PETALING JAYA: The problem of foreigners dominating local businesses remains widespread due to weak enforcement and lack of follow-up action, while the issue of them marrying locals to run shops to bypass licensing rules is only the tip of the iceberg, say business groups.
They pointed out that many more foreigners were operating illegally without proper licences or permits.
“Foreign spouses should not be allowed to operate outlets themselves.
“Enforcement must be tough and uncompromising,” said Malaysian Federation of Hawkers and Traders Association president Datuk Seri Rosli Sulaiman.
He said some foreigners exploited marriages by registering businesses under their spouses’ names but run them directly.
“In many cases, Malaysians acted only as ‘fronts’,” he said.
This comes after Deputy Domestic Trade and Cost of Living Minister Datuk Dr Fuziah Salleh told the Dewan Negara on Sept 3 that marriage to locals was the main modus operandi for foreigners to legally conduct business in Malaysia.
Closer eye: (From left) Rosli, Ragavan, Chin and Koong say heavier enforcement is needed to address the loopholes that allow foreigners to run businesses.
She said complaints often came from traders who felt threatened, though registrations were technically legal since they were carried out by local spouses.
She said the registration of businesses, under Act 197, is limited to Malaysian citizens or permanent residents only, as a measure to protect local small and medium enterprises from foreign competition.
Rosli stressed that the bigger problem lies with foreigners who trade illegally in markets and commercial areas, often monopolising business zones.
“Despite repeated crackdowns, they are back the next day. Unlike Singapore, where foreign traders face maximum fines and blacklisting, in Malaysia, they get away easily,” he said.
He urged heavier penalties, stricter coordination among agencies, blacklisting of repeat offenders and firm action against corruption that allows illegal trade to continue.
Kuala Lumpur and Selangor Indian Chamber of Commerce and Industry president Nivas Ragavan said the problem of foreigners marrying locals to operate businesses has become more common, especially in small-scale F&B, sundry shops, construction, agriculture and services such as barbershops.
He said many entrepreneurs believed foreigners used this “backdoor entry” to bypass licensing rules, and the issue was frequently raised during industry dialogues.
“This creates an uneven playing field. Locals invest significant capital, pay licence fees and follow regulations, while foreigners cut corners, operate at lower cost and sometimes avoid taxes,” he said.
Ragavan, who is also Federation of Malaysian Business Associations vice-chairman, said this led to unfair competition, heavier enforcement burdens and suspicion toward genuine foreign spouses.
He called for stricter checks on registrations, spot inspections and better coordination between councils, the Companies Commission of Malaysia and the Immigration Department.
Associated Chinese Chambers of Commerce and Industry of Malaysia treasurer-general Datuk Koong Lin Loong said complaints had also emerged in the retail clothing sector and restaurants.
He added that while foreigners cannot register sole proprietorships or partnerships, they are allowed to own private limited companies (Sdn Bhd) with just one local shareholder or director, except in restricted industries.
“Malaysia is relatively lax compared to neighbouring countries, with businesses able to be set up with minimal paid-up capital.
“Marrying locals is only a fraction of the issue since foreigners already have legal avenues to operate businesses,” he said.
Koong proposed raising the minimum paid-up capital requirement to ensure foreign businesses are genuine and to reduce unnecessary competition.
He also said false declarations in marriage registrations should be punished severely.
Meanwhile, SME Association of Malaysia president Dr Chin Chee Seong said foreigners marrying locals to open small business outlets such as restaurants or night market stalls was not a major threat to SMEs.
“Overall, it will not affect much because they cannot grow big,” he said.
Chin stressed that the real concern was unlicensed street vendors and those operating without approval from local councils or the Domestic Trade and Cost of Living Ministry.
He added that permanent residency in Malaysia was not easy to obtain, even for foreigners married for decades, which limited the scale of such businesses.
He urged the government to focus enforcement on unlicensed operators rather than small-scale marriages of convenience.
