Pos Malaysia to stamp its mark

  • Business
  • Saturday, 15 Mar 2003


PEOPLE have been cracking jokes about the postal services for ages. Stereotypes such as indifferent clerks, grumpy postmen and slow deliveries are fodder for such gags.  

But when you realise that these services drive a company with a Kuala Lumpur Stock Exchange market capitalisation of over RM500 million, the laughter sounds pretty hollow. 

Pos Malaysia Bhd (Pos Malaysia), the country's sole postal services provider, is a wholly-owned subsidiary of listed Pos Malaysia Services & Holdings Bhd (Pos Holdings).  

Postal services account for 99.5 per cent of Pos Holdings' revenue for 2002. 

Ordinarily, share investors fancy monopolies, but Pos Holdings struggles to get attention, even after it was included as a component stock of the Kuala Lumpur Composite Index last November. It is rather remarkable that the counter is trading well below its net cash per share (about RM1.70) and net tangible assets per share (about RM2.80). 

Then again, it is hard to get excited about the prospects of the postal services business. The popular notion is that it is a sunset industry as people increasingly choose to communicate through other means, such as e-mail and mobile phones. 

And there is good reason to believe that the use of postal services is on a permanent decline. According to a publication by global body Universal Postal Union (UPU), international letter-post traffic has decreased in 2000 (by 1.7 per cent) and 2001 (by 4.7 per cent).  

In the report, UPU said it was too early to tell if the drop would continue or if it was due to the economic slowdown and unusual events. That may be so, but there is no denying that the industry is facing some tough challenges. 


Pos Malaysia chairman Datuk Annuar Maaruf, who is also a director of Pos Holdings, readily acknowledges this. “The postal services will continue to remain relevant. But as with any business, if you fail to keep up with the changes and respond to the challenges, you will become obsolete,” he says. 

Globalisation and liberalisation are reshaping the landscape. More and more postal administrations are being privatised; Pos Holdings is, of course, one example. The primary consequence is that they have to be profit-driven and can no longer operate like government arms. 

There is also the need to look beyond borders. These companies will have to go global as barriers fall and geographic boundaries become insignificant. 

Liberalisation will also intensify competition. As it is, monopolies in areas such as courier services, logistics, and financial services related to postal services, are fast vanishing.  

For example, there are over 100 courier companies operating in Malaysia. And there are probably as many offering parcel services.  


Technological development presents another big challenge because it leads to substitution of postal services.  

For one thing, instead of mailing letters and postcards, people can send e-mail and electronic postcards via the Internet. And it is far easier to talk or send SMS (short messaging service) notes over mobile phones. 

However, Annuar believes that businesses will continue to rely on the mail, particularly those who need to regularly send out documents and parcels. “Mail is a very important marketing tool for these companies. So we see postal services becoming even stronger in this respect.” 

He also points out that Pos Malaysia should enjoy some form of protection so that it can continue to be a universal service provider, which means it cannot discriminate between people in giving its services. 

The argument is that because Malaysia is still a developing economy, the post is still very much the most cost-effective, affordable and accessible means of communication for the population, especially those in the rural areas. 

“Because Pos Malaysia has social obligations, it is not appropriate to fully apply commercial principles in valuing our business,” he says. But he is quick to highlight the sturdiness of the business. 

Pos Malaysia's revenue in the last decade has been growing at between 3 and 4 per cent per annum. The drag factor here is that the growth can only come from an increase in mail volume. Tariff revision will provide a strong lift, of course, but that is decided by the powers that be. 

The company has generated a pre-tax profit margin of more than 10 per cent of turnover. Annuar describes this as commendable, but he is eyeing a new target of at least 15 per cent. 

Post office

“Our paid-up capital at company level is not much – only about RM98 million. In essence, Pos Malaysia is not really a capital-intensive business. We have zero borrowings and a positive cash flow.” 

These features will come in handy as the company transforms itself through a combination of strategies. One aspect is to enhance its services by becoming fully market-driven and customer-focused.  

This includes the establishment of call centres to deal with complaints and queries, and the introduction of innovative, value-added services. 

Annuar also sees Pos Malaysia becoming a big player in the logistics line. That is a natural shift for the postal services industry. These companies have a wide reach (via their post office networks) and vast experience in handling and delivering goods. 

According to the UPU report, some 20 per cent of postal administrations provided logistical services in 2001. These services are both at the administrative level (for example, stock management and order processing) and the physical level (packing, despatch, transport and delivery). 

Pos Malaysia has a similar game plan. It intends to set up an international mail hub near the Kuala Lumpur International Airport to handle distribution of goods from business to consumer (B2C) and from business to business (B2B). The plan is to sign up domestic and international distributors as customers. 

The company is also looking into becoming a collection agency for goods and consolidating them at distribution centres before they are forwarded. This will make use of its postal network strength. 

Another potential new business is the management of supply chains. In particular, Pos Malaysia is keen to link the small and medium industries (SMIs) with the world market.  

Annuar points out that Pos Malaysia has an edge in these ventures because of its strong ties with the government, which controls Pos Holdings. 

He adds: “All these (the logistical services) will be quite different from what we are doing. So we have to be prepared for this change. We must acquire the necessary skills and exposure. But we're not going to do this alone. We will be forming strategic alliances with foreign partners.” 

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