Malaysian manufacturers brace for immediate supply chain disruptions Survey reveals alarming outlook

A survey by the Federation of Malaysian Manufacturers (FMM) found that 90% of over 200 respondents expect supply chain disruptions within the next two weeks due to the ongoing conflict in the Middle East, The Star reports.

FMM President Jacob Lee Chor Kok warned that some key manufacturing materials could become scarce or entirely unavailable, with prices rising sharply. He identified three main areas affected by the conflict: logistical disruptions, rising energy and fuel costs, and shortages of raw materials.

“On logistical disruptions, companies need to reroute shipments at much higher freight costs, while also paying premium insurance and higher port storage charges. The other issue affecting every rakyat is the increase in energy and fuel costs. As such, FMM is appealing to the government to consider extending the diesel subsidy to the sector. Thirdly, there are material disruptions, especially in petrochemical derivative products such as polyvinyl chloride, polypropylene, polyethylene and other plastic resins,” Lee said.

He stressed that most Malaysian manufacturers operate in traditional, low-margin sectors, making them particularly vulnerable to rising costs, which poses a serious threat to business sustainability.

FMM hopes the government will take measures to mitigate cost increases so companies do not pass them on to consumers, which could further fuel inflation.

Lee highlighted the industrial sector’s key role in Malaysia’s economy, noting that it accounts for about 23% of GDP, provides employment for 2.3 million people, and generates 86% of the country’s exports, with 44% coming from electronics and high-tech manufacturing.

The Purchasing Managers’ Index (PMI) indicates that the sector is recovering but remains unstable: it rose to 50.2 in January before dropping to 49.3 in February.

By Jeyhun Aghazada