PETALING JAYA: Malaysia’s manufacturers are under mounting pressure, with over two-thirds reporting that production and operating costs have surged by at least 10%, says the Federation of Malaysian Manufacturers (FMM).
The group said it has raised these concerns with the government, which has agreed to grant an interim exemption on import duty and sales tax until Dec 31 for Malaysian-made goods that are returned after failing to complete export due to disruptions.
FMM president Jacob Lee said an April survey found that 90.5% of manufacturers are already affected by ongoing disruptions in the Middle East or expect to be within the next four weeks.
“Working capital and cash flow pressures were reported by 74.5% of companies, with 18.2% saying the strain is severe enough to affect their ability to fulfil orders or pay suppliers,” he said.
To ease supply constraints, the Health Ministry, through the Medical Device Authority, has concluded a strategic arrangement with Chinese authorities to boost the supply of key inputs such as resin and naphtha for Malaysia’s medical device sector.
FMM is advocating similar arrangements for other critical materials such as sulphur, ammonia and selected polymer grades.
Lee urged the government to go further by setting up a “Business Resilience Fund” to help manufacturers manage rising costs and working capital pressures driven by the Iran conflict, disruptions in the Strait of Hormuz and instability in Red Sea shipping routes.
“Targeted financial support can be channelled through Bank Pembangunan Malaysia Berhad and SME Bank, with policy support from Bank Negara Malaysia,” he suggested.
He said the proposal draws on measures taken during the Covid-19 pandemic, including Bank Negara’s Special Relief Facility and other targeted financing schemes.
FMM has also proposed a working capital guarantee mechanism via agencies such as Syarikat Jaminan Pembiayaan Perniagaan Berhad and Credit Guarantee Corporation Malaysia Berhad.
Lee also called for enhanced tax relief to help businesses absorb rising logistics costs.
“We are requesting further tax deductions for crisis-related freight and insurance costs, including double deductions for war-risk surcharges, rerouting costs, and higher marine cargo insurance premiums, as well as detention, demurrage and port storage charges directly linked to the Middle East conflict,” he said.
He said temporary import duty exemptions are also needed for critical raw materials sourced from alternative markets.
“When supply chains in the Middle East are closed, manufacturers are forced to source from alternative suppliers in Kazakhstan, Canada and other countries, often at premium prices,” he said.
