Selangor government is looking to license online businesses in the state, with guidelines set to be introduced within the first half of next year.
Selangor local government, public transportation and new village development committee chairman Ng Sze Han said the move was necessary to regulate the growing number of online businesses as well as to offer some form of certification by the authorities for such enterprises.
“Home-based online businesses are increasing, particularly during the Covid-19 pandemic and it is a trend we cannot stop, ” he said.
“We want to encourage and legalise online businesses for several reasons.
“There is a need for proper regulation to avoid problems within the community, such as disturbing neighbours, causing traffic nuisance and generating excessive waste.
“Some existing online businesses need a local council’s licence or similar documentation for their expansion, export plans or other reasons, but there is no existing process that allows them to do that.”
To apply for an online licence, Ng said applicants would first have to register their business with the Companies Commission of Malaysia (SSM) and apply for a planning order with the local council for temporary conversion of their property.
“It will be a simple process to apply for a temporary conversion to change from a residential to semi-commercial property, ” he said.
“This is necessary as under the Town and Country Planning Act 1976 (Act 172), a property cannot deviate from the original purpose it was built for.”
Ng said the guideline would likely cover businesses that use websites, social media and messaging apps to conduct their transactions and day-to-day affairs.
“We are looking at allowing a maximum of 25% of a residential property to be used for a home-based online business, which includes workspace and storage, ” he said, adding that operators who needed a bigger area should look at renting an office space.
“The guideline will cover most types of home-based online businesses, such as food (freshly cooked and frozen), baked goods and kuih, cosmetics, clothing, arts and craft, writing, design, architecture and consultancy.
“It will also apply to large-scale or commercial entities that use the online platform for their businesses.”
Ng said to date, SSM had 41,148 entities registered as online businesses.
Petaling Jaya City Council (MBPJ) is taking the lead in drawing up the guideline, which is the first of its kind in Malaysia.
“We are still in the midst of fine-tuning certain details, such as the exact application process and whether to implement it simultaneously across the entire state or to start with the city councils first, then municipal and district councils, ” said Ng.
“The fee structure for online business licences is also being discussed, as the existing rates for traders differ between city and district councils.”
He said the first draft of the guideline was presented in October during a meeting attended by himself and heads of local councils in Selangor.
The final version will have to be presented and approved at the state exco meeting, before its targeted implementation within the first half of next year.
The licence application, fee collection and monitoring measures will be handled by the local councils where the online businesses are based in. For example, a business registered in Kota Damansara would fall under MBPJ.
“This move is not meant to penalise online businesses. We want to legalise and regulate them, so we need the data and measures to do that, ” said Ng.
He assured that the registration process would be made as easy and simple as possible to encourage all entrepreneurs to register their online businesses.
Home-based entrepreneurs who spoke to StarMetro were generally against the licensing move, citing it as an additional and unnecessary burden during an already difficult economic situation.
“While I understand why there may be a need for this, I feel it’s a knee-jerk reaction to a few bad business owners who cause problems in the neighbourhood. And for this, the majority of home-based small businesses have to pay the price, ” said Dana Chia*.
“For some businesses, this might be the only means of support and finance after being affected by the Covid-19 pandemic.
“Having to go through the hassle of applying for a licence and other paperwork will be too much trouble and may even take away what little profit we get, ” said the Petaling Jaya resident who started selling cakes and cookies about six months ago.
Chia, who bakes as a hobby and receives orders on a seasonal basis, questioned why the “25% of a residential space to be used for an online business” should apply to her and whether she should convert her house into a semi-commercial property.
“Who and how will they come up with guidelines for acquiring a licence? Do the authorities truly understand the wide spectrum of online business in the first place?” asked Chia, who gets her orders through social media and word-of-mouth recommendations.
“Some F&B businesses might be more problematic as they may generate a lot of food waste or cause congestion when customers or delivery guys pick up their food.
“But what if it’s a technology business or someone selling homemade jewellery or craft? Where do these fall under? You cannot have a blanket rule for all.
“The procedures and documents required are often mired in needless paperwork, rather than to help structure or regulate online businesses.”
Chia felt that the proposal appeared as another way for the government to make money from people who are already suffering during hard times when instead they should be trying to help entrepreneurs and local SMEs get back on their feet and help the economy.
“I disagree with the licensing proposal as my business is not a huge one that brings in large profits, ” said Eida Iskandar*, who feels she is not able to fulfil the requirements needed to apply for the licence.
“The application process also seems complicated and impractical, since we will have to go to two different government agencies to register our business and apply for a licence.”
The 52-year-old has been selling frozen food such as curry puff and kuih from her house in Kajang for the past three years, with Facebook and WhatsApp being her chosen platforms.
“Mine is a seasonal business, so I don’t have a fixed daily or monthly income, ” said Eida.
“I’m already paying about RM200 per month for my Internet bill. I may not have much left if I also have to pay the licence and registration fees for a business that I’m only doing part-time to support my family.”
Instead of making it more difficult for people to earn an income during the Covid-19 pandemic, she said the government should look at other ways to assist people who are turning to online businesses after losing their jobs or need additional funds to supplement their family income.
“The government should help us entrepreneurs increase sales or improve our businesses by providing training and other initiatives, instead of burdening us with additional fees and regulations, ” said Eida.
Anele Mei Yun* felt that more research and feasibility studies should be done before the proposal was implemented.
“The government’s move to provide a safe platform for small online businesses is a good one, ” said the 30-year-old who has been selling Nyonya kuih for over a year.
“But at the same time, we don’t want too much hassle for applications, rules and fees. The rules should not be rigid; it should be understood by people from all walks of life.”
In addition to taking orders via Facebook and WhatsApp, Yun sometimes bundles her colourful kuih and other baked goodies onto a trusty bicycle to sell around Ampang.
As a home-based baker who lives in a strata property, Yun said she did not have much capital to scale up her business and would find it difficult to meet the guideline’s requirements.
“If this move were to be made mandatory, I hope the government will not make the process too difficult and costly, ” she said, adding that she would not pay more than the RM60 for the licensing fee.
“In my experience, bureaucracy in dealing with government agencies sometimes impedes business creativity and makes it difficult for start-ups.”
Yun suggested that the government provide digital training to petty traders to boost their sales and delivery schemes.
(* denotes pseudonym)
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