PETALING JAYA: The strengthening of the ringgit against the US dollar is beginning to affect a range of local industries – from furniture exports to pharmaceuticals and rubber gloves.
Many industry players say the rise is still manageable for now, adding that while there has not been a sharp collapse in demand, buyers have become more cautious.
At the same time, the China-US tariff wars have also benefited Malaysia.
Muar Furniture Association president Steve Ong said local furniture exporters are facing renewed pressure on margins even as global demand shows mixed signals.
Ong said a stronger ringgit is generally unfavourable for all export-driven industries, including furniture manufacturing.
“Industry players note that while currency movements remain a key factor for export-oriented manufacturing, rising domestic costs pose an even greater long-term challenge,” he said in an interview.
On Friday, the ringgit closed at 4.09 level against the US dollar, hitting a new four-year-and-seven-month high, supported by positive Malaysian economic data.
Ong said from a global perspective, softer international economic conditions have inevitably affected demand in key markets, such as the United States and Europe.
“While there has not been a sharp collapse in demand, buyers have become more cautious, resulting in less stable order flows and longer decision cycles.
“However, the ongoing US-China trade tension has also accelerated the relocation of furniture supply chains away from China. This structural shift has benefited South-East Asia, including Malaysia,” he said.
Malaysia, added Ong, stands out as a mature furniture manufacturing hub with over 40 years of industry experience.
Currently accounting for around 5% of global furniture exports, Malaysia, he stressed, remains well-positioned to serve Western markets.
“Although short-term demand remains uneven, industry players remain optimistic about the sector’s long-term prospects, provided that there is consistent policy support to help manufacturers move up the value chain.”
The strengthening of the ringgit, said Ong, had also not significantly affected buyers’ willingness to source from Malaysia.
“But it has intensified pressure on manufacturers’ margins. In response, some exporters have begun discussions with customers to adjust selling prices in order to reflect higher production and operating costs.
“That said, currency movements do not impact costs in a uniform way. While export transactions are typically denominated in US dollars, a portion of raw materials and inputs can also be priced in US dollars,” he said.
The pharmaceutical sector may also feel the impact of a stronger ringgit, particularly in areas involving US dollar transactions, said the Malaysian Pharmacist Society.
Its president Amrahi Buang said the cost of active pharmaceutical ingredients (APIs) depends on where they are sourced from, with suppliers pricing in US dollars directly affected by currency movements.
“Contracts and trade arrangements denominated in US dollars are impacted when the ringgit strengthens. Packaging and logistics costs, many of which involve cross-border services, are also influenced by exchange rate fluctuations.
Trade agreements set in US dollars, said Amrahi, may need to be reviewed or renegotiated following the ringgit’s strengthening, adding however that pharmaceutical companies must continue to comply with regulatory standards rather than adjust prices purely for profit.
Malaysia Semiconductor Industry Association president Datuk Seri Wong Siew Hai said the strengthening ringgit has had a manageable impact on export-reliant companies.
Wong said for multinational corporations earning mainly in US dollars, the higher ringgit values affect local overhead costs, such as salaries and utilities, translating to a slight increase in costs in USD terms.
Malaysian exporters also receive fewer ringgit when converting their USD sales although the overall effect on profits is still marginal, he added.
“Companies with diversified operations are less affected, and most overseas customers have kept existing contracts, with only a few requesting pricing reviews.
“Despite currency fluctuations, Malaysia’s electrical and electronics exports continue to grow. In 2024, the sector hit a record RM601bil,” he said.
As of October this year, exports reached RM579.17bil, up 18% from the same period last year, according to Wong.
Malaysian Rubber Glove Manufacturers Association president Oon Kim Hung said local rubber glove exporters are seasoned players, highly experienced and accustomed to managing foreign exchange currencies.
“(As) the recent performance of the ringgit will record lower value, we will likely have to revise our prices and be better at managing costs.”
