PETALING JAYA: Malaysia may need to take drastic measures to reduce its dependence on foreign imports and protect domestic manufacturers, Investment, Trade and Industry Minister Datuk Seri Johari Abdul Ghani said yesterday, after the country recorded a RM146 billion trade deficit with China last year.
He said growing reliance on cheaper imported goods had contributed to the closure of local factories, raising concerns that Malaysia could become increasingly dependent on foreign suppliers and eventually face higher prices.
Johari said the ministry was examining products contributing to Malaysia’s trade deficit with China to determine whether local manufacturers could resume producing goods that were increasingly being sourced from overseas.
“We want to analyse all the products that have caused such a large trade deficit with China.
“We will examine whether our local companies previously manufactured these products, why they can no longer produce them and why some have closed down,” he told the Dewan Rakyat during question time.
He warned that allowing cheaper imports to replace locally manufactured goods could undermine domestic industries and weaken Malaysia’s long-term economic resilience.
“In the long run, when local companies that previously manufactured these products shut down their factories, even the products we once imported cheaply will eventually become expensive,” he said.
Johari acknowledged that some local companies disagreed with the government’s approach but stressed that stronger intervention was necessary to safeguard the country’s economic interests.
“Although they may disagree, for the long-term benefit of the country, we must take very drastic action to ensure that we can protect our economy without depending on countries that could adversely affect our economy as a whole.”
He highlighted Malaysia’s contrasting trade relationships with the world’s two largest economies, noting that the country recorded a RM100 billion trade surplus with the United States in 2025 but a RM146 billion deficit with China.
Johari said growing trade tensions between Washington and Beijing, including restrictions imposed by both countries, had made it increasingly important for Malaysia to strengthen its domestic industrial capabilities.
He said Malaysia’s electrical and electronics (E&E) sector remained a major contributor to exports, generating RM712 billion in 2025 against approximately RM567 billion in imports, resulting in a RM145 billion trade surplus.
However, he stressed that Malaysia must move beyond relying on imported raw materials and semi-finished products by encouraging domestic companies, particularly small and medium enterprises, to participate more actively in manufacturing supply chains.
“We can no longer simply allow imports because they are the easier option,” he said.
Johari added that the government would continue strengthening local industries under the New Industrial Master Plan 2030, while expanding into higher-value activities such as integrated circuit design and advanced semiconductor packaging to reduce external dependence.