Foreign investments should deliver more opportunities for Malaysian SMEs, says Steven Sim

GEORGE TOWN, Oct 30 — The government wants local content to be given greater consideration in government, government-linked company (GLC) and multinational corporation (MNC) procurements to create more opportunities for local micro, small and medium enterprises (MSMEs).

Entrepreneur Development and Cooperatives Minister Steven Sim Chee Keong said the approach is aimed at ensuring local businesses benefit from investments and the development of domestic supply chains.

“We also want government procurements, GLC procurements and, of course, MNC procurements to have a perspective for local content. We want foreign direct investment (FDI) to come in to benefit local businesses. So, there must be a requirement for local contents,” he said.

He said this during a panel discussion with Grant Thornton Malaysia National Tax Practice Leader Datin Seah Siew Yun at the Grant Thornton Tax Seminar on Budget 2027 here today.

Sim said local content requirement is one of the components under the SCALE Action Plan, which will form the ministry’s next phase of longer-term structural reforms for the MSME sector.

He said SCALE covers SME redefinition, cash flow protection, artificial intelligence (AI) adoption, local content requirement and easing access to financing, with the ministry looking at reforms through legislation, regulation or policy.

On FDI, Sim said the government has also retweaked its investment incentive system under the new incentive framework, with tax incentives linked to key performance indicators (KPIs).

Among the criteria are the creation of high-paying jobs for Malaysians and development of the local supply chain, with the approach intended to ensure foreign investments generate spillover benefits for MSMEs instead of benefitting only large companies.

Meanwhile, Sim said GLCs and government-linked investment companies (GLICs) have an important role in developing local industries and helping smaller businesses grow, while avoiding crowding them out of the market.

He said the government has instructed GLCs and GLICs to invest up to RM25 billion annually to develop the local supply chain, adding that part of the funds should be invested domestically to build local industries.

Sim said strengthening MSMEs is crucial as they account for about 96 per cent of business establishments in Malaysia, although their contribution to gross domestic product (GDP) remains below 40 per cent.

He said the government is targeting MSMEs to contribute at least 40 per cent to GDP, noting that while SMEs similarly make up an overwhelming majority of business establishments in many developed economies, their economic contribution is higher. — Bernama