This article first appeared in The Edge Financial Daily on May 5, 2017 - May 11, 2017

KUALA LUMPUR: Pos Malaysia Bhd is still waiting for clarity from the government on whether it can raise the tariff for its domestic and international postal services by this year, said its group chief executive officer Datuk Mohd Shukrie Mohd Salleh.

“This matter has been raised by not only Pos Malaysia, but also the deputy minister of communications and multimedia. On our part, after a certain number of years, Pos Malaysia can put it in a proposal to gradually raise the postal tariff,” Mohd Shukrie told reporters yesterday.

Though Mohd Shukrie kept mum on the quantum of the hike requested, he said there is no compensation the government has to accord to Pos Malaysia if it decides to turn down the hike proposal.

He was speaking after attending a memorandum of collaboration signing ceremony between Pos Malaysia and electronic commerce (e-commerce) retailer Lazada (M) Sdn Bhd to establish an e-commerce regional distribution centre, which will be build on the site of the former low-cost carrier terminal in Sepang.

As to when the government, via the Malaysian Communications and Multimedia Commission (MCMC), is expected to announce its decision, Mohd Shukrie declined to speculate.

He said Malaysia is one of the countries in Asean which has the lowest postal tariff structure. “The rate now is around 60 sen whether you are sending a mail to Petaling Jaya or Sabah and Sarawak,” Mohd Shukrie said, noting that at the current tariff, Pos Malaysia does “a lot of cross-subsidy of mails and parcels sent among the states”.

In 2010, Pos Malaysia obtained approval from the government to raise its domestic postal tariff by 30 sen for its standard mail to 60 sen. Three years later, it got approval to raise the tariff for its international postal services.

In November 2016, RHB Research estimated that every 10% increase in the postal tariff could result in a 22% rise in Pos Malaysia earnings.

Separately, Mohd Shukrie said Pos Malaysia will be investing RM60 million to build the new e-commerce distribution centre in Sepang. Construction is set to begin next week and be completed by August 2018.

Pos Malaysia will allocate to Lazada some 280,000 sq ft of space on the ground floor of the facility, and 50,000 sq ft on the mezzanine floor, leaving Pos Malaysia with 100,000 sq ft.

“This facility will provide value-added services, such as air-sea-land transportation solutions, international trans-shipment, postal and courier services and warehousing facilities. It will be able to handle a capacity of 182,000 tonnes of items annually. Next year, we target to [handle] 34 million items, followed by 64 million in 2019,” Mohd Shukrie said.

He shared that MCMC at end-April renewed Pos Malaysia’s exclusive concession to provide mail services to the Malaysian government. “The concession is valid for the next 25 years, expiring in 2041,” he added.