PETALING JAYA: Heightened geopolitical tensions in the Middle East are expected to weigh on Malaysia’s micro, small and medium enterprises (MSMEs), particularly in the textile, cement and steel industries.
SME Corporation Malaysia (SME Corp) chief executive officer Rizal Nainy said these industries, which rely heavily on shipping, imports and exports, are likely to be among the hardest hit as disruptions ripple through global supply chains.
He noted that about 15% to 16% of Malaysia’s 1.1 million MSMEs are involved in export and import activities.
“The food and beverage sector has yet to experience a significant immediate impact.
“However, cost pressures are likely to emerge over the longer term due to rising oil prices,” he told reporters yesterday.
SME Corp, a central coordinating agency under the Entrepreneur and Cooperatives Development Ministry, oversees the implementation of development programmes for SMEs.
Rizal said MSME costs could surge to as much as 50% of total operating expenses if the conflict extends beyond May, driven by global oil prices, which have now exceeded US$100 (RM392.40) per barrel.
“We conducted a survey that identified four major cost components: fuel, electricity, labour and overall operating expenses.
“Fuel is already among the top cost drivers, accounting for about 6.4% of total MSME operating expenses.
However, this could rise to as much as 50%, placing significant pressure on business sustainability if the crisis persists beyond May.”
He added that access to raw materials remains a key concern, with disruptions extending beyond the Strait of Hormuz to other critical routes such as the Suez Canal and the Red Sea.
“Raw materials are sourced not only from the Middle East but also from Europe. Risks are spreading across major shipping routes, with higher insurance premiums, increased logistics and shipping costs, and delays in the movement of goods further impacting MSMEs,” he said.
On intervention measures, Rizal said SME Corp has introduced several initiatives to support MSMEs, including offering financing at lower interest rates than commercial banks.
“While commercial banks charge higher rates, we have reduced ours to between 3% and 3.5%, with a ceiling of 4%.
“This helps lower financing costs and improves access to funding.”
He added that a Free Trade Agreement guide for MSMEs is being developed to outline export and import processes while highlighting potential tariff benefits.
“This guide will serve as a reference, showing that exports need not be limited to the Middle East or the United States.”
In light of these challenges, Rizal urged MSMEs to reassess their strategies, including diversifying export markets to reduce dependence on high-risk regions.
“MSMEs must adapt quickly by diversifying markets and strengthening resilience, as ongoing uncertainties could further disrupt trade and drive up costs,” he said.
