PETALING JAYA: The ongoing disruption and closure of the Strait of Hormuz arising from geopolitical tensions in West Asia is a matter of serious concern to Malaysia’s business community, said National Chamber of Commerce and Industry of Malaysia (NCCIM) president Datuk Seri N. Gobalakrishnan.
As one of the world’s most critical maritime routes, he said, the Strait of Hormuz carries about 20% of global oil and liquefied natural gas shipments daily, making it central to international energy security and global trade stability.
Nearly 90% of crude oil exports transiting the strait are destined for Asian markets, including major economies within Asean, he said, adding that any prolonged disruption will have far-reaching implications on energy prices, international trade flows and supply chain stability, with direct consequences for highly open and trade-dependent economies such as Malaysia.
“On behalf of NCCIM, I wish to express our deep concern over the potential economic impact of this crisis, particularly on Malaysian businesses and SMEs, which form the backbone of our economy. Although Malaysia is geographically removed from the conflict, we are not insulated from its economic repercussions,” Gobalakrishnan said in a statement.
He added that the immediate effects are already evident through rising global energy prices, higher freight and insurance costs, supply chain disruptions and increased uncertainty across international markets.
“Freight costs on key international shipping routes have risen sharply, delivery lead times have become less certain, and imported raw material costs have increased significantly. Manufacturing businesses that previously absorbed logistics cost increases of approximately 3% to 5% annually are now facing projected increases ranging between 10% and 18%, depending on sector exposure,” Gobalakrishnan said.
He noted that these developments place considerable pressure on SMEs, which account for 97.4% of all business establishments in Malaysia and contribute nearly 38% of gross domestic product.
Unlike larger corporations, he said, many SMEs operate within narrow profit margins of 5% to 10%, leaving limited capacity to absorb sudden increases in fuel, transport and production costs.
“Sectors most affected include manufacturing, logistics, retail, food processing, agriculture and export-oriented industries. If the disruption persists, businesses may be forced to defer investment, adjust production, pass higher costs to consumers or scale back expansion plans. This will contribute to inflationary pressures, affecting both businesses and consumers while placing additional strain on domestic economic activity,” he added.
Gobalakrishnan said NCCIM is particularly concerned about broader inflationary spillover effects, as fuel and logistics costs account for 20% to 30% of operating expenses across key sectors.
“A sustained 10% to 18% increase in freight and transport costs could push consumer prices upwards by an estimated 0.5 to 1.0 percentage point, eroding household purchasing power and weakening market confidence. The government’s fuel subsidy mechanism, including the targeted Budi Madani assistance of RM200 per month for eligible diesel vehicle owners and broader RON95 subsidies, has helped cushion immediate fuel price pressures and ease consumer burden,” he added.
However, he emphasised that many commercial and industrial users remain exposed to global fuel volatility, while import-dependent businesses continue to face rising logistics and procurement costs.
While these subsidies provide short-term relief, they are not sufficient to fully shield businesses from prolonged external shocks.
In this regard, financing support such as the RM5 billion Skim Jaminan Pembiayaan Perniagaan under the Madani Government guarantee schemes, along with targeted financing facilities under Bank Negara Malaysia – including the Targeted Relief and Recovery Facility, High Tech and Green Facility and Low Carbon Transition Facility, with combined allocations exceeding RM10 billion – play an important role in supporting SME liquidity, working capital, digitalisation and resilience., said Gobalakrishnan.
“These measures help businesses manage cash flow pressures and adapt to external shocks arising from rising logistics and energy costs linked to the Strait of Hormuz disruption. NCCIM and the business community express appreciation to the Madani Government for its timely financial support measures, including financing assistance and subsidy interventions, which have provided critical relief to SMEs during this period of uncertainty.”
Gobalakrishnan said NCCIM proposes a temporary targeted moratorium for affected SMEs to ease immediate cash-flow pressures caused by rising operational costs. This would allow businesses breathing space to manage higher fuel, logistics and raw material costs while safeguarding operations and employment. Financial institutions are also urged to provide flexible restructuring options and easier access to working capital.
At the same time, he said, the crisis highlights the urgent need to strengthen Malaysia’s long-term economic resilience through supply chain diversification, enhanced regional trade cooperation, stronger energy security planning and accelerated digitalisation.
Malaysia’s business community has consistently demonstrated resilience through past crises, but resilience must be reinforced by timely policy intervention and strong public-private collaboration, he said, adding that the crisis is a stark reminder that geopolitical instability abroad can rapidly translate into economic consequences at home.
NCCIM said it remains committed to working closely with the government and all stakeholders to safeguard business continuity, protect SMEs and ensure Malaysia remains competitive and resilient in an increasingly uncertain global environment.
