KUALA LUMPUR: The Middle East conflict has already had an immediate impact on local manufacturers, fast pushing up fuel, freight and fertiliser costs across industries.
Federation of Malaysian Manufacturing (FMM) president Jacob Lee Chor Kok said higher costs, delivery delays and disruptions in shipping were some of the immediate impacts that FMM – which represents the manufacturing sector, comprising over 13,000 member companies – had observed.
“So far, the impact is not obvious but we see increases in logistics, insurance, freight and energy costs,” he said at a press conference to announce the results of a survey of business conditions for the second half of 2025.
Lee noted that many companies were still getting orders and a lot of sales transactions had been concluded recently to shield buyers and sellers from further cost increases.
Meanwhile, FMM president emeritus Tan Sri Soh Thian Lai called for the government to provide more support to its members.
He recommended that it introduce measures such as a six-month bank loan moratorium and more stimulus packages for all micro, small and medium enterprises (MSMEs), as a result of the Middle East conflict.
“We need to take active action and must be prepared, our costs have increased so much,” he said.
Although Finance Minister II Datuk Seri Amir Hamzah Azizan has said that a stimulus package may not be necessary at the moment, Soh believes otherwise.
Amir Hamzah previously said no economic stimulus package will be introduced for the time being in response to the Middle East conflict, adding that the government’s current approach is to focus on short-term measures to ensure economic stability while current monitoring developments.
“I think the key point is that we do not yet know whether the crisis in the Middle East will persist.
“If it does not, I do not think there is any need to implement an economic stimulus package,” he was quoted as saying.
Soh said MSMEs are facing tight financial conditions “all the time”.
“From the movement control order until now, costs have been increasing.
“They are still able to survive, and I will not say it is a critical cashflow situation, but it is tight.”
Proactive support would allow them to prepare for operational efficiency and aid their capacity to export, he added.
FMM stated that in the second half of 2025, manufacturing activity stabilised following the sharp slowdown in the first half of last year.
It said firms anticipate gradual improvement at the company level, while the industry outlook remains mixed, suggesting an uneven recovery across sectors.
Rising input costs, increasing competition, labour availability, and regulatory burdens – which continue to affect operating conditions – are among the key business challenges, FMM said.
Moving forward, companies forecast global economic sentiment to remain cautious, with more expecting deterioration than improvement.
Domestic economic conditions are projected to remain broadly stable but uncertain, while technology deployment is expected to further advance as firms chase productivity gains, according to FMM.
