As Malaysia prepares for Budget 2026, Ninja Van Malaysia welcomes the government’s continued efforts to advance digitalisation, support SMEs, and strengthen export capacity. Budget 2025 delivered important measures through expanded digitalisation grants, technology funding, initiatives to build resilience in the supply chain, and steps to help SMEs expand into international markets.
Yet, despite these strides, logistics costs remain a significant challenge for SMEs. Under the revised sales and service tax (SST) framework effective July 1, 2025; logistics services, including warehousing, fulfilment and last mile delivery, were brought into scope with a 6% tax. This means SMEs face compounded costs at different stages of moving goods. For smaller businesses that already operate on thin margins, these layered costs translate into higher operating expenses, reduced affordability for shippers, and ultimately higher prices for consumers.
Why Widening SST Exemptions Matters
Delivery and fulfillment make up a significant portion of SME operating costs, often accounting for more than 20% of e-commerce expenses. We encourage the government to explore widening SST exemptions across the logistics value chain, which would help ease cost pressures on SMEs and consumers. This would allow businesses to:
- Lower SME operating costs: For a small online seller processing 500 orders a month, removing SST-related charges could free up thousands of ringgit annually to reinvest in digital tools or business expansion.
- Support consumer affordability: Reduced logistics costs can help stabilise delivery fees and keep online shopping accessible for Malaysians at a time of rising living costs.
- Boost digital adoption: With savings from lower taxes, SMEs can more easily invest in parcel tracking systems, fulfilment software, and inventory restocking, aligning with Malaysia’s digitalisation agenda.
Industry voices have raised similar concerns. Small and Medium Enterprises Association Malaysia (SAMENTA) highlighted that rising logistics costs have become one of the most pressing challenges for SMEs, particularly in e-commerce, where higher delivery charges directly erode competitiveness. The association also warned that these increases will be passed on to consumers, further driving up the cost of living. They have also cautioned that the expanded SST risks pushing up costs for SMEs least able to absorb them. Similarly, the SME Association of Malaysia has pointed out that the SST framework creates ‘tax-on-tax’ effects because it does not allow input tax credits, raising operating costs across logistics, manufacturing, and other export-reliant sectors.
Broader Benefits Across Industries
The impact of lower logistics costs would extend beyond SMEs, delivering benefits across the wider economy.
In transportation and mobility, lower logistics costs would allow operators to reduce distribution expenses and optimise network efficiency, enabling goods to move faster and more affordably across the country.
For retail and e-commerce, reduced last-mile delivery expenses would help businesses maintain competitive pricing for consumers, while also supporting greater participation by small sellers in the digital economy.
Manufacturers, meanwhile, would benefit from reduced warehousing and supply chain costs, making Malaysia a more attractive location for regional production and export activities. These cost efficiencies could translate into greater investment inflows and job creation.
Unlocking SME Competitiveness and Digital Growth
Malaysia’s SMEs contributed 39.5% of GDP in 2024, making them critical to the economy. Yet as e-commerce adoption grows, the burden of service tax on parcel delivery risks slowing momentum and limiting their competitiveness. By considering wider SST exemptions for the logistics sector, the government has an opportunity to empower SMEs to compete more effectively, ensure consumers enjoy affordable access to goods and services, and strengthen Malaysia’s position as a regional trade hub. This is a timely chance to make logistics a driver of growth rather than a barrier.
In the longer term, we encourage the government to review the overall tax framework, including exploring a possible transition back to Goods and Services Tax (GST). This could help resolve the ‘tax-on-tax’ burden currently faced by logistics players under SST, while making Malaysia’s supply chains more competitive globally. However, in the immediate term, widening SST exemptions across the logistics value chain would deliver faster relief for SMEs and consumers.
Ninja Van Malaysia stands ready to collaborate with government, industry associations, and the SME community to find practical solutions that ensure logistics remains an enabler of affordability, efficiency, and growth in Malaysia’s digital future.