SHAH ALAM: Malaysia must not open its market too quickly to foreign investment without safeguards for local industries, says the Investment, Trade and Industry Minister.
Datuk Seri Johari Abdul Ghani said doing so could undermine local companies that had taken decades to grow from traders into manufacturers and exporters.
“If we are not careful, Malaysia will become merely a marketplace for foreign products. Our businesses will regress, and they will become traders once again. I do not think we want to see that happen,” he said in his address at the Associated Chinese Chambers of Commerce and Industry of Malaysia’s (ACCCIM) 80th annual general meeting here yesterday.
Johari said Malaysia welcomed foreign investment, but investors must bring in new technology, products and capabilities that complement local companies instead of competing directly with them.
“Competition is necessary but must also be fair. When Malaysian companies produce 100,000 units while foreign companies produce three million units, the cost structures are completely different. It is extremely difficult to compete under those conditions,” he added.
Citing the iron and steel industry as an example, Johari said Malaysia developed the sector after independence, with six or seven local companies creating jobs, paying taxes, and driving economic growth.
However, he said the entry of two major foreign producers with much larger production capacity led to direct competition with local players.
The original intention, he said, was for the foreign companies to supply products not manufactured in Malaysia and export much of their output.
“Instead, they competed with the six or seven local companies. At the same time, Malaysia continued to import large quantities of iron and steel products,” he said.
Johari said Malaysia’s relatively small domestic market also made it harder for local manufacturers to compete with foreign companies operating at a much larger scale.
“When processing licences, we consider the investor’s business, raw material sources, and plans. This allows us to engage with the relevant associations.
“For example, we met with ACCCIM and discussed what they thought about this. We asked whether they thought the investment would affect their businesses or complement them. These are the things we need to look at,” he told reporters.
Johari said foreign investors remain welcomed, especially where they could help Malaysia close gaps in technology and production capacity.
“Where we lack technology, foreign investors can come in, bring that technology and partner with local companies. The aim is not to eliminate local companies,” he added.
He said the businesses that needed protection were not limited to micro enterprises but also sizeable small and medium enterprises that contributed to the country’s industrial development.
At the event, ACCCIM launched its Trade and Investment Facilitation Centre (TIFC). The centre will work alongside Miti to help businesses connect with relevant government bodies, form commercial linkages, and access professional advice.
Its president Datuk Ng Yih Pyng said foreign investors, overseas companies and trade organisations had long approached ACCCIM when considering business and investment opportunities in Malaysia.
TIFC would complement existing government efforts to promote trade and investment and help businesses obtain assistance more efficiently.
Ng urged the government to move beyond improving the ease of doing business by ensuring faster approvals, better coordination among agencies and a more transparent regulatory environment.
