SHAH ALAM, Aug 10 – Malaysia must avoid opening its market to foreign competition faster than domestic industries can adapt, particularly when local companies are up against much larger players with significant economies of scale, the New Straits Times reported, quoting Investment, Trade and Industry Minister Datuk Seri Johari Abdul Ghani.
Johari said foreign investment should complement local industries by bringing in technology and capabilities Malaysia lacks, rather than displacing businesses built up over decades.
Citing the iron and steel industry, Johari said Malaysia had developed it over decades, but local players subsequently struggled after the market was opened to much larger foreign producers with significantly greater production capacity.
“Our market is not big. When you open the market so fast, when we are not ready, this is what we face,” he said in his officiating speech at the Associated Chinese Chambers of Commerce and Industry of Malaysia’s 80th annual general meeting.
“While these investments expanded production capacity, the structural challenge they were intended to address remained unresolved as imports of iron and steel products increased over the past 10 years.
“If new investments develop in isolation from local firms or compete directly without creating meaningful industrial linkages, domestic capabilities can gradually weaken, putting local firms out of business,” he said.
Johari said Malaysian entrepreneurs had built their businesses over the years through perseverance and continuous reinvestment, with many starting as traders before expanding into manufacturing and exports.
“We cannot allow future industrial policies to reverse that progress. If we are not careful, Malaysia risks becoming merely a marketplace for foreign products, and our businesses will regress and become traders only, once again.
“Our responsibility is to ensure that we leave behind stronger industrial capabilities, not fewer, for the next generation,” he said.
Speaking to reporters later, Johari said the government would continue to welcome foreign investors but would take greater care to ensure their investments did not directly undermine existing Malaysian businesses.
He said the government would assess the nature of an investor’s business, including what it produced and where it sourced its raw materials, when processing licence applications.
“That is why, when we process licences, we will look at what sort of business the investor is involved in, where they source their raw materials and what they intend to do. This allows us to engage with the relevant associations.
“For example, this morning, 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 Malaysia should leverage foreign investment to address technology gaps by encouraging investors to bring in new technologies and partner with established local companies rather than displacing them.
