Enforce same rules before cheap imports squeeze out local SMEs

Imported goods should be subject to the same certification, safety and tax requirements as Malaysian products to prevent local SMEs from being undercut in their own market, says the Small and Medium Enterprises Association (Samenta).

Samenta president William Ng said local SMEs were now competing on an unequal footing, particularly in fast fashion, apparel, footwear, plastics, household essentials and consumer electronics.

“A lot of imported goods enter the market at price points below local raw material costs, often bypassing local compliance costs, regulatory certifications and tax obligations that domestic SMEs are strictly required to meet,” he told FMT.

Ng said local retailers and brand owners could not compete with factory-direct pricing when imported goods were sold at or below cost.

He said food and beverage businesses have also come under the same pressure, while manufacturers of building materials, hardware, metal and plastic products, packaging and furniture are also being squeezed by higher compliance, labour and utility costs.

Ng was responding to a recent FMT report citing a warning by the think tank Global Institute for Tomorrow (GIFT) that an influx of foreign goods, including those from China, was hurting local businesses.

GIFT founder Chandran Nair said the impact could lead to the closure of local businesses, resulting in job losses.

Ng said cross-border e-commerce platforms had further widened the gap by subsidising logistics and enabling direct factory-to-consumer shipping.

“Local SMEs don’t stand a chance” in terms of pricing and speed of delivery, he said.

He said importers must comply with the same standards imposed on local manufacturers, including Sirim certification, safety requirements, energy-efficiency ratings and mandatory Bahasa Malaysia or English labelling.

“Currently, uncertified goods enter through online platforms with minimal scrutiny.”

Ng noted that Malaysian exporters had to meet certification requirements such as CE standards for exports to Europe and CCC requirements in China, and said foreign sellers should face similar rules when entering the Malaysian market.

He also called for tighter customs checks and warehouse audits to curb transshipment mislabelling, saying under-declaration was a major problem involving direct factory-to-consumer imports.

Ng said the pressure had intensified as Chinese manufacturers looked overseas to clear excess inventory amid domestic industrial overcapacity and slower consumption.

He said Samenta was not calling for blanket protectionism, but for stronger enforcement and measures to help SMEs become more competitive.

These included matching grants and tax rebates for automation, digital transformation, ESG compliance, and research and development to help SMEs move up the value chain.

Nair said Putrajaya had the right to protect local industries from excessive competition without necessarily breaching World Trade Organization rules.

He said China’s domestic industrial overcapacity and slower consumption had led manufacturers and distributors to push inventory into Southeast Asia, with Malaysia becoming a “prime target” because of its open economy.

Sunway University economist Yeah Kim Leng said cheap imports were a “double-edged sword” as consumers benefited from lower prices while SMEs faced greater import competition.

He said enforcement alone would not be enough, as SMEs also needed to ensure their products remained competitive.

“Otherwise, it will be quite a challenge. They have to improve product features, move up the value chain or change their business model,” he added.

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