As Malaysia’s economy navigates an uncertain global environment, domestic consumption continues to stand out as a reliable driver of growth. In the first quarter of 2025, private consumption remained buoyant, supported by stable employment conditions, real wage growth, and subdued inflation.
With Bank Negara Malaysia holding its policy rate steady, and with the improved market sentiment, the domestic consumption outlook is underpinned by both macroeconomic stability and sustained consumer confidence. But the mechanics of household spending are shifting, and businesses need to keep pace. One model quietly gaining traction in Malaysia is the subscription and rental economy.
Once largely confined to software and media, subscription-based or rental-based models are now expanding into sectors such as home appliances, wellness, personal care, and food services. At its core, the model turns one-time product purchases into recurring service relationships, bundling the product with maintenance, upgrades, and customer support under a single monthly fee. For consumers, it offers convenience, zero up-front cost, and predictability; for businesses, it delivers revenue stability in terms of recurring income, and deeper customer relationships.
Recent data underscores the relevance of this shift. According to the Department of Statistics Malaysia, distributive trade sales grew 5.7% year-on-year in March 2025, reaching RM154 billion, driven by a 6.6% rise in retail trade and a 5.7% increase in wholesale activity. This steady momentum in consumer-facing sectors suggests Malaysian households remain willing to spend, but with a growing preference for value-added, service-integrated offerings.
Ecommerce and direct-selling channels, often favoured in subscription and rental models, continue to expand their share of wallets, reflecting evolving purchasing behaviours. Importantly, the expansion of Malaysia’s Sales and Services Tax (SST) framework from 1 July 2025 could further accelerate this trend. With over thirty additional services, ranging from logistics and maintenance to leasing and repair, now taxable under SST, standalone services will become more costly for consumers and more complex for providers to administer. In this environment, bundled offerings that consolidate services and spread SST impact across a fixed monthly fee will gain traction.
As more service categories come under SST, Malaysian households are likely to feel a gradual increase in living costs, prompting a shift toward predictable, all-inclusive pricing models that reduce exposure to unplanned expenses. Subscription and rental- oriented businesses are well-positioned to adapt. By internalising the servicing ecosystem and packaging it with product use, they can offer end-users transparency and convenience, while achieving operational efficiency on the back-end. For SMEs, this also simplifies compliance and improves tax predictability.
One illustrative example is CUCKOO International (MAL) Berhad. While its roots trace back to South Korea, where the CUCKOO brand is renowned for its rice cookers and other home appliance innovations, including water filtration systems, the Malaysian entity has localised and scaled the model for local households, offering subscription- and rental-based solutions that blend Korean technology, Malaysian customer service, and holistic wellness offerings. By managing the entire product lifecycle internally, the company reduces friction for customers while embedding long-term recurring revenue into its operations.
This positions CUCKOO not only to weather macro volatility but to thrive in a service-centric, post-SST marketplace. Rising household debt levels-up from RM1.25 trillion in 2019 to RM1.57 trillion by mid-2024 - suggest that more Malaysian households, especially in the B40 and M40 groups, are becoming value-conscious in their spending.
This is driving greater interest in affordable, pay-as-you-go models for essential home appliances. Companies offering low-barrier rental plans, such as CUCKOO International, are likely to benefit from this trend as consumers prioritise financial flexibility over upfront ownership.
Notably, CUCKOO’s bundled rental and service model means the company is less directly affected by the expanded SST compared to providers that rely on disaggregated service charges—allowing it to maintain price competitiveness and operational continuity. Crucially, the model also generates formal employment across the value chain, from field technicians to logistics, customer service, and digital operations.
In an era where servicesector jobs will anchor Malaysia’s next phase of growth, these ecosystem-based businesses could play an outsized role in driving quality employment and upskilling. More broadly, the SST expansion may serve as an inflection point for Malaysia’s informal and fragmented service providers.
Micro-scale or unregistered operators may face new compliance burdens or pricing constraints, potentially pushing consumers toward formal subscription and rental players with structured offerings. In this light, the subscription and rental models become not only a commercial advantage, but a policy-aligned strategy for broadening the tax base and enhancing service delivery standards
For investors and policymakers alike, the subscription and rental economy represents an underappreciated lever for long-term economic resilience. Recurring revenues support business continuity across cycles. Embedded service networks encourage job creation in nonoffshorable roles. And customer-centric bundling increases trust, loyalty, and lifetime value. Of course, success depends on execution.
These models require strong back-end systems, consistent service quality, and customer relationship management capabilities. Businesses that overextend or fail to deliver may find themselves quickly losing credibility. But for those who get it right, the subscription and rental economy could redefine how value is created, delivered, and sustained in Malaysia’s consumer market.
In a world where consumers no longer buy just products, but experiences, services, and peace of mind -Malaysia’s maturing middle class may well power the next generation of brands that not just sell more, but serve better.
As Malaysia transitions into a more service-driven economy, forward-looking models like these may prove pivotal to sustaining growth, innovation, and inclusivity.
