ADVOKASI Perusahaan dan Industri (API) has red-flagged the growing number of businesses across Malaysia that being illegally operated by foreign nationals – a problem now visible on streets and shophouses in every major city.
Worse still, many of these foreign nationals are not just running unlicensed businesses but are also involved in illicit trade, including the sale and distribution of illegal cigarettes and alcohol.
The pattern is clear with some foreign nationals are entering the country on social visit or tourist passes setting up businesses and in many cases using these operations as a front to distribute contraband, particularly illicit cigarettes and alcohol.
“Foreign nationals are taking advantage of loopholes in the system,” asserted API’s managing director Datuk Fazli Nordin.
“They set up shop, they operate openly and before long, they are involved in illicit trade because they either do not know the consequences or do not care. This has become a nationwide problem and it’s getting worse.”
According to API, the law enforcement agencies are well aware of the problem and are now cracking down aggressively. In April alone, a series of enforcement operations has sent a clear signal that foreign nationals involved in illegal businesses and contraband trade are firmly on the radar:
Crackdown
On April 8, 133 foreign nationals were detained in raids in Balakong and Shah Alam, including 65 Bangladeshi nationals. Smuggled cigarettes and alcohol were seized during the operation.
The next day, the Immigration Department detained 69 foreign nationals in Jalan Imbi, Kuala Lumpur, most of whom were found to be misusing social visit passes. Several individuals attempted to flee across rooftops but were apprehended.
In addition, the Kuala Lumpur City Hall (DBKL) has ramped up enforcement against illegal foreign traders operating in Seputeh, Pudu and Selayang by issuing compound notices and seizing goods from unlicensed operators.
The enforcement momentum was reinforced by Home Minister Datuk Seri Saifuddin Nasution Ismail who warned that foreigners on social, tourist or visitor passes who engage in business activities will face action.
“The Home Minister has drawn a clear line. The message from enforcement agencies is clear,” observed Fazli. “They’re watching, they know where they’re and they’re acting. Foreign nationals who think they can operate under the radar should think again.”
Nevertheless, API acknowledged that the overwhelming majority of foreign nationals in Malaysia are here lawfully and have contributed productively to the economy.
‘More rampant enforcement needed’
As such, the association’s concern is directed specifically at those recruited – often under false pretences – or are actively involved in the illicit cigarette distribution networks.
Applauding the recent enforcement momentum, Fazli cautioned that sporadic operations alone will not solve the problem.
“Every operation follows the same pattern. A raid happens, arrests are made, product is seized and within weeks, the network is back,” he lamented.
“Different faces, same locations, same product. We urge enforcement agencies to maintain this as a sustained, regular posture – not a one-off exercise. We also see a trend where illicit cigarettes are increasingly sold openly in these outlets.”
Malaysia’s illicit cigarette market remains one of the largest in the world with illicit products accounting for 54.4% of total cigarette consumption nationwide in 2025 and costing the government billions in lost tax revenue annually, according to the latest NielsenIQ data.
API also called on Malaysians not to patronise, protect or provide employment to foreign nationals operating illegally while urging the public to report information on illegal foreign-run businesses and illicit trade activities to the relevant enforcement agencies.
API reiterated its commitment to supporting enforcement efforts and advocating for harsher penalties against repeat offenders, organised syndicates and those who exploit foreign nationals to sustain illicit retail operations.
“This isn’t going away. And neither are we,” added Fazli. – Focus Malaysia
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