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THE Malaysian government has been urged to set up a special relief fund to support small and medium enterprises (SMEs) adversely affected by the escalating global tariff war, which is expected to severely impact the local economy by mid-2026.
Speaking during the debate on the Supply Bill (Budget) 2026 in the Dewan Rakyat today, Bagan MP Lim Guan Eng warned that SMEs could face collapse without immediate government intervention to shield them from external economic volatility.
“The full effects of the tariff war are likely to be felt by mid-2026, and without protective measures, many SMEs risk shutting down,” he said.
Lim identified three major challenges pressuring the domestic market: heightened US tariffs, the emergence of a dual-speed global economy, and the influx of foreign goods. These factors, he stressed, are threatening local job opportunities and undermining the competitiveness of Malaysian SMEs.
He emphasised the sector’s critical role in the economy, contributing 38 per cent to GDP, accounting for 48 per cent of employment, and nearly 13 per cent of national exports.
In addition to financial aid, Lim proposed a new procurement requirement mandating that foreign investors and contractors source at least 50 per cent of their supplies from local producers, to help safeguard the domestic market.
“Indonesia, for instance, requires foreign firms to purchase 70 per cent of their goods locally. We are merely suggesting 50 per cent,” he noted.
Lim also pressed the government to act decisively against the dumping of foreign goods, warning that it poses a serious threat to homegrown industries.
“The government must enforce bans or impose anti-dumping duties to protect local manufacturers,” he said. - October 16, 2025
