Kuala lumpur: Subsidy rationalisation can help safeguard the profit margins of micro, small and medium enterprises (MSMEs) and preserve Malaysia's competitiveness if implemented gradually, in a targeted manner and accompanied by comprehensive support measures.
According to BERNAMA News Agency, the Ministry of Investment, Trade and Industry (MITI) stated that the resulting fiscal savings should be channelled transparently and strategically towards the automation of MSMEs, while strengthening electric vehicle (EV) infrastructure and the development of green energy. The ministry emphasized that these funds should also be utilized to enhance local talent and accelerate the transformation towards high-value-added industries.
"This approach will ensure Malaysia remains competitive within ASEAN and continues to be a preferred investment destination amid an increasingly challenging global economic transition," MITI said in a written reply published on the Parliament website today. The ministry's response was prompted by a question from Datuk Dr Nik Muhammad Zawawi Salleh regarding the potential impact of subsidy rationalisation on MSME profit margins and Malaysia's competitive stance in attracting investments, particularly in the context of EV manufacturing relocation, exports, and the China+1 strategy within ASEAN.
MITI further explained that under the China+1 strategy, investors can leverage regional economic networks and supply chains already established by Malaysian companies across the Asia-Pacific, eliminating the need to build new business relationships and supplier networks from scratch. The existing ecosystem supports the establishment or expansion of operations, improves supply chain efficiency, and enhances Malaysia's investment competitiveness, while expediting operational integration, expanding access to regional and global markets, and reducing the time and cost of implementing investments.
"Therefore, subsidy rationalisation is not expected to have a significant impact on the China+1 strategy, as the strength of the existing supply chain ecosystem plays a far more significant role in influencing investors," MITI asserted.