Business exports to Russia halted just as recovery begins

GEORGE TOWN: While business owners are looking forward to seeing better days, the ongoing Russia-Ukraine war seems to have thrown a spanner in recovery works.

SME Association of Malaysia president Ding Hong Sing said some businesses which exported to Russia were already badly affected by the war.

‘“Just when we started to see the light at the end of the tunnel, the war has put a halt to many businesses that export goods to Russia.

“Just before that, our business improved by 20% to 30% compared to last year. But now, businesses are badly affected as the United States’ government has stopped international money transactions in Russia.

“Some of the businesses that trade in Russia include frozen food, cooking oil, shortening (edible fat) as well as gloves,” he said.

Ding said his frozen food business had also been badly affected.

“I just shipped goods to Russia but the payment could not be made.

“My goods – worth around US$21,000 (RM88,095) – have been put on hold,” he said.

Small and Medium Enterprises Association (Samenta) national secretary Yeoh Seng Hooi said while some small and medium businesses had picked up compared to last year, there were those still struggling to survive, especially in tourism-related sectors.

“Generally, business for small and medium enterprises has picked up. But those in the tourism-related, retail and entertainment industries are still not on an uptrend.

“The export-oriented industries continue to have strong orders but are crippled by the capacity bottlenecks due to labour shortage, inflation and hike in material prices.

“The rising oil prices and inflation could be the side effects if the Russia-Ukraine war is prolonged.

“Supply chain disruptions continue and the impact of stagflation – persistent inflation and weak economic growth – in developed nations is worrying. This may impact external demand,” he said.

Malaysian Consortium of Mid-Tier Companies president Callum Chen said businesses across all sectors had picked up in general.

“However, many exporters, especially those exporting to the United States, were badly affected by the global logistics disruption.

“The majority of our exporters and importers were not affected by the Russia-Ukraine conflict as both countries are not Malaysia’s traditional export and import market,” he said.

Free Industrial Zone Penang Companies’ Association (Frepenca) committee member Datuk Heng Huck Lee said most electronic and electrical companies had experienced brisk business due to the backlog caused by earlier component shortages.

“The first quarter of the year is normally softer for the electronic and electrical sector. However, many companies remain strong due to the backlog caused by some earlier component shortages,” he said, adding that the industry had not experienced any negative effect in the Russia-Ukraine war.