The Malaysian Employers Federation calls for urgent action to level the playing field for local businesses, emphasising fair enforcement and stronger local content policies.
PETALING JAYA: The Malaysian Employers Federation (MEF) has called on the government to take urgent action to level the playing field for Malaysian micro, small and medium enterprises (MSME), saying local businesses are increasingly under threat from foreign operators.
MEF president Datuk Dr Syed Hussain Syed Husman backed recent remarks by Entrepreneur and Cooperatives Development Minister Steven Sim, who highlighted mounting pressures on local businesses amid intensifying global competition, particularly from China and the rise of protectionist measures abroad.
Speaking at a recent media forum, Sim said foreign producers are increasingly selling directly into Malaysia, bypassing local intermediaries.
However, he said as a small and open economy, Malaysia must be prudent in responding with tariff-style measures.
Syed Hussain emphasised that the government must strengthen local content policies, including prioritising Malaysian products and enterprises within government-linked companies (GLCs) and public procurement frameworks to ensure domestic businesses could scale up and remain competitive.
“Local MSME are closing down, jobs are being lost and domestic supply chains are weakening. This trend cannot be allowed to continue.”
Highlighting the critical role of MSME, he added that they make up nearly 97% of registered businesses and contribute 39% of Malaysia’s GDP, serving as key employers and stabilisers of the economy.
He also emphasised that openness should not come at the expense of local businesses.
“We are not calling for blanket protectionism. We need a fair and well-enforced competitive environment.
“Foreign businesses often enter Malaysia with lower compliance burdens, bypass local intermediaries and undercut prices, placing local MSME at a structural disadvantage.”
Syed Hussain said MEF strongly supports Sim’s call for stricter enforcement in key areas, including licensing, tax compliance, product standards, consumer protection and fair market conduct.
“Rules must apply equally to all operators. Weak enforcement penalises compliant local businesses and distorts competition.”
He also reiterated support for prioritising local products and companies in public procurement, GLC sourcing and national supply chains.
“Domestic confidence is the foundation of global competitiveness.
“If companies are not trusted and supported at home, they will never thrive abroad.”
MEF welcomed government initiatives to boost productivity, reduce bureaucracy, improve access to capital and expand market opportunities, while adding that financing constraints, cash-flow pressures and regulatory complexity continue to hamper MSME growth.
“The survival and growth of MSME must be treated as a national economic priority.
“MEF stands firmly with the government in calling for tougher rules, stronger enforcement and a business ecosystem that genuinely supports local enterprises, before it is too late.”
Last month, the Domestic Trade and Cost of Living Ministry announced it would review its 2020 guidelines on foreign participation in the food and beverage (F&B) sector, amid concerns that the rapid expansion of foreign brands may threaten local MSME.
The ministry said the guidelines are outdated and contain loopholes.
theSun reported last week on the issue with SME Association of Malaysia president Dr Chin Chee Seong describing the review as timely.
“The review isn’t just about identifying loopholes; it’s about revisiting the definitions and terms used in the 2020 guidelines.
“Currently, the wording is problematic. It uses phrases like ‘you are expected’ or ‘you are required,’ but there is no ‘must’.
“Foreign companies are only encouraged to comply, which creates loopholes in practice.”
Chin added that some foreign outlets could bypass rules intended to protect MSME, such as the requirement for an impact study for F&B outlets exceeding 5,000 square feet to ensure they do not negatively affect local businesses.
He said foreign operators should also invest locally, engage domestic supply chains, hire local labour and coordinate with municipal authorities issuing operational licences.