoking-related diseases.
By failing to align regulation with relative risk, the policy weakens incentives for smokers to switch to less harmful alternatives and fragments regulatory oversight.
Malaysia’s nicotine market is already majority illicit. Expanding restrictions on legal alternatives will not reduce demand. It will shift more consumers into illegal supply chains.
When legal alternatives are over-regulated and over-taxed, consumers move to unregulated channels. The black market does not disappear, but it expands.
This shift carries clear economic consequences. Malaysia’s legal nicotine market generates RM3.84 billion in retail turnover and supports 31,500 direct jobs across the broader tobacco and nicotine ecosystems. At the same time, vape products alone contributed RM288.45 million in excise revenue between 2021 and July 2025. A ban would eliminate these gains while doing nothing to reduce demand.
While the current framework provides a foundation for regulation, further restrictive measures risk accelerating the shift toward illicit markets, eroding tax revenue, and undermining legitimate businesses.
The proposed reforms are targeted and practical. Taxes on vapes and heated tobacco products are set at 5% and 10% of cigarettes tax rates respectively, with nicotine pouches left tax-free.
Pre-market authorisation should be replaced with a streamlined notification process. Nicotine pouches, currently misclassified as medicinal poisons under the Poisons Act 1952, should be integrated within Act 852’s scope.
Product packaging should be permitted to explain evidence-based health claims, and smoke-free zone rules should apply to combustion cigarettes only.
Reforming Act 852 means Malaysia collects more tax revenue, controls more of the regulated market, protects more young people and gives adult smokers a genuine path away from cigarettes.
Policy Manager
World Vapers' Alliance
Country Associate Malaysia
Consumer Choice Center
