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 courier market is one of the most competitive and densely populated in Southeast Asia. With more than 100 licensed courier operators serving a population of just over 34 million, the sector has benefited from strong competition, low prices, and rapid service improvements. This environment has been especially beneficial for consumers and MSMEs, which rely heavily on affordable and reliable delivery services to reach customers nationwide.
The sector’s rapid growth has been driven by high internet penetration, widespread use of mobile payments, and the expansion of e-commerce, including cross-border trade. At the same time, this growth has exposed structural pressures, particularly for smaller courier firms. Rising fuel costs, the removal of blanket diesel subsidies, and the increasing use of automation by large logistics players have intensified competition and squeezed margins for MSMEs operating with limited capital and scale.
Against this backdrop, calls for government intervention have gained traction. The proposed minimum courier price and “buyer choice” list are framed as mechanisms to prevent so-called price dumping and ensure industry sustainability. However, these proposals represent a significant shift away from market-based competition toward centralized control over pricing and access. By constraining how prices are set and how couriers are selected, the proposals risk weakening the very competitive dynamics that have driven the sector’s success.
Economic research is clear and consistent on the effects of price floors: when prices are set above market levels, demand falls, inefficiencies emerge, and resources are misallocated. In the context of courier services, a mandatory minimum price would mean fewer consumers are willing to pay for deliveries, leading to lower parcel volumes and excess capacity within the system. Couriers would face higher operating costs without corresponding increases in sustainable demand.
These effects are particularly damaging for MSMEs. Smaller firms tend to operate on thin margins and have limited liquidity to absorb higher costs or periods of reduced demand. Malaysia’s experience with price floors in other sectors—most notably the minimum wage—shows that such policies often concentrate harm among smaller firms, leading to job losses, reduced competitiveness, and business closures, rather than improved resilience.
International evidence reinforces this conclusion. Studies of price floors in logistics and transport markets show that while some producers may benefit in the short term, overall welfare declines as losses to consumers and intermediaries outweigh gains. Over time, reduced volumes and higher compliance costs lead firms to scale back operations, cut employment, or exit the market entirely. The likely outcome in Malaysia’s courier sector would be reduced service availability, higher prices, and increased market concentration in favor of large incumbents.
Beyond economic inefficiency, the proposed policies raise serious political and governance concerns. Centralized price setting and manually approved courier lists shift decision-making from markets to political and administrative processes. This creates incentives for rent-seeking behavior, favoritism, and corruption, particularly in a sector where access to licenses and approvals determines commercial survival.
A restricted “buyer choice” system risks excluding smaller, rural, or less-connected operators who lack the resources or political influence to navigate complex approval processes. Meanwhile, firms with stronger connections or greater administrative capacity are more likely to secure favorable treatment. Rather than expanding consumer choice, such a system would narrow it, limiting competition and entrenching existing power imbalances.
Malaysia’s own experience shows that non-compliance with price controls and licensing rules is already widespread. Introducing a high and uniform price floor would increase incentives to evade regulations, while centralized approval mechanisms would raise the stakes for bribery and informal influence. The result would be a less transparent, less competitive, and less inclusive courier market—particularly disadvantaging rural consumers and businesses that already face higher logistics costs.
The report concludes that the proposed minimum courier price and centralized buyer choice system should be abandoned. Rather than raising prices, policymakers should focus on reducing costs and barriers that limit competition and innovation in the courier sector. Where support is needed, targeted subsidies—particularly for rural and smaller operators—are preferable to blunt price controls that distort the entire market.
Investment in transport and logistics infrastructure, especially in underserved areas, would lower operating costs and improve service reliability without harming consumers. Regulatory relief, including a review of licensing and registration requirements, would further ease the burden on MSMEs. At the same time, encouraging the adoption of automated and AI-driven courier allocation systems would help spread productivity gains across the sector instead of concentrating them among large firms.
Together, these reforms would strengthen Malaysia’s courier market by preserving competition, protecting consumers, and supporting sustainable growth—without exposing the industry to unnecessary economic and political risks.
Research Director
Country Associate Malaysia
Senior Policy Analyst
