Pos Malaysia says taking steps to mitigate unavoidable rise of postage rates

Pos Malaysia Berhad officer, Norsazila Zainuddin showing the special stamps of the Yang di-Pertuan Agong after a pre-launch press conference at Pos Malaysia headquarters, Kuala Lumpur, December 6, 2016. — Bernama pic
Pos Malaysia Berhad officer, Norsazila Zainuddin showing the special stamps of the Yang di-Pertuan Agong after a pre-launch press conference at Pos Malaysia headquarters, Kuala Lumpur, December 6, 2016. — Bernama pic

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KUALA LUMPUR, Oct 24 — Pos Malaysia is working to ensure its services remain affordable, amid an upcoming postal price hike due to the US’ intention to increase its rates for terminal dues.

Chief executive officer Syed Md Najib Md Noor told Malay Mail that his organisation has been engaging with Putrajaya’s relevant agencies in order for the postal service to move towards a more “liberated operating model”.

“Pos Malaysia is currently working on a paper to be tabled at the upcoming Cabinet meeting. Ultimately, we are aligned on the fundamentals that postal services need to remain affordable and accessible to all Malaysian citizens and businesses.

“We have been engaging the ministry and the related agencies to consider all best practices worldwide, all of which are moving towards adapting to a more liberated operating model come deregulation,” said Syed Md Najib.

He said that the company is committed to its transformation plan set to build on the backs of its distribution network which will allow them to take on a bigger role in facilitating access to the booming digital economy in the country.

Outgoing and incoming parcels and deliveries beyond Malaysian shores will see a drastic increase starting next year ranging anywhere from 30 per cent up to a whopping 210 per cent in delivery.

This was due to the Trump administration’s intention to increase its rates for terminal dues as well as other countries reaching an agreement to increase their own postal rates as well.

“The US will advance on their intent to increase the rates of their terminal dues effective July 2020. Subsequently, Malaysia will see a drastic hike of more than 210 per cent in delivery costs to the US.

“Other countries are following suit, making their own arrangements to implement a gradual increase in postal rates beginning in 2020. As a whole, this will contribute to a forecasted 30 per cent hike in total delivery costs,” he said.

“However, come 2021 these rates will be subject to revision once again, which would then bring about a potential increase of up to 50 per cent in total cost,” Syed Md Najib added.

Furthermore, based on recent reports he predicted that there is an indication that China is expecting to pay triple for overseas postal deliveries by 2025. 

Terminal dues is the Universal Postal Union (UPU) remuneration system for letters and small packets. The system essentially ensures that post operators are compensated for the cost of handling, transporting and delivering items across borders.

This multilateral agreement is what facilitates the movement of postal items across nations, ensuring that anyone, anywhere who is in the UPU’s 192 country-membership, can send and receive international posts.

In September, the UPU which is the United Nations agency for the postal sector held an emergency congress after the US. Postal Service (USPS) under President Donald Trump’s administration had put a proverbial gun to their head by threatening to leave the body.

The US government had served a notice last October that it would leave in 12 months unless rates were changed so that importing countries did not lose money from distributing mail and packages from countries including China in the age of e-commerce.

The UPU’s terminal dues were based from the 1960s when developed countries such as the US, Canada and European nations had to pay more fees when compared to then developing countries such as China, Malaysia and Thailand among others.

The intention behind higher terminal dues being paid by developed nations was to help subsidise the international postage passing through member country borders and to spare consumers from bearing the full cost of commercial rates.

However, with China’s rise as a global economic heavy weight, the Trump administration argued for an update on the terminal dues.

UPU director-general Bishar Hussein warned that any US departure from the 193-member agency would be a “nightmare scenario”, with delivery of global mail disrupted and US stamps no longer being recognised abroad.

Countries with more than 75,000 tonnes in post imported annually may apply their self-declared new rates from July 2020, UPU officials said.

On the domestic front, Syed Md Najib also warned that there is a potential hike in mail delivery claiming a “domino effect” due to the unprecedented and unexpected changes on the overall system, leading to changes across the board.

“It’s similar to how a rise in the cost of petrol would lead to a rise in the cost of nasi lemak, whereby price hikes involve not only the main resource in question but also every other peripheral process linked to the resource.

“Following this fact, it is timely for domestic mail operators to revamp their systems to manage this change and remain competitive,” he said.

Syed Md Najib also stressed that the stamp cost of 60 sen has not been raised for nearly a decade since 2010 and that local postage pricing was also needed to reflect inflation, staff welfare and increasing number of addresses to serve.

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