The unprecedented pace of globalisation, trade liberalisation, and capital movement in the later years
profoundly changed to pose serious challenges for Malaysian companies to compete in an open market. In
today’s highly competitive market, the demand for quality is important factor for companies to survive in
the ever-expanding global marketplace. The concept of Total Quality Management (TQM) has been
developed as a result of intense global competition. ASEAN trade liberalisation through the elimination
of intraregional tariffs contributed to improving manufacturing in ASEAN countries to be more efficient
and competitive in world markets. However, Asean Free Trade Agreement (AFTA) is a good news for
foreign companies as they have competitive advantages, but not for local companies. The examining of
AFTA as a moderator is less done in previous work. The purpose of this paper is to propose relationship
between TQM practices and business performance with moderator effects of AFTA. The main
contribution of this paper is to examine whether AFTA has the effect as a moderator. This proposed
conceptual model will help the academicians and industry players to have better understanding on the
effect of AFTA in TQM implementation in improving their business performance. The structural equation
modeling (SEM) techniques are used to examine the relationships of the practices