Government reviewing rules on foreign F&B chains amid fears for local SMEs

The government is taking another look at its rules governing foreign food and beverage (F&B) brands, amid growing concern that the aggressive expansion of international chains could squeeze out local businesses.

According to Free Malaysia Today, deputy domestic trade and cost of living minister Fuziah Salleh said the review comes after questions were raised in Parliament over the rapid growth of brands such as Mixue, Chagee and Auntea Jenny, and whether their presence threatens the survival of local small and medium-sized enterprises (SMEs).

Speaking in the Dewan Rakyat, Fuziah said her ministry is trying to strike a careful balance between upholding free market principles, ensuring fair competition and protecting consumers while making sure local industries are not left behind.

“The challenge is ensuring that competition remains fair and local industries are protected in a free market economy,” she said.

She was responding to Ampang MP Rodziah Ismail, who asked what steps the ministry had taken, and planned to take, to curb the expansion of foreign F&B chains, as well as e-commerce platforms that undercut local businesses by offering extremely low prices.

Fuziah noted that the current guidelines are due for a review, especially given the rapid growth of the F&B sector since 2024 and the fact that existing rules were drafted more than 20 years ago.

As an example, she pointed to Mixue’s entry into Malaysia in 2024, saying the brand had since grown to around 500 outlets nationwide. She added that the ministry had already stepped in last year to limit further expansion.

“We did not allow them to freely add outlets. It is not that easy,” she said.

Fuziah also highlighted that specialty store guidelines introduced in 2020 require foreign operators to be incorporated in Malaysia, have a minimum paid-up capital of RM1 million, and conduct an impact assessment if their outlet space exceeds 5,000 square metres.

On the e-commerce front, she said the ministry is finalising new legislation to amend or replace the Electronic Commerce Act 2006, with plans to table it in Parliament later this year.

Malaysians are concerned the government’s meddling will impact foreign investment

Malaysians took to social media to express their dissatisfaction towards the F&B guidelines, stating that the government’s meddling in foreign food outlets may turn away foreign investors from the country.

Some also felt that by setting stricter rules that are biased towards local small businesses might make them more complacent without any competition, thus hindering any sort of improvement or advancement.