Malaysia wants procurement rules to give local MSMEs more opportunities

Malaysia wants procurement by the government, state-linked companies and multinational corporations to give greater consideration to local content, Entrepreneur Development and Cooperatives Minister Steven Sim Chee Keong said on October 30. The aim is to expand opportunities for Malaysian micro, small and medium enterprises (MSMEs).

At the Grant Thornton Tax Seminar on Budget 2027 in George Town, Sim said foreign investment should benefit domestic businesses rather than only large companies. He said tax incentives under the revised investment incentive framework were tied to performance indicators, including well-paid jobs for Malaysians and domestic supply-chain development.

A requirement for local content is included in the ministry’s SCALE Action Plan, which Sim described as its next phase of longer-term structural reform. Other components cover redefining SMEs, safeguarding cash flow, encouraging artificial intelligence adoption and making financing easier to access. The ministry is considering legislative, regulatory or policy changes.

Sim also said government-linked companies and government-linked investment companies had been directed to invest as much as RM25 billion a year in developing domestic supply chains. Part of that money should go into building industries within Malaysia, he said.

Those companies should support smaller businesses without displacing them from the market, Sim added.

According to Sim, MSMEs account for about 96 per cent of Malaysian business establishments, yet contribute less than 40 per cent of gross domestic product. The government wants their GDP contribution to reach at least 40 per cent.