KUALA LUMPUR: Global trade is facing increasing uncertainty with the ongoing conflicts in West Asia continuing to disrupt global supply chains, and as a highly open trading nation, Malaysia is not immune to these developments.
Deputy Investment, Trade and Industry Minister Sim Tze Tzin said Malaysia has already seen the impact on trade flows.
“Our direct exports to the Middle East fell by 15.8% to RM14.08bil, affecting trade with key markets such as the United Arab Emirates, Saudi Arabia and Qatar,” he said at the Malaysian International Chamber of Commerce and Industry AGM and annual luncheon yesterday.
The Deputy Minister said, however, it was equally important to recognise that Malaysia was entering this challenging period from a position of strength.
“Our external trade was RM336.7bil within the first four months of 2026, a 28.6% jump compared to the same time in 2025. Our economy also expanded by 5.4% in the first quarter of 2026, supported by resilient domestic demand, continued investment activity and a strong labour market,” Sim said.
He said while geopolitical tensions may be reshaping the global economic landscape, Malaysia’s economic fundamentals remain strong. “Part of this resilience is being driven by structural shifts in the global economy...demand for advanced technologies, semiconductors and artificial intelligence-related products continues to grow rapidly.”
Nevertheless, he said the government fully recognises the concerns faced by businesses on the ground. “Businesses are contending with rising logistics costs, volatile commodity prices and growing uncertainty across global markets.
“These pressures are already affecting business operations, investment decisions and growth plans across multiple sectors.”
In the same vein, the Deputy Minister noted that Malaysia needed to prepare for “the second wave” of impact. “Many of the products and industries we rely on every day are linked to global petrochemical supply chains,” he said.
Sim said as costs for raw materials, packaging materials and fertilisers continue to rise, some of the most significant impact may only emerge months from now, or even next year, as these higher input costs gradually work their way through manufacturing, agriculture and food production.
He said the global environment will likely remain challenging in the months ahead and the conflict in West Asia, evolving trade dynamics and rising protectionist measures will continue to test the resilience of businesses and economies around the world.
Later at a panel discussion with the Malaysian Investment Development Authority and the Malaysia External Trade Development Corp, Sim said under the government’s new incentive framework, also known as NIF, everyone who wants to invest in Malaysia including local investors can fill up the necessary forms, and then they will be assessed.
“For example, do you know that all hotels in Malaysia can get incentives? Even a one-star hotel can apply for domestic direct investment incentives. But we have changed it (up) a bit, we now base it on economic complexities. Say, if you make investments in less developed areas, you get more incentives,” Sim said.
“So, this is open to everyone, some of the companies even get over RM400mil in tax exemptions. I am just encouraging everyone to check out the NIF for your businesses,” he said.
