SME Association Urges Government to Investigate High Commission Charges by P-Hailing Companies

The Small and Medium Enterprises Association (Samenta) Malaysia has called for a government investigation into the substantial commission fees imposed by ride-hailing and food delivery companies on SMEs. Expressing concern over the wide disparity in charges compared to other countries, Samenta emphasized the adverse impact on SMEs and consumers. The association urged for transparency, equity, and competition within the p-hailing industry to address these challenges effectively.

7 August 2023 – The Small and Medium Enterprises Association (Samenta) Malaysia has raised concerns over the exorbitant commission fees imposed by ride-hailing and food delivery companies on local SMEs. The association seeks government intervention to investigate why these companies charge SMEs up to 32% in commissions, a striking difference from the 5% rate observed in other countries.

National president Datuk William Ng highlighted the urgent need for transparency and equity within the p-hailing (platform-hailing) industry. Notably, Prime Minister Datuk Seri Anwar Ibrahim and Transport Minister Anthony Loke are set to engage with industry players to address the issue and explore avenues to enhance the welfare of riders and partners.

Ng underlined that the impact of these high commission rates extends beyond riders, adversely affecting the SMEs themselves. In a statement, he revealed that SMEs often grapple with the burden of steep commissions, reaching as high as 32%. Moreover, to gain visibility on these platforms, SMEs are compelled to participate in promotions that tack on an additional 30% in commission, further straining their profitability.

Consequently, SMEs are compelled to adjust their product pricing on these platforms, translating to increased costs for consumers. The discrepancy in pricing can range from 10 to 100% more than direct purchases from merchants. Ng emphasized that while the pretext of supporting innovation and digitalization is cited, p-hailing operators have eluded regulatory scrutiny, inadvertently harming the very industry they aim to empower.

Samenta drew attention to the contrast in commission rates applied by these companies to different types of businesses. Larger chain restaurants are subjected to a significantly lower commission rate, as low as 8%. This raises questions about the feasibility of maintaining profitability at this level, given the disparity in charges for SMEs.

Drawing comparisons from international markets, Ng highlighted Meituan, a prominent shopping platform in China, which maintains a maximum commission rate of 12% while remaining profitable. He further pointed out the stark pricing differences between similar services in different countries, citing examples from Vietnam and Malaysia.

Ng urged for the promotion of competition within the p-hailing industry, emphasizing that if monopolistic or oligopolistic conditions persist, regulatory measures should be considered. These could involve restrictions on the sectors served by these companies or the implementation of legislation to cap commission rates, thus fostering a fair and competitive environment within the industry. – source: Bernama

Author: Terry KS

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