Protect SMEs from influx of cheap foreign goods, says think tank

A think tank has warned Malaysian small and medium-sized enterprises (SMEs) to brace for competition from Chinese brands flooding the local market. The Global Institute for Tomorrow, led by founder Chandran Nair, urged the government to shield local businesses from excessive competition without violating World Trade Organization (WTO) regulations.

Nair stated that Malaysia has the right to safeguard its manufacturing sector and other industries from an excessive influx of goods, as long as the government's policies are clear and do not breach WTO rules. He advocated for negotiations with China and stricter regulations for foreign players, emphasizing the need for parallel investments in science and technology to foster innovation and productivity.

The surge in Chinese brands, ranging from food and beverages to electronics and electric vehicles, has put pressure on local SMEs, reducing their market share and leading to declining revenues. Goh Lim Thye, an economist from Universiti Malaya, noted that China's slower economic growth prompted its brands to seek overseas opportunities for profit, with Malaysia's open market and strong trade links making it an attractive destination.

However, Nair cautioned that Malaysia's reliance on natural resources hindered the country's ability to develop an advanced economy and society. He argued that Malaysia should strive for value-added industries and a science-based industry instead of relying solely on natural resource extraction. Nair pointed out that countries like Singapore refine more oil than Malaysia does, yet they add more value to the resource.

The same issue applies to the rare earths industry, where China once exported raw materials but now focuses on adding value.