KUALA LUMPUR: The federal government should introduce a comprehensive policy framework to address the rapid growth of cross-border e-commerce platforms, which are placing increasing pressure on Malaysia's small and medium enterprises (SMEs) and retail sector, Senator Datuk Phoong Jin Zhe said today.
Raising the issue in the Dewan Negara, the Sabah DAP chairman said aggressive low-price strategies adopted by overseas platforms, particularly China's factory-to-consumer (C2M) model, were creating an uneven playing field for local businesses.
While consumers may benefit from lower prices in the short term, Phoong said the long-term impact on Malaysia's economic ecosystem deserved closer scrutiny.
He said some cross-border platforms relied on substantial capital subsidies and potentially predatory pricing to gain market share, affecting not only local retailers but also government revenue, commercial property demand, domestic logistics networks and employment.
"If left unchecked, these practices could gradually weaken Malaysia's established business ecosystem," he said.
Phoong noted that governments in jurisdictions including the United States, Europe and Indonesia had begun studying or introducing regulatory measures to address market distortions arising from cross-border e-commerce while protecting domestic industries.
He said the impact was already being felt by Malaysia's micro, small and medium enterprises, as well as neighbourhood retailers nationwide.
"As an example, a pair of earphones can now be shipped directly from a factory in China to a Malaysian consumer's doorstep for just RM2.63 with free delivery. At such prices, it is virtually impossible for local businesses to compete," he said.
Phoong said local retailers must absorb rental costs, employee salaries, Employees Provident Fund (EPF) contributions, import charges and other operating expenses while complying with local tax obligations.
"In contrast, large cross-border platforms operate under a fundamentally different cost structure, resulting in competition that is far from equal.
"If this imbalance continues without appropriate policy intervention, many local businesses will find it increasingly difficult to survive," he added.
He said chambers of commerce and business associations had also raised concerns over mounting operational challenges faced by SMEs and retailers, calling for proactive government intervention.
Phoong urged the Finance Ministry and the Domestic Trade and Cost of Living Ministry to conduct a comprehensive study, drawing on international best practices to formulate policies suited to Malaysia's economic landscape.
Among the measures he proposed were strengthening regulations governing cross-border e-commerce to ensure overseas direct-to-consumer sales do not undermine local distribution channels, reviewing the Low Value Goods Tax (LVGT) and import threshold policies to reduce tax disparities, and updating Malaysia's competition laws to address predatory pricing and other anti-competitive practices.
He stressed that his proposal was not aimed at limiting consumers' access to affordable goods or restricting healthy market competition.
"Competition benefits consumers, but it must be fair and sustainable.
"If our local retail ecosystem and SMEs continue to face unfair competitive pressures, widespread business closures could eventually reduce employment opportunities, weaken the country's tax base, disrupt domestic supply chains and erode Malaysia's economic resilience," he said.
Phoong said the government should strike a balance between consumer welfare and industrial development by ensuring local businesses were given a fair opportunity to compete while supporting the continued growth of the digital economy and cross-border trade.
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