KUALA LUMPUR (Jan 22): Malaysia is considering stricter regulations on foreign involvement in the local food and beverage (F&B) industry, to safeguard the survival of domestic micro, small and medium enterprises (MSMEs) amid a rapid expansion of foreign brands.

Among the measures under review is lowering the business floor area threshold that would trigger mandatory impact assessments, Deputy Minister of Domestic Trade and Cost of Living Datuk Dr Fuziah Salleh said.

F&B services fall under the “specialty store” category within the distributive trade sector, which is governed by the Guidelines on Foreign Participation in the Distributive Trade Services 2020.

Currently, specialty store operators are required to conduct an impact assessment on existing local retailers only if the outlet operates in a stand-alone building or has a business floor area of at least 5,000 square metres.

Other requirements for foreign participation include local incorporation under the Companies Act 2016 and a minimum paid-up capital of RM1 million for each specialty outlet.

“We acknowledge that there are gaps in the current enforcement of the guidelines, as they were drafted in 2020. The ministry is in the midst of reviewing the guidelines and will introduce several enhancements,” Fuziah told the Dewan Rakyat on Thursday during the oral question-and-answer session.

She was responding to a question from Ampang MP Rodziah Ismail on government measures to curb the aggressive expansion of foreign F&B brands such as Mixue, Chagee and Auntea Jenny, as well as price-fixing practices on e-commerce platforms that could threaten the survival of local MSMEs.

Citing Mixue as an example, Fuziah said the Chinese beverage chain applied to enter the Malaysian market in 2024 with a one-off application covering 547 outlets.

She noted that Mixue outlets are typically less than 1,000 square metres in size and therefore not subject to impact assessment requirements under the existing guidelines.

“Based on the 2020 guidelines, the application was approved,” she said, adding that the ministry has imposed tighter controls on approvals for new outlets and branch expansions starting in 2025.

Separately, Fuziah said the ministry plans to table a bill at the next parliamentary sitting to address rising consumer complaints and to foster a more sustainable and conducive e-commerce ecosystem.

She said the ministry is currently weighing whether to introduce new legislation or amend the Electronic Commerce Act 2006.

“There are quite a number of amendments that we need to undertake to ensure a fairer ecosystem — not only for businesses and consumers, but also for affiliates, as the ecosystem involves many elements. The legislation will address all relevant aspects,” she said.

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