Kuala lumpur: The Federation of Malaysian Manufacturing (FMM) is seeking the government's intervention to mitigate the impact of the West Asia conflict on Malaysia's manufacturing sector. In a statement today, its president, Jacob Lee Chor Kok said rising costs, supply delays and operational uncertainty are already affecting manufacturing output and export fulfilment.

According to BERNAMA News Agency, Lee emphasized that manufacturers are absorbing extraordinary and unplanned logistics costs due to the conflict. These costs include war risk surcharges, excess freight charges on rerouted shipments, elevated marine cargo insurance premiums, as well as demurrage and port storage charges. To ease the impact, Lee said the federation has urged the government to exempt reimported export cargo from sales tax and import duty, subject to the goods not being sold or disposed of domestically upon return.

"FMM urges the government to provide a double tax deduction on these crisis-related logistics expenditures for the current and following year of assessment," he said. Lee also highlighted the federation's request for the government to extend diesel subsidy coverage to fuel-intensive industrial sectors with no viable alternative energy source. "Marine logistics operators serving Sabah and Sarawak should be treated as a priority, given the absence of fuel alternatives," he added.

To ensure a stable supply of critical raw materials, Lee suggested that the government can direct national energy producers and major domestic refiners to prioritize domestic allocation of key feedstocks, as well as facilitate temporary duty and tax exemptions for imports from alternative sources. He noted that the crisis impacts energy costs, logistics, raw material supply, tax treatment, and port operations simultaneously, which demands a coordinated whole-of-government response. FMM stands ready to work with the government as an active partner in its response.

Lee concluded by pointing out that other countries like Thailand, India, and South Korea have each established coordinated government-industry mechanisms to address the same disruption. "Malaysia's manufacturing sector, which accounts for 23.4 per cent of gross domestic product, cannot afford to be left behind," he added.