KUALA LUMPUR: The Malaysia External Trade Development Corporation (MATRADE) is taking proactive steps to cushion the impact of escalating geopolitical conflicts in West Asia, by activating a comprehensive mitigation framework to support Malaysian exporters navigating maritime blockades, surging logistics costs and supply chain disruptions.
This came following recent escalations of military conflict involving Iran, Israel, and the United States that began on Feb 28, it said in a statement today.
MATRADE said it has issued a specialised survey to Malaysian exporters to assess the direct implications of the conflict on their business operations.
Preliminary results from the survey of which 53.7 per cent are micro, small and medium enterprises (MSMEs), mid-tier companies (32.7 per cent) and multinational corporations (13.6 per cent) indicated a critical pulse check finding on the industry.
It noted 63.9 per cent of companies expect the ongoing conflict to affect their operations, mainly due to shipment delays and rising ocean freight as well as insurance costs.
Businesses also anticipate a drop in sales, order cancellations and a sharp increase in raw material prices, particularly plastic-based materials linked to crude oil.
Meanwhile, 39.1 per cent of respondents said they are currently exporting to the region, primarily to the United Arab Emirates (UAE) and Saudi Arabia, with many considering diversifying into other markets to mitigate risks arising from the conflict.
To help Malaysian exporters address challenges arising from the conflict, the agency is encouraging exporters to diversify logistics routes and reroute shipments to safer ports in the region, including the Port of Fujairah in the UAE and Port of Salalah in Oman, as well as use land transportation where possible.
Matrade is also accelerating efforts to help Malaysian companies expand into less-affected markets such as South Asia, Latin America and Africa, while strengthening trade within ASEAN.
To maintain trade activities, the agency would intensify digital business matching through 'Virtual eBizMatch' sessions to replace physical trade missions in high-risk areas.
Besides, it is working with financial institutions to facilitate access to insurance packages for exporters affected by cargo abandonment or higher war-risk premiums.
The agency is also leveraging Malaysia’s free trade agreements (FTAs), including the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), to help exporters gain better access to stable markets and benefit from preferential tariff treatment.
At the same time, MATRADE is strengthening intra-ASEAN trade integration to help exporters redirect shipments away from disrupted Middle East routes and reduce rising logistics costs and delays.
"We are enabling Malaysian exporters to redirect trade flows into geographically proximate and economically stable markets.
"This strategic pivot not only reduces exposure to geopolitical volatility but also strengthens Malaysia’s position as a regional trade hub within Southeast Asia," said MATRADE chairman Datuk Seri Reezal Merican Naina Merican.
He also said the agency is not just monitoring the crisis; it is actively rerouting trade, mitigating export risks, and deepening the country's diversification initiatives to safeguard Malaysia’s long-term trade resilience.
Meanwhile, MATRADE chief executive officer Abu Bakar Yusof said its immediate priority is to mitigate the 'double-ended' blockade affecting Malaysia's cargo by leveraging its local presence in West Asia to resolve real-time logistical hurdles.
"While we anticipate operational strain, we are positioning Malaysia as a reliable alternative supplier for our trade partners seeking to diversify away from regional risks," he said, adding that it remained committed to safeguarding Malaysia’s trade interests and supporting exporters through this challenging period. - Bernama
