Business associations in Kelantan are sounding an alarm over a worrying trend in which foreign nationals are leveraging marriages to Malaysian women and formal business partnerships to establish and operate commercial ventures while sidestepping regulatory requirements. The Kelantan Malay Malaysian Chamber of Commerce (DPMMNK) has brought the matter into sharp focus, citing multiple complaints from members who contend they are battling unfair market conditions created by these arrangements.
Wan Zulkifli Wan Abdullah, president of DPMMNK, outlined the mechanics of the scheme during recent remarks to Bernama. According to his account, foreign operators are registering businesses formally under the names of their local spouses or business partners, effectively concealing foreign ownership and circumventing licensing, taxation, and compliance obligations that would normally apply. The practice has become particularly entrenched in the retail sector and food and beverage industry, where established local operators say they face pressure from competitors operating without bearing the same regulatory burdens.
The complaints lodged with DPMMNK paint a picture of systemic regulatory evasion. Foreign nationals are allegedly securing business licences and conducting commercial operations under Malaysian names without adhering to the standard licensing and taxation frameworks that apply to legitimate local businesses. This creates a cost advantage for the foreign-backed ventures and an uneven playing field for genuine local entrepreneurs who cannot reduce their compliance burden in the same manner. The practice, while potentially beneficial to consumers through lower prices, fundamentally undermines the integrity of business licensing systems designed to protect consumers and ensure fair market competition.
Local authorities in the region have begun documenting the scale of the problem. The Ketereh Islamic Municipal District Council (MDKPI), which oversees enforcement in the Ketereh area, detected 21 cases of visa and visit pass misuse tied to unauthorised business activities over a three-year period. Between January and May of this year alone, MDKPI conducted three separate enforcement sweeps, issued 21 compounds to violators, and ordered the closure of three premises found to be breaching business regulations. These figures suggest the issue is not merely anecdotal but represents an identifiable enforcement challenge.
The sectors most commonly implicated in these violations span a broad swath of the local economy. Retail operations, hawker stalls, food and beverage outlets, construction work, and even alms-collection activities in public spaces have all been identified as venues where foreign nationals are operating in violation of their visa conditions. This diversity of sectors indicates the practice is not confined to a single industry but reflects a broader attempt by foreign workers and entrepreneurs to circumvent immigration and business regulations across multiple economic spheres.
Local authorities have taken a hard line not only against the foreign operators but also against Malaysian citizens who facilitate these arrangements. Mohd Azman Ghazali, secretary of MDKPI, emphasised that the council views involvement by local individuals—whether as nominal licence holders, spouses, or business partners—as a serious breach warranting enforcement action. This signals that authorities intend to prosecute the full chain of complicity, recognising that such schemes cannot function without the active participation or acquiescence of Malaysian citizens.
The personal liability exposure for Malaysians who lend their names or licences to such arrangements is substantial and often underestimated. Wan Zulkifli has publicly cautioned citizens against allowing their identities or business authorisations to be used by others, warning that doing so exposes them to financial penalties through compounds, personal tax obligations for business income, and potential criminal prosecution if regulatory conditions are violated. A Malaysian whose name appears on a business licence remains the legal holder of that licence and bears ultimate responsibility for its conduct, regardless of who actually operates the business.
The regulatory landscape governing business operations in Malaysia is designed to ensure compliance with multiple state and federal requirements. Foreign nationals operating businesses must secure appropriate visas, obtain business permits, comply with taxation rules, and adhere to sector-specific regulations. By operating under Malaysian names, foreign operators obscure their nationality and eligibility, making enforcement more difficult and creating the false appearance of local ownership. This obfuscation strikes at the heart of regulatory systems intended to protect local businesses and ensure a transparent market.
Wan Zulkifli has called on the government to elevate its monitoring and enforcement efforts while strengthening coordination between different regulatory agencies and the business community itself. The current approach, reliant on ad-hoc enforcement operations and reactive complaints, appears insufficient to address what may be a widespread practice. A more systematic approach involving information-sharing between municipal authorities, tax agencies, immigration officials, and business chambers could improve detection and deterrence. Engaging the legitimate business community as partners in enforcement may also prove valuable, as established operators have direct knowledge of market conditions and can identify suspicious arrangements.
The issue gained national attention when Prime Minister Datuk Seri Anwar Ibrahim recently addressed the broader question of refugee compliance with Malaysian law. While acknowledging Malaysia's humanitarian stance toward refugees including Rohingya populations, the Prime Minister emphasised that all residents remain bound by Malaysian legal frameworks governing business operations and premises usage. His remarks underscored that humanitarian considerations do not exempt any group from regulatory compliance, a message with implications extending beyond refugee populations to all foreign nationals operating in Malaysia.
The emergence of this issue in Kelantan reflects broader tensions between Malaysia's openness to foreign labour and entrepreneurship on one hand and the need to maintain regulatory order and protect local business interests on the other. Southeast Asian economies generally benefit from cross-border business activity and foreign investment, but uncontrolled circumvention of regulatory frameworks creates distortions that ultimately harm both legitimate domestic competitors and the credibility of government institutions. Addressing the practice will require sustained enforcement, clear communication of liabilities to Malaysian citizens, and possibly legislative refinement to close regulatory loopholes that enable these schemes to flourish.
