Written by Fatin Ismail
The Review of eCommerce Legislation Final Report (Laporan Akhir Kajian Semakan Semula Perundangan eDagang) (‘the report’) represents a major national effort to modernise, refresh and renew the legal and regulatory framework for online commerce in Malaysia. Led by the Ministry of Domestic Trade and Cost of Living (‘KPDN’) with input from over 90 stakeholders, the report provides a comprehensive evaluation of existing eCommerce laws, identifies key enforcement and consumer protection gaps, and sets out a structured plan for reform. Richard Wee Chambers (a member of Grandall Law Firm) are the legal advisors in this Review of eCommerce Legislation.
Key Themes
The report traces Malaysia’s eCommerce growth trajectory, from a RM398 billion industry in 2015 to over RM1.2 trillion in 2022, and recognises its role as a key pillar of national digital transformation. The report also highlights critical challenges such as online scams, unclear liability between platforms and sellers, limited redress for consumers, and fragmented regulatory oversight.
Through international benchmarking against the EU’s Digital Services Act (DSA 2022), the UK’s Digital Markets, Competition and Consumers Act (DMCCA 2024), and the Philippines’ Internet Transactions Act (ITA 2023), the report proposes a reform roadmap centred on five pillars:
- Regulatory clarity: streamlining overlapping laws and establishing clear accountability for digital platforms.
- Consumer fairness and redress: ensuring transparent disclosure, equitable contracts, and accessible remedies.
- Accessibility and inclusion: empowering vulnerable consumer groups.
- Platform accountability: addressing responsibilities of intermediaries and large-scale platforms.
- Institutional governance: proposing a coherent national structure for e-commerce supervision.
Current State Assessment
A current state assessment reveals the state of Malaysia’s existing e-commerce regulatory ecosystem. It outlines the legal, institutional, and enforcement challenges currently facing regulators and market participants, while emphasising the need for comprehensive reform to align with global standards.
Fragmented Legal Coverage
E-commerce activities in Malaysia are currently governed by multiple overlapping laws including the Electronic Commerce Act 2006, Consumer Protection Act 1999, Personal Data Protection Act 2010, Communications and Multimedia Act 1998, and Competition Act 2010.
This fragmentation has resulted in inconsistent enforcement and unclear accountability among agencies as well as gaps or overlaps between different ministries or agencies. This leads to challenges in defining the scope of responsibility for cross-border or hybrid digital transactions.
Without a unified statutory framework, regulators often rely on ‘borrowing’ provisions from other laws which adds a layer to and could potentially cause delays in enforcement.
Need for Updated Legal Definitions
The Electronic Commerce Act 2006, adopted from the UNCITRAL Model Law, provided the legal foundation for recognising electronic contracts and digital signatures. However, it no longer captures the realities of today’s rapidly evolving digital marketplace.
Emerging business models such as social commerce, live commerce, AI-assisted sales, and influencer marketing now dominate online trade, but fall within legal grey areas that blur the traditional distinction between a consumer and a business
This has created uncertainty in areas such as contractual liability, consent, and jurisdiction. These issues demand updated definitions reflecting technological neutrality and platform-driven trade.
Gaps in Consumer Protection
The report highlights persistent consumer issues arising from weak enforcement and outdated safeguards, including:
- Incomplete or inaccessible seller information, which complicates refunds and returns;
- Ambiguous or unfair contract terms, such as auto-renewals and voucher-only refunds;
- Limited understanding of statutory rights, including the cooling-off period and mechanisms for dispute resolution; and
- Inadequate protection for vulnerable groups and minors, particularly in social commerce environments.
While Malaysia has adopted regional frameworks such as the ASEAN Guidelines on Consumer Protection in E-Commerce, local enforcement and redress mechanisms remain underdeveloped. The absence of a robust Online Dispute Resolution (ODR) system and limited tribunal jurisdiction further exacerbate the issue.
Governance and Accountability
Malaysia’s e-commerce ecosystem largely operates under self-regulation or co-regulation, resulting in inconsistent standards across platforms. The report calls for a structured governance framework that:
- Defines platform duties of care, including transparency, product safety, and responsible marketing;
- Introduces tiered governance obligations, where very large online platforms (VLOPs) bear greater compliance responsibilities; and
- Clarifies B2B (business-to-business) and P2B (platform-to-business) relationships to ensure fair commercial practices.
Drawing on international precedents such as the DSA 2022 and the UK DMCCA 2024, the report emphasises that effective platform regulation must be risk-based, transparent, and enforceable ensuring accountability without stifling innovation.
Extraterritorial Application
A significant challenge is the limited extraterritorial reach of Malaysia’s current e-commerce laws. Digital transactions frequently involve foreign platforms or sellers that operate outside Malaysia’s jurisdiction but target Malaysian consumers.
The absence of clear extraterritorial provisions means that regulators have limited authority to act against foreign entities engaging in unfair or deceptive practices, cross-border enforcement and cooperation with foreign regulators remain ad hoc and consumers often face barriers in seeking redress for disputes involving international sellers or digital service providers.
To address this, the report recommends incorporating explicit extraterritorial clauses in future legislation ensuring that Malaysian law applies to entities offering goods or services to consumers within Malaysia, regardless of the entity’s physical location.
Extraterritorial application aims to enhance legal certainty, consumer confidence, and Malaysia’s ability to participate credibly in cross-border digital trade frameworks.
As Malaysia’s e-commerce governance is currently characterised by fragmented laws, unclear jurisdiction, and insufficient consumer protection, this leads to an erosion of trust in digital markets and limits Malaysia’s competitiveness in the global eCommerce landscape. The findings of this chapter lay the groundwork for solutioning for Malaysia’s next phase of eCommerce regulation.
Solutioning
The heart of the report lies in Chapter 7, translating the study’s findings into a practical regulatory and institutional blueprint.
Risk-Based Legal Framework
The report proposes a risk-based approach to regulation, recognising that large digital platforms with substantial market influence should bear greater compliance duties compared to small and medium-sized enterprises. The key to this is proportionality, thus ensuring proportionality while fostering innovation and market participation.
Strengthening Identity Verification and Data Access
Digital identity verification and compliance reporting are identified as key enablers for trust and accountability. The report calls for integrated systems that enable regulators to trace and verify online sellers, thereby reducing scams and fraudulent listings.
Redefining Dispute Resolution
One of the most impactful recommendations lies in modernising dispute resolution.
The report proposes:
- Enhancing the Consumer Claims Tribunal (TTPM) to handle e-commerce disputes, including cases involving incomplete seller information or cross-border transactions.
- Establishing a national Online Dispute Resolution (ODR) framework, integrating KPDN, MCMC, and other agencies to provide seamless, fast, and low-cost redress for consumers.
- Introducing a “no wrong door” policy to ensure that consumers can obtain help regardless of which agency they approach.
Regulatory and Governance Mechanisms
Two governance models are proposed:
- A new National E-Commerce Authority, acting as a central coordinating body for enforcement, policy, and consumer redress; or
- An expanded mandate for KPDN, creating a specialised e-commerce division within the ministry.
The report also introduces the concept of “undertakings” a form of non-licensing compliance where digital platforms commit to specific consumer protection and data transparency standards, subject to oversight.
Towards a Dedicated E-Commerce Act
To close existing legal gaps, the study recommends drafting a renewed Electronic Commerce Act, consolidating dispersed provisions from current laws as well as introducing new provisions for a more cohesive and future-proof statute.
Conclusion
The Review of eCommerce Legislation signals a transformative moment for Malaysia’s digital economy. Its emphasis on risk-based regulation, institutional coordination, and user-centric dispute resolution reflects a forward-looking approach aligned with global best practices. If implemented, the recommendations and solutioning could lay the foundation for a more transparent, trusted, and resilient e-commerce ecosystem, one that empowers consumers while strengthening confidence in Malaysia’s digital marketplace.
The full report can be accessed here.
Published on 4 November 2025