PETALING JAYA: After the escalation of the Russo-Ukrainian war on Feb 24 last year, the world is now witnessing an all-out Palestinian-Israeli war that started in the wee hours of Saturday.
This latest war could potentially impact consumer prices in Malaysia due to supply chain disruptions, said Monash University economics professor Niaz Asadullah.
“Increased tensions and potential supply disruptions in the Middle East may cause crude oil prices to rise. This could have implications for indirect imports into Malaysia, as the higher transport costs would be passed on to consumers.
“While some price increases may be temporary, if the war persists or escalates, it could lead to more sustained disruptions in supply chains and higher costs, potentially impacting consumer prices in the long run,” Niaz said.
However, he said Malaysia has reduced its dependence on crude oil imports and is itself one of the largest (crude oil) producers in Southeast Asia.
To mitigate the potential economic impact on local markets, Niaz said Malaysia should explore diversifying its import sources and reduce its reliance on countries directly affected by the latest war.
“The government could foster domestic production capabilities in key sectors to enhance self-sufficiency and promote stable pricing.
“Strengthening diplomatic efforts to support peaceful resolutions in the Middle East could also contribute to stability and reduce economic uncertainties,” he said.
Meanwhile, political analyst Amirul Syazwan Hamzah said the trajectory of the Palestinian-Israeli war could indirectly have implications for the geopolitical landscape in Southeast Asia, including Malaysia.
He said the war is being widely discussed and debated globally, including within Southeast Asian countries due to its repercussions.
“The Palestinian-Israeli war could potentially influence public sentiment and activism related to human rights, international law and the rights of marginalised communities. This could lead to specific political or social consequences,” he said.
Amirul Syazwan, who observes economic and geopolitical trends, said it is difficult to predict whether the Palestinian-Israeli war would be long drawn out. He said this is because their differences are deeply complex and longstanding, with no easy resolution.
“Their differences have persisted over decades, and the resolution depends on various factors, including the actions and decisions of the parties involved and the international community’s efforts to foster peace.
“Malaysia has historically taken a concerned stance towards the Palestinian cause and has been critical of Israel’s policies.
“We would likely continue to advocate a peaceful and just resolution to the war, aligning ourselves with countries that share similar positions.”
However, he said it is important to note that the positions of various countries on this issue can evolve and be influenced by other geopolitical factors, potentially leading to shifts or realignments in alliances.
“Malaysia’s stance on the war could impact its interactions with other countries, particularly those that have a differing stance on the issue.
“It may also influence Malaysia’s involvement in international organisations or forums that address the war, as well as its decisions regarding foreign aid and humanitarian efforts in the region,” he said.
Supporting his position, Niaz said as a trade-dependent economy, Malaysia needs to exercise caution in its statements regarding the Palestinian-Israeli war.
“We just recovered from the economic problems caused by the Covid-19 pandemic and have finally stabilised our inflation rate, which is a good thing.
“Unlike Ukraine and Russia, Israel and Palestine are not major exporters of food grain or oil, so our economy should not be critically affected by the war there.”
According to the UN’s Comtrade database, which is the world’s most comprehensive global trade data platform, Malaysia’s imports from Palestine are minuscule and worth only RM4.44 million in 2021.
They include tropical fruits, pure olive oil and essential oils. Malaysia restricts imports of goods from Israel.
However, Niaz said the war could have an impact on global commodity prices, particularly in the energy sector.
