Kuala lumpur: A Federation of Malaysian Manufacturers (FMM) survey found that 90 per cent of over 200 respondents expect supply chain disruptions within the next two weeks due to the West Asia conflict.

According to BERNAMA News Agency, FMM President Jacob Lee Chor Kok highlighted that key materials needed for manufacturing are expected to be in short supply or unavailable, alongside rising prices. The West Asia conflict has impacted the sector in three main areas: logistical disruptions, higher energy and fuel costs, and material disruptions.

In terms of logistical disruptions, companies are facing the need to reroute shipments at significantly higher freight costs, while also incurring premium insurance and higher port storage charges. The rise in energy and fuel costs is another pressing issue affecting the general public, prompting FMM to appeal to the government to consider extending the diesel subsidy to the sector. Material disruptions are particularly concerning for petrochemical derivative products such as polyvinyl chloride, polypropylene, polyethylene, and other plastic resins.

Lee emphasized that Malaysian industries, primarily involved in conventional manufacturing, are particularly vulnerable to cost increases due to thin margins, which pose a significant threat to business sustainability. He expressed hope that the government could introduce measures or interventions to help mitigate cost increases, preventing excessive passing of costs to consumers and consequently driving inflation.

The manufacturing sector plays a crucial role in Malaysia's economy, contributing 23 per cent to the national gross domestic product (GDP) and employing 2.3 million people. Lee noted that the sector is likely the second-largest taxpayer in the country, with 86 per cent of Malaysia's exports being manufactured goods. Notably, 44 per cent of exports are from the electrical and electronics sector, or emerging technology manufacturing.

Lee also discussed the Purchasing Managers' Index (PMI) as an indicator of the sector's health, showing recovery but remaining unstable. The PMI rose to 50.2 in January before falling to 49.3 in February, with readings above 50 indicating expansion and those below 50 signaling contraction.

Currently, oil prices remain elevated, with Brent crude falling 1.54 per cent to US$107.30 per barrel at 5.18 pm.