While the ambition to boost local production is understandable, setting sales targets for local products risks distorting the market and harming consumers. Forced quotas can lead to higher prices, lower quality, and reduced choice—all of which hit household budgets. If retailers are required to stock a certain percentage of local goods, they may have to pass on higher costs to shoppers, especially if local alternatives are not cost-competitive.
There's also a risk of retaliation from trade partners. Malaysia has benefited from open trade and integrated supply chains. Imposing local-purchase preferences could invite similar measures from other countries, hurting Malaysian exporters. In a world where protectionism is rising, this move might backfire.
Small businesses themselves could suffer. Meeting targets may require them to divert resources from innovation to compliance. Bureaucrats, not market signals, will decide which products get promoted. That's a recipe for inefficiency and, in worst cases, cronyism. We've seen similar programs in the past lead to rent-seeking rather than genuine industrial upgrading.
Finally, consumers may end up subsidising uncompetitive industries. Without real competition, there is little incentive for local firms to improve productivity or cut costs. The committee should instead focus on improving the business environment—reducing red tape, upgrading skills, and encouraging R&D—rather than picking winners through sales quotas.