KUALA LUMPUR: Exporters are feeling the squeeze from the stronger ringgit and want more government support to stay competitive amid softer overseas demand.
Kuala Lumpur and Selangor Indian Chamber of Commerce and Industry president Nivas Ragavan said the strengthening of the ringgit against the US dollar is a “double-edged sword” for small and medium enterprises (SMEs).
“SMEs will need to focus on productivity gains, value-added offerings, diversification of markets and better hedging strategies while the government can support by ensuring continued access to financing.
“Government agencies such as Malaysia External Trade Development Corporation (Matrade) can support SMEs via export incentives and market expansion programmes,” he suggested.
Nivas said for export-oriented SMEs, the stronger ringgit presents challenges, reducing price competitiveness in key markets such as the United States and Europe, especially in highly price-sensitive sectors.
“While demand from these markets has not collapsed, it has softened due to global economic uncertainties, high interest rates and cautious consumer spending,” he said, adding that currency movement adds further pressure on already tight margins.
Overseas buyers, he said, are also pressing for price cuts due to the stronger ringgit.
“SMEs with thin margins, especially those on long-term contracts or facing rising domestic costs, struggle to absorb the pressure.
“The bigger challenge is not the currency alone but also softer global demand, buyer pressure, and higher operating and financing costs,” he said.
On the other hand, SMEs that are import-reliant, especially those bringing in raw materials, machinery, components or technology, are benefiting from lower input costs and improved margins, explained Nivas.
“This provides some short-term cost relief, especially for manufacturers and traders,” he said in an interview.
However, SME Association of Malaysia president Dr Chin Chee Seong said overall, the rise of the ringgit has not had a major impact on most SMEs.
“This is because SMEs contribute only around 12%-15% of the country’s total exports, and many SMEs are still primarily focused on the domestic market rather than being heavily export-dependent,” he said.
“That said, for export-oriented SMEs, especially those dealing directly with overseas buyers, a stronger ringgit does slightly reduce price competitiveness and margins. However, this impact remains manageable for now and is not widespread across the SME sector.”
