While the digital tax would not apply to imported physical goods as it is already levied, it could apply to online market operators such as Lazada, 11street and Shopee, indirectly impacting e-commerce volume.
“[This would] ultimately trickle down to the parcel delivery operators,” said Affin Hwang in a sector update today.
Last-mile delivery listed companies on the bourse include GD Express Carrier Bhd, CJ Century Logistics Holdings Bhd, Tiong Nam Logistics Holdings Bhd and Pos Malaysia Bhd.
Affin Hwang said the all-time high number of parcel delivery licence holders coinciding with a recent influx of capital expenditure from such companies is likely to burden the industry over the near term.
“Emerging headwinds from rising labour cost and potential fuel adjustment could further crimp margins that are already at a multiyear low. It clouds the outlook of the logistics companies under our coverage (Tiong Nam, CJ Century),” it said.
Affin Hwang maintained “neutral” on the logistics sector.
In the Mid-term Review of the 11th Malaysia Plan 2016-2020 released last week, the government said it will explore imposing tax on online transactions of e-commerce companies in a bid to increase contribution from indirect taxes and non-tax revenues.
Referring to Japan as an example, given the country was one of the earliest adopters of digital tax, Affin Hwang said the 8% consumption tax rate on all e-commerce transactions delivered by foreign business customers had levelled the playing field to Japanese businesses but also saw revenue growth drop in the first two years when the new tax was introduced in 2015.
“Depending on the quantum and extent of the digital tax implemented by Malaysian authorities, it could very well impact parcel delivery volume growth which has been growing at a healthy four-year CAGR of 24.9%,” said Affin Hwang.