Impose compulsory purchase of 50% local products to protect Malaysia’s MSME

Bagan MP Lim Guan Eng has called upon the government to impose compulsory purchase of 50 percent local products to protect Malaysia’s micro, small, and medium enterprises (MSME).

He said this measure is vital to protect the sector from the US tariffs and dumping of foreign goods and services instead of action against social visa abuse that was announced by the Entrepreneur Development and Cooperatives Minister Steven Sim.

“It would be unrealistic to expect that any fresh action now by enforcement agencies on top of what has already been conducted will make any discernible difference and succeed in protecting MSMEs and local small traders from unfair competition from foreigners that have disrupted our orderly entrepreneurial ecosystem,” he said in a statement.

“The most effective remedy is for the government to impose compulsory purchase of 50% of local products by foreign and local investors to protect the survival of MSMEs, which have been increasingly challenged by the adverse consequences of tariffs and the dumping of foreign goods and services.

“Only after imposing the 50% local products ruling can the complementary action by enforcement agencies against foreign visitors who misuse their social visit visas, succeed in protecting the business of MSMEs and local traders.

“Presently, the imposition of tariffs have limited the market access of local MSMEs in foreign markets. Further, the dumping of foreign goods and services at low prices or even below production cost have resulted in MSMEs losing business.

Lim also highlighted the challenges faced by the MSME sector while emphasizing the vitality of the sector.

“Many MSMEs are complaining that they are running at way below capacity and some are considering closing down their business by the end of this year if the situation does not improve.

“MSMEs complain that companies winning government or private contracts take all their materials from their home countries until not a single nut, bolt and screw is bought from local manufacturers.

“Failure to protect our MSMEs comes at heavy price when MSMEs contribute 38% of our GDP, contribute 40% of employment and 13% of exports. The government must impose the buy 50% local products ruling unless the materials sourced is not available locally.

“Many foreign countries like Indonesia have implemented the 50% buy local products ruling without any adverse impact on free trade and there is no reason why the Malaysian government cannot follow suit.