Kuala Lumpur: The announcement of a ’90-day visa-free policy’ by China has led to significant market turbulence and public debate in Malaysia. Concerns have been raised about the potential influx of foreigners and the survival of local small and medium enterprises (SMEs).
According to BERNAMA News Agency, the mutual visa exemption agreement adheres to international standards, allowing a single stay of 30 days with a cumulative total not exceeding 90 days within 180 days. This is a reciprocal arrangement, and the policy has been misinterpreted as allowing a single stay of 90 days, which is not its intent. The real issue lies in whether Malaysia’s policy pace and institutional support are aligned to fully embrace the increasing openness in the economic landscape.
The Department of Statistics Malaysia’s ‘2023 SME Annual Report’ indicates that SMEs contribute 38.2 per cent to the GDP, yet their digitalisation rate lags at 25 per cent, compared to 68 per cent in China. This discrepancy highlights the technological and efficiency gap that is fueling local business anxieties. Many local businesses are not only resisting external competition but also the pace of institutional transformation, such as the upcoming implementation of electronic invoicing.
Chinese investments in Malaysia remain primarily within the manufacturing sector, with services accounting for less than 10 per cent. This suggests that fears of foreign domination in everyday life sectors are largely unfounded. The focus should be on ensuring that openness is orderly and regulated, with industry segmentation and foreign joint ventures encouraged to foster SME digital transformation.
The government is urged to intensify guidance and support for SMEs while clearly communicating the urgency of adapting to free-market competition. Ensuring a level playing field through mechanisms like a ‘National Cooperation Certification Mechanism’ and enforcing business licensing and tax regulations will help sustain market order and protect local business interests.
Ultimately, the preparedness of Malaysia to embrace both internal and external changes will determine its success in navigating the challenges of an open market. The collective effort towards shared prosperity will require setting rules, enforcing standards, and managing risks effectively.