27/01/2026

TUESDAY | JAN 27, 2026

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F&B operators facing pressure from foreign brands

Consumers weigh in PETALING JAYA: As the government reviews guidelines on foreign participation in the F&B sector, Malaysians are divided, reflecting the delicate balance between protecting local businesses and ensuring consumer choice. Some consumers expressed frustration with both foreign and local operators. “On one hand, I really dislike cheap, foreign ice cream brands that serve sugar-laden treats, which feel like a health hazard every time people consume them. “On the other hand, I also get annoyed at local brands or SME that price their menus based on ‘vibes’ rather than value, making some products up to three times more expensive. It feels like neither side is playing fair,” said university student Muhammad Johan Arifin. Others highlighted the importance of healthy competition. Damien (not his real name) said if foreign brands could offer low prices, local brands should be able to do the same. For him, the key lies in improving business efficiency rather than relying solely on regulatory protection. Noorain Mohd Nor shared a similar view, emphasising that both competition and regulation have roles to play. “This is a free market. If your food and drinks aren’t competitive, then step aside. “Consumers shouldn’t have to pay more just because some businesses can’t perform. “At the same time, government rules should help level the playing field where structural disadvantages exist, so local shops could survive and thrive alongside larger competitors.” She also pointed out why foreign brands often gain an advantage. “They win because of price, which is often cheaper than local alternatives, and service, which is fast and convenient,” she said, adding that the government should monitor not only foreign operators but also how local businesses price their offerings. “If the government is serious about fair competition, it should ensure local businesses aren’t overcharging or limiting options for consumers.” Offering a more optimistic perspective, Farah (not her real name), a small-business owner, said competition from foreign brands has encouraged her to innovate. “I’ve started offering delivery and digital ordering for the first time, and customers seem to appreciate the convenience. “If the guidelines could help us compete fairly, it could be a real boost for local businesses.” Public reactions reveal a nuanced reality: While many Malaysians support efforts to safeguard local SME, they also value affordability, quality and convenience. – By Harith Kamal

o Main risk comes from imbalance in market power, says academic

Ű BY HARITH KAMAL newsdesk@thesundaily.com

PETALING JAYA: Local food and beverage (F&B) operators are facing growing pressure from foreign brands, which experts warn could push Malaysian small and medium-sized enterprises (SME) out of the market if stricter competition safeguards are not enforced. From predatory pricing to loopholes in existing regulations, the rapid expansion of international F&B chains is raising alarm bells across the industry. Economists and SME leaders say the challenge is not the presence of foreign brands but how their dominance could undermine domestic entrepreneurship and consumer choice in the long term. Universiti Teknologi Mara senior lecturer in economics Dr Mohamad Idham Md Razak said foreign operators bring competition, investment and consumer choice, which are generally positive for efficiency and innovation. “But if growth becomes concentrated among foreign players while local SME struggle to survive, this could weaken domestic value creation, reduce local entrepreneurship and make the ecosystem less resilient.” He emphasised that the main risk is not the presence of foreign players but an imbalance in market power. On whether stricter guidelines are warranted, he said well-calibrated rules on pricing behaviour, franchising practices and market entry could correct distortions without signalling protectionism. “Stricter guidelines are justified if they are designed to ensure fair competition rather than exclude foreign players.” He added that predatory pricing by large operators could pose long-term risks. “In the short term, consumers may benefit from lower prices, but over time such practices could push local competitors out of the market, reduce choice and eventually allow dominant players to raise prices. “This undermines a healthy trade ecosystem and weakens domestic industry.”

Mohamad Idham said well-calibrated rules on pricing behaviour, franchising practices and market entry could correct distortions without signalling protectionism. – BERNAMAPIC

while maintaining a competitive market. SME Association of Malaysia president Dr Chin Chee Seong said the review is timely. “It isn’t just about identifying loopholes; it’s about revisiting the definitions and terms used in the 2020 guidelines. “Right now (in the review), the wording is problematic. It uses phrases such as ‘you are expected’ or ‘you are required,’ but there is no ‘must.’ “In other words, foreign companies aren’t strictly obliged to follow the requirements.” He explained that some foreign outlets could bypass rules designed to protect SME. “One of the rules says if an F&B outlet exceeds 5,000 sq ft, an impact study is required to show it won’t negatively affect local SME. “Many outlets open small stores below the threshold, so they bypass the impact study. Once operational, some engage in predatory pricing, (which is) lowering prices to undercut local businesses.” He added that technology gives foreign operators an advantage. “Many leverage IT and digital platforms; online ordering, delivery apps and so on. “Local SME often lack the resources to build such platforms, which puts them at a disadvantage.”

To maintain fair competition while supporting SME viability, Malaysia must strengthen enforcement of competition laws while helping SME improve competitiveness. “Policies that support SME scaling, integration into supply chains and participation in e-commerce on fair terms would allow local firms to compete on quality and innovation rather than price alone.” He also suggested that Malaysia could learn from countries such as South Korea, Japan and countries in the European Union, which combine strong competition law enforcement with targeted SME support. Last week, the government announced that it is reviewing its guidelines on foreign F&B brands, following concerns raised by an MP that the expansion of foreign chains could threaten the survival of local SME. Domestic Trade and Cost of Living Deputy Minister Datuk Dr Fuziah Salleh said the review would focus on the 2020 Guidelines on Foreign Participation in the Distributive Trade Services, which the ministry has identified as outdated and containing loopholes. Among the issues under review is the minimum outlet size required for specialised F&B outlets before approval is granted, part of the ministry’s effort to protect domestic SME

Local SME vulnerable to market concentration, displacement: Fomca PETALING JAYA: The surge of foreign F&B brands is raising concerns over market concentration and the gradual displacement of local operators, the Federation of Malaysian Consumer Associations (Fomca) has warned. Its CEO Saravanan Thambirajah said micro and small local F&B businesses are particularly vulnerable, operating on thin margins with limited access to capital. cultural identity and local supply chains.” While consumers may initially enjoy low prices, heavy discounts and frequent promotions, Saravanan cautioned that such short-term benefits could be misleading. “When prices are kept artificially low through subsidies or cross-financing, they do not reflect real market costs. different market environment and do not adequately address platform-based pricing strategies, algorithm-driven promotions or sustained below-cost selling. “What is missing is stronger regulatory coverage for e-commerce, clearer obligations on platforms, and more effective monitoring and penalties.” must coordinate to avoid regulatory gaps. “Rules without meaningful penalties will not change market behaviour. Enforcement must be robust and deterrent enough to ensure compliance.” Saravanan said a balanced approach benefits both consumers and local businesses.

“Consumers benefit most when competition is fair and sustainable. Protecting local SME helps maintain diverse offerings, preserves local jobs and strengthens the domestic economy, all of which ultimately support consumer welfare.” He emphasised that the aim is not to limit choice, but to ensure it remains meaningful. “Fair regulation of foreign brands ensures better transparency, clearer accountability and stronger consumer protection, particularly in online transactions. “When competition is balanced, consumers enjoy variety, innovation and reasonable prices without sacrificing long-term choice or market stability.” – By Harith Kamal

Fomca has proposed measures for upcoming legislative amendments or new laws to fill the gaps. “We want legislation focused on fairness and transparency, not protectionism. “This includes clear rules against sustained predatory pricing, stronger accountability for e commerce platforms and mandatory local representation for foreign brands so consumers and regulators have a responsible party to engage with.” He also urged greater transparency from foreign brands on pricing, promotions and seller identity, adding that enforcement agencies

“If local competitors are forced out, consumers may eventually face fewer choices, reduced innovation and higher prices once competition diminishes.” He also highlighted challenges in online transactions with foreign sellers. “Consumers face unclear promotional terms, misleading ‘limited-time’ offers and a lack of transparency over who is responsible when disputes arise, particularly on digital platforms.” Saravanan said the 2020 guidelines on foreign participation in distributive trade services are no longer adequate to protect SME. “The guidelines were developed in a very

“Many foreign brands, especially those backed by large corporations or venture capital, could enter the market aggressively, securing prime locations, expanding outlets rapidly and absorbing losses over extended periods. “These structural advantages mean local SME cannot compete on equal terms, not due to weaker products or services, but because of higher rental costs, smaller marketing budgets and lack of scale. “Over time, this leads to market concentration and the gradual displacement of local brands, which are vital for employment,