PETALING JAYA: Massive influx of foreign businesses into the Malaysian market has caused unprecedented impact and damage to local SMEs, warns Datuk Liew Bin, deputy president of the Malaysia Retail Chain Association (MRCA).
The overall business environment is now reaching a “suffocation point,” he said.
Liew pointed out that the main issue for local SMEs currently is the near-total lack of barriers for foreign companies to set up and do business in Malaysia.
Not only is there almost no minimum paid-up capital requirement, but nearly all sectors — save for a few — are fully open to foreign players without the need for local shareholders.
He noted that the conditions for starting a business here are often simpler and more relaxed than in the investors’ home countries.
In a viral Facebook post, Liew compared the situation to a military campaign.
He described the last two years of large-scale Chinese e-commerce impact as the “loss of air superiority” in the online battlefield, where local merchants were forced into retreat.
Now, the situation has escalated, with foreign capital extending from online platforms to physical offline sectors.
“Something even more serious has arrived. This is no longer the Air Force; it is a full-scale landing of the Ground Forces,” Liew wrote.
“Renovation, F&B, beauty, dentistry, retail, wholesale, printing — industries of all sizes, across every sector you can imagine, are marching south.
“This is not penetration; it is an advance. This is not competition; it is an encirclement,” he said.
Liew emphasized that the proposal submitted by the Associated Chinese Chamber of Commerce and Industry Malaysia to the government last year did not ask for higher tariffs to protect local businesses.
Instead, they requested a fair, rational and sustainable institutional framework that allows local businesses the space to survive and grow.
He highlighted that many foreign enterprises, particularly Chinese companies, benefit from state subsidies, policy support and systematic resources.
Some even use dumping strategies to manage overcapacity from their home markets, he said.
In contrast, local SMEs must rely on their own hard work, bank loans and personal risk to stay afloat.
The two groups, he argued, are not even in the same race yet are forced into a head-on collision.
“To put it cruelly, we have no retreat; we only have self-preservation,” he said.
Liew revealed that these concerns were raised two to three years ago but were dismissed at the time.
“Today, those predictions are coming true, and the reality is arriving faster and more fiercely than expected,” he said.
As policy directions become clearer, Liew admitted that the SME sector can now only pin its hopes on government policies aimed at increasing productivity, reducing red tape, widening financing channels and opening new markets.
He hopes these measures will be more than just slogans and will truly help local businesses survive this crisis.
In a statement, MCA vice president Datuk Lawrence Low said that large foreign firms possess distinct advantages in pricing, supply chains, financing and branding.
By utilizing tactics such as predatory pricing (dumping), long-term subsidies, massive advertising, and centralized procurement, they can rapidly seize market share.
This leaves local businesses with thinning profit margins, making it impossible to compete in the long run, said Low, who chairs the MCA Economic and SME Affairs Committee.
Many local SMEs are being forced toward closure or downsizing before they even have the chance to transform or upgrade their operations.
“Once local businesses are eliminated, the market will be dominated by a few large foreign entities.
“This will not benefit consumers in the long run; instead, it may lead to monopolies that drive up prices and harm consumer interests,” he warned.
Low also stressed the impact on labor market.
“SMEs are a primary source of employment in Malaysia, absorbing a large portion of the grassroots and middle-income groups.
“If these businesses fail, it will lead to mass unemployment and loss of household income, ultimately hurting national consumption and social stability,” he said.
He urged the government to comprehensively review regulations regarding foreign entry and strengthen anti-monopoly oversight.
He proposed targeted support schemes, including tax relief, financing assistance, and help with digital transformation and productivity.
“While consumers benefit from having more choices, the government must ensure a level playing field. Otherwise, SMEs will be wiped out quickly.
“Only by protecting the survival space of local SMEs can the influx of foreign investment truly bring positive benefits and a win-win situation for economic growth and social stability,” Low said.
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