ASSOCIATION of Malaysian Express Carriers (AMEC) is asking the Government to lift the 5% service tax on domestic packages of 500g to 30kg to put express carriers on a level playing field with logistics operators.
President Teong Teck Lean said express players were moving towards express logistics solutions as customers’ demand for this type of services was increasing.
“Customers are now looking at a one-stop centre that will not only handle documents but also logistics services,” he told StarBiz.
“Hence, besides handling documents, we are also delivering a lot of heavier items now. To be fair, the 5% service tax on domestic packages ranging from 500g to 30kg imposed only on courier players licensed under the Malaysian Communications and Multimedia Commission should be lifted.
“This is because logistics players or other types of transporters do not have to pay the service tax to carry goods in the same weight range.”
Teong added that AMEC had engaged a consultant to prepare a report on the matter with the cooperation from its members, and it would be presented to the Government in one to two months.
“This issue affects more local courier companies than multinationals as we handle more domestic deliveries,” he said, adding that the lifting of the service tax was one of the major factors that would ensure the survival of AMEC members in these challenging times.
Teong said it would be timely to implement this now because many courier players were facing difficulties following the global economic downturn.
He said that so far this year, courier companies had seen a reduction in business volumes, especially in the handling of speed delivery of physical advertising materials.
“We have noticed the downtrend in new product and service launches that need the support of courier companies this year as a result of the weakening economy.
“Many of our customers are more prudent with their expenditure. We have seen also a reduction in the delivery of diaries, calendars and ang pow packets recently,” he said.
On a brighter side, Teong said, express carriers could benefit from the current economic slump as businesses would consolidate and outsource their transportation and delivery operations.
“When business expands, it is economical to personally handle your transportation due to economies of scale but when it shrinks and less delivery is needed, it is better to dispose your assets (vehicles) and outsource the service to us.
“However, this gain will not counterbalance the loss anticipated as a result of the gloomy economic climate,” he said.
To ensure the development of the industry in the long run, AMEC is also looking at the possibility of asking the Malaysian Industrial Development Authority and the International Trade and Industry Ministry to grant pioneer status to local express courier companies.
The tax-free income from the incentive can be invested in advanced technology that is much needed by the industry.
“The advanced system and technology are crucial if we want to attract foreign investors to Malaysia and ensure the competitiveness of local courier companies against multinationals,” Teong said.