In brief
In October 2025, the Ministry of Domestic Trade and Cost of Living (MDTCL) published a regulatory impact assessment report of Malaysia's existing e-commerce legislative framework ("MDTCL Report"). The MDTCL Report identified significant regulatory gaps, including fragmented regulatory oversight, undefined e-commerce intermediary obligations, rising consumer and seller misconduct, and the absence of a centralized online dispute resolution mechanism. These gaps are compounded by the rapid evolution of e-commerce business models that existing laws were not designed to address.
Reforms to the existing legislative framework have been proposed. The key proposals include platform due diligence and duty-of-care requirements, extraterritorial application to foreign e-commerce players, and the establishment of a dedicated e-commerce governing body and integrated online dispute resolution platform. If implemented, these proposals would represent a material shift from the current general consumer protection and contract-based regulatory model toward direct platform accountability.
Problem statements
The MDTCL Report identified various problem statements, and the corresponding basis for legislative reform, including:
| Problem statements |
Proposed reforms |
| Fragmented regulatory oversight and absence of a dedicated e-commerce regulator |
|
| E-commerce activities being governed by multiple statutes administered by different ministries and agencies, with no single regulator specifically responsible for e-commerce. |
Establishment of a dedicated e-commerce governing body under the purview of the MDTCL, responsible for policy formulation, compliance monitoring, investigation, and enforcement of e-commerce obligations. |
| Undefined roles and responsibilities of e-commerce intermediaries |
|
| Existing laws are largely structured around buyer-seller relationships. The laws do not clearly define the obligations of e-commerce intermediaries (i.e., the platform providers). |
Imposition of direct platform due diligence and duty of care obligations on e-commerce intermediaries, including the implementation of identity verification measures, maintenance of transaction logs, moderation and removal of violating content, and the establishment of mechanisms for users to flag such content. |
| Inadequate dispute resolution mechanisms |
|
| Platform-operated dispute resolution mechanisms are perceived as seller-biased. Consumers seeking to escalate disputes to the Tribunal for Consumer Claims Malaysia (TCCM) are hampered as platforms decline to disclose seller details, and the TCCM lacks subpoena powers to compel such disclosure. Proceedings also continue to require physical attendance. |
Granting the TCCM subpoena powers to compel platforms to disclose seller information, and allowing the TCCM to accept transaction order identifiers as a sufficient basis for initiating a dispute. Establishment of a centralised online dispute resolution platform operating on a "no wrong door" principle, integrated with relevant sector regulators. |
| Emerging risks from new business models and technologies |
|
|
AI use in recommendation systems and dynamic pricing raises concerns about algorithmic transparency, consumer manipulation and the liability of autonomous systems for errors or harm. Foreign platforms serving the Malaysian market without physical or legal presence create enforcement difficulties. |
Platforms would be required to maintain human oversight over AI systems, notify users of direct AI interactions, and comply with the data privacy laws when personal data is used in AI-driven systems. Inclusion of an extraterritoriality clause subjecting all persons and entities engaging in e-commerce activities in the Malaysian market to Malaysian law; and overlaid with the requirement to maintain a minimum local presence. |
Conclusions and next steps
If the reforms proposed in the MDTCL Report are implemented, e-commerce intermediaries may be required to assume a more active role in monitoring and regulating conduct within their platforms, while foreign platforms serving Malaysian users may face heightened local accountability obligations. Businesses that operate marketplaces, sell through platforms, utilise platform recommendation tools or rely on automated decision-making in the Malaysian market should monitor these developments closely and assess the adequacy of their governance frameworks, seller verification controls and consumer-facing practices in anticipation of these proposals crystallising into formal regulatory requirements.
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Raynice Chew, Associate, and Ian Liew, Chambering Pupil, have contributed to this legal update.
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