28/03/2026

BIZ & FINANCE SATURDAY | MAR 28, 2026

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Calls for immediate govt intervention

PETALING Malaysia’s manufacturing sector is pressing for immediate government intervention as escalating tensions in the Middle East begin to ripple through global trade routes, energy markets and industrial supply chains. The Federation of Malaysian Manufacturers (FMM) said the conflict, which intensified following US and Israeli military action against Iran on Feb 28, has triggered simultaneous disruptions at two of the world’s most critical shipping corridors – the Strait of Hormuz and the Red Sea. The resulting shock has driven up costs, delayed shipments and tightened the supply of key industrial inputs. The Strait of Hormuz alone accounts for roughly one-fifth of global oil and liquefied natural gas (LNG) flows, handling close to 20 million barrels per day last year. Its closure, coupled with continued instability in the Red Sea, has forced vessels to reroute via the Cape of Good Hope, extending transit times by up to two weeks. For manufacturers, the impact has been immediate. Freight rates have risen sharply, with additional war risk surcharges and marine insurance premiums climbing between 200% and 400%. Longer shipping times are straining delivery schedules and working capital cycles, particularly for export-oriented industries. Energy costs have compounded the pressure. Brent crude is now trading at about US$106 (RM424) per barrel, up roughly 28% from the start of the year and nearly 50% higher o Local manufacturers and rubber glove makers seek urgent relief from Middle East conflict impact JAYA:

global shipping and pushed oil prices above US$100 per barrel, directly affecting the availability and cost of NBR, which is petroleum-derived. The shortage is now threatening production continuity and placing significant financial strain on manu facturers. Malaysia accounts for about 45% of the global supply of rubber gloves, making the industry a critical link in international healthcare systems. Any prolonged disruption could affect hospitals and medical distri butors worldwide and under-mine Malaysia’s standing as a reliable supplier of personal protective equipment (PPE). To mitigate the impact, Margma is calling for temporary measures to prioritise domestic NBR supply and ease contractual obligations tied to gas consumption. It urged the government to work with local suppliers to ensure that available NBR is channelled first to Malaysian manufacturers during the crisis. The association also highlighted challenges arising from “take-or-pay” gas contracts, which require manu facturers to meet minimum con sumption levels. With factories operating below capacity due to raw material shortages, companies face penalties for unused gas. Margma proposed temporary flexibility in these contracts, in cluding waivers, reductions in offtake requirements, or rebates, to help manufacturers manage costs until supply conditions stabilise. Both industry groups stressed that timely intervention will be critical not only to support domestic production and employment but also to safeguard Malaysia’s role in global supply chains. “A swift, coordinated response is needed to protect local industries and ensure continuity of supply to global markets,” the associations said, warning that delays could have lasting consequences for the country’s export competitiveness and industrial base.

adds an unnecessary burden at a time when companies are already absorbing higher logistics costs.” The federation is also seeking tax relief for crisis-related logistics ex penses, including surcharges, higher freight rates, insurance premiums and port charges arising from congestion. FMM proposed a double tax deduction on such costs, alongside an interim ruling to ensure they are deductible in the year incurred. Fuel costs remain another area of concern. While diesel subsidies are currently available for road transport operators, industrial users – inclu ding those operating kilns, boilers and marine equipment – pay market rates. With industrial diesel prices having surged in tandem with crude oil prices, FMM is urging the govern ment to extend targeted subsidies to fuel-intensive sectors such as ceramics, quarrying, glass manu facturing and food processing, as well as to domestic marine logistics operators serving Sabah and Sarawak. To address supply risks, FMM called for a coordinated approach to secure critical raw materials. This includes prioritising domestic allocation of key feedstocks by national energy producers and refiners, temporarily easing duties on alternative imports, and establishing a national inventory monitoring system to track supply levels and trigger early intervention where needed.

It also urged the government to defer scheduled port tariff increases, noting that several major ports – including Port Klang, Johor Port, Tanjung Pelepas and Penang Port – have implemented or are planning phased hikes of up to 30% through 2027. Proceeding with these increases under current conditions would further erode exporters’ cost com petitiveness, it said. In addition, FMM highlighted the need for greater transparency in freight pricing. Shipping lines have introduced multiple layers of conflict-related surcharges, often outside contracted rates, with limited oversight. The group called for a formal monitoring mechanism to track such charges and ensure accountability, as well as measures to address congestion caused by the storage of empty containers at Malaysian ports. “The scale and breadth of the disruption require a coordinated, whole-of-government response,” Lee said, adding that other regional economies have already put in place joint government-industry mecha nisms to manage similar pressures. Concerns have also been raised by the Malaysian Rubber Glove Manu facturers Association (Margma), which warned of a worsening shortage of nitrile butadiene rubber (NBR) latex, a key input for nitrile glove, due to the same supply chain disruptions. Margma said the blockade of the Strait of Hormuz has constrained

than pre-conflict levels. This has translated directly into higher fuel and petrochemical feed stock costs across multiple sectors. At the same time, supply constraints are emerging for petroleum-based raw materials such as naphtha, liquefied petroleum gas (LPG), synthetic resins, rubber inputs and sulphur. With most manufacturers opera ting on lean inventories of between two and six weeks, prolonged disruption risks production slow downs across industries, including plastics, chemicals, electronics, rubber products and food processing. FMM said the combined effect of rising costs, supply uncertainty and logistical delays is already weighing on output and export fulfilment. It warned that existing policy frameworks are not designed to address externally driven shocks of this scale, and called for targeted, time-bound measures to stabilise operations and preserve competitiveness. Among its proposals is an exemption from sales tax and import duty for goods reimported after failed export attempts. Many manufacturers have seen shipments turned back due to port closures, cargo diversions or buyer suspensions, yet are still being taxed upon re-entry. “These are not commercial imports,” FMM president Jacob Lee Chor Kok said, noting that the goods were produced locally and intended for export. “Treating them as taxable imports

TGX Commercial Hub in Penang secures key brand partnerships PETALING JAYA: Villa Tropika Development, a subsidiary of Island LandCap Properties Group Sdn Bhd, has formalised strategic partnerships with several established retail and food and beverage brands for its upcoming TGX Commercial Hub in Penang, marking a key milestone for the project. in Tasek Gelugor, the site benefits from steady daily vehicle flow and strong visibility. Its position at the border of Penang and Kedah also offers a unique commercial advantage, allowing businesses to tap into differing weekend cycles in both states and effectively extend peak trading periods.

The memorandums of understanding signed with brand operators, including Starbucks, 7 Eleven, Kenny Rogers and Krispy Kreme, underscore growing confidence in the development’s long-term prospects. Island LandCap Properties executive chairman Datuk Oon Weng Boon said TGX (Tasek Gelugor Xchange) is conceived as an integrated commercial hub, bringing together retail, dining and essential services within a single location. The project will comprise 148 double-storey shop units, complemented by dedicated drive thru outlets and a supermarket anchor tenant, forming a comprehensive ecosystem for both businesses and the surrounding community. A defining feature of the development is its “shop-shop” concept, which links ground and first-floor units through shared corridors and lift access, improving connectivity and expanding leasing flexibility for tenants. Strategically located at a high-traffic junction

The surrounding area is anchored by several major industrial parks, including Penang Technology Park, Kulim Hi-Tech Park and Northern Techvalley BKE, providing a sizeable catchment driven by industrial activity and workforce demand. “The presence of established international brands is expected to drive consistent footfall and help position TGX as a key commercial destination in the northern region,“ Oon said. The project is being developed in a joint venture with Perda Ventures Incorporated Sdn Bhd, a wholly owned subsidiary of Lembaga Kemajuan Wilayah Pulau Pinang, with ongoing engagement from government agencies and financial institutions. Upon completion, TGX is expected to emerge as a new commercial landmark for Tasek Gelugor and the wider Seberang Perai Utara area, supporting local economic growth while catering to evolving lifestyle needs.

Oon (seated, centre) and Berjaya Food Bhd CFO Louise Chin Wan Ching (seated, right) with representatives from the brands at the signing ceremony.