MALAYSIA’S domestic market is facing an increasingly pronounced influx of foreign products, especially from China, driven by the rapid expansion of online purchasing channels that are difficult to regulate, academics and policymakers say.
Professor Emeritus Barjoyai Bardai of the Graduate School of Business at Universiti Tun Abdul Razak (UNIRAZAK) said Malaysia’s status as an upper-middle-income country has made it a prime target for foreign exporters, triggering growing concern over the sustainability of local traders and manufacturers, particularly micro, small and medium enterprises (MSMEs).
He said the issue has become more serious following confirmation from the Ministry of Domestic Trade and Cost of Living (KPDN) that the scale of foreign product dumping in the local market is now at a worrying level.
“From the consumer’s perspective, the short-term impact appears relieving. Official data show inflation in 2025 remains moderate at around 1.3 to 1.6 per cent, with some consumer goods recording lower prices due to heightened competition and excess import supply.
“This situation helps to reduce cost-of-living pressures, particularly for low- and middle-income households,” he said.
However, Barjoyai cautioned that the medium- and long-term consequences could be far less benign.
“Prolonged dumping risks squeezing local producers to the point of undermining jobs and household incomes,” he said.
On Sunday, KPDN described the influx of foreign products being sold domestically as having reached an alarming stage.
In response, its minister, Datuk Armizan Mohd Ali, said the matter is being examined by a special committee comprising the Ministry of Investment, Trade and Industry (MITI), the Ministry of Entrepreneur and Cooperative Development (KUSKOP), the Ministry of Housing and Local Government (KPKT), the Ministry of Home Affairs (KDN) and KPDN.
Barjoyai warned that if domestic production capacity continues to shrink, Malaysia risks becoming overly dependent on imports, leaving the country vulnerable to sharp price increases in the future once local competition disappears.
“Early warning signs are already visible, as national imports grew faster than exports in 2024, followed by a narrowing of the trade surplus over several months in 2025,” he said.
“This reflects the strong penetration of foreign goods into the domestic market and poses pressure on local supply chains if not addressed immediately.”
Meanwhile, Dr Mohamad Idham Haji Md Razak, Senior Lecturer at the Department of Economics and Finance, Faculty of Business and Management at Universiti Teknologi MARA (UiTM), said the influx of foreign products has a significant and inherently dual impact on Malaysia’s economy.
“On the positive side, the entry of foreign products raises competition in the domestic market, which in turn benefits consumers through more competitive prices, wider choices and improved product quality,” he said.
“In the short term, this phenomenon helps to curb cost-of-living inflation, particularly for daily consumer goods. Exposure to foreign products also forces local firms to innovate, improve production efficiency and adopt new technologies in order to remain relevant in an increasingly open global market.”
He added that within the broader context of international trade integration, the presence of foreign goods also reflects Malaysia’s economic openness, supporting cross-border trade and investment flows.
However, Dr Mohamad Idham stressed that from a medium- to long-term structural perspective, an uncontrolled influx of foreign products could have damaging consequences.
“Local industries, especially small and medium enterprises, face intense pressure due to their inability to compete with the production scale, subsidies or cost advantages enjoyed by exporting countries,” he said.
“This situation has the potential to weaken domestic production capacity, increase reliance on imports and adversely affect the country’s trade balance.
“More worrying still, if strategic domestic sectors are eroded, it could have implications for employment opportunities, local technological development and the overall resilience of the national economy.” - February 9, 2026
