Donal Crotty, who heads the Irish Chamber of Commerce Malaysia, described as impractical a suggestion that foreign companies be required to source 50% of essential goods from local suppliers.

He said such a policy would disrupt global supply chains and reduce Malaysia’s appeal as an investment destination.

“Forcing companies to source locally makes business more difficult and creates inefficiencies, which could prompt firms to look for other countries with a more business-friendly environment,” he told FMT.

Crotty was commenting on a recent suggestion by former finance minister Lim Guan Eng to impose a 50% local purchase rule on foreign companies.

Lim said Indonesia required foreign firms to source 70% of their materials locally. However, Crotty disputed Lim’s claim.

He said Indonesia’s local content rule varied by sector, and ranged from 0% to 80%, with a 80% rule for retail stores, including food and beverage, while the smartphone and electric vehicle industries have a 40% requirement.

“A better way forward is identifying the needs of foreign companies and then providing incentives to encourage them to source from local suppliers,” Crotty said.

Malaysian International Chamber of Commerce and Industry general manager Harpreet Kaur said companies already give priority to local content whenever possible.

“Businesses always seek the best local suppliers, factoring in the supply chain and quality standards, before turning to foreign sources,” she said.

Carmelo Ferlito of the Center for Market Education said firms purchase goods where they are available. “What happens if they are forced to buy from sources that don’t have what they need?” he said.