PETALING JAYA: Businesses are beginning to feel mounting cost pressures from the ongoing Middle East conflict, with early signs of rising fuel prices, freight charges and insurance premiums emerging across key sectors, according to the Malaysian Employers Federation (MEF).
Its president Datuk Dr Syed Hussain Syed Husman (pic) said the situation highlights the vulnerability of local businesses, particularly micro, small and medium enterprises (MSMEs), to external geopolitical shocks.
"Although the full extent of the impact has yet to materialise, employers are already experiencing upward cost pressures in logistics, energy, and raw materials.
"MSMEs, with their thinner margins and limited buffers, are especially exposed to these external shocks," he said in a statement on Wednesday (March 18).
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He warned that prolonged disruptions could have wider consequences across the economy.
"If the conflict persists, businesses may face sustained cost escalations and uncertainty in supply chains.
"This will inevitably affect pricing, investment decisions, and hiring plans.
"Employers are striving to absorb these increases, but there is a limit to how much can be sustained without affecting business viability," he said.
Syed Hussain said many MSMEs remain in a fragile recovery phase following recent economic shocks, including the pandemic, rising compliance costs and global uncertainties.
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"Many MSMEs are still in the recovery phase and operating under tight cashflow conditions.
"Any additional external shock, such as this geopolitical conflict, can significantly strain their resilience.
"Proactive and targeted support measures will be critical to help them navigate this period," he said.
While acknowledging the government’s cautious stance, Syed Hussain said policymakers must remain ready to respond if conditions deteriorate and stressed the need for longer-term resilience.
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"At this stage, a broad-based stimulus may not be immediately necessary.
"However, the government must remain ready to act swiftly if conditions worsen.
"Targeted measures such as temporary financial relief, facilitation of access to working capital, and cost-mitigation initiatives would be vital in supporting businesses, particularly MSMEs.
“This situation reinforces the need for businesses to accelerate productivity enhancements, diversify supply chains, and adopt technology to mitigate future disruptions.
"Policy support in these areas will be essential to ensure sustainable business continuity," he stressed.
Syed Hussain said the government cannot afford to take a "wait-and-see" stance and only start drawing up financial assistance packages after the full impact is felt.
"By then, the delay could prove detrimental, especially for businesses operating on thin margins.
"The government must begin working now on ready-made financing mechanisms and contingency support frameworks that can be deployed swiftly if conditions worsen," he added.
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Malaysian Employers Federation, MEF, Dr Syed Hussain Syed Husman, Middle East Conflict, MSMEs, Vulnerable, Government Assistance, Financial Help, Impact, Fuel Prices, Transport Costs, Insurance, Working Capital
