KUALA LUMPUR: Malaysia must be prepared to face impacts such as more expensive imports following the conflict in the Middle East, said Malaysian Investment Development Authority (MIDA) chairman Tengku Datuk Seri Zafrul Abdul Aziz.
He said Malaysia is a trading nation with high-value exports and imports transported through the region’s airspace.
Several Malaysia Airlines flights were forced to turn back because airspace in the Middle East was closed or restricted due to escalating tensions, he noted.
"When routes are unsafe, flights have to be diverted or cancelled. This means longer flights to Europe, an increase in fuel costs, and risk of air cargo delays.
"When deliveries are delayed, costs rise and the prices (of goods) also increase,” he said in a post shared on social media on Sunday.
Tensions in the Middle East escalated when the United States and Israel launched attacks on Iran on Saturday, sparking retaliatory strikes on Israeli territory as well as on US military facilities in the Middle East.
According to Tengku Zafrul, the oil market also reacted quickly because Iran is located near one of the world’s most critical oil routes.
"When the conflict intensifies, oil prices surge as markets fear disruptions to oil supply. Hence oil prices rise, logistics costs increase, and (goods) prices also go up,” he said.
Tengku Zafrul said that when the world is unstable, investors tend to seek safe haven assets such as the US dollar and gold, which in turn puts pressure on the ringgit through capital outflows.
"When the ringgit comes under pressure, imports become more expensive,” he noted.
Regarding the Middle East conflict’s impact on Malaysians’ pockets, Tengku Zafrul said this depends on how long the conflict lasts.
"If it is brief, the impact is limited. If it drags on, we must be prepared,” he said. - Bernama
