MIDA chairman Tengku Zafrul warns of pricier imports, higher logistics costs and ringgit pressure due to Middle East conflict disrupting trade routes.
KUALA LUMPUR: Malaysia must prepare for more expensive imports and broader economic impacts stemming from the escalating conflict in the Middle East.
Malaysian Investment Development Authority (MIDA) chairman Tengku Datuk Seri Zafrul Abdul Aziz said the nation’s high-value trade is vulnerable as exports and imports transit through the region’s airspace.
He noted that several Malaysia Airlines flights were already forced to turn back due to closed or restricted airspace.
“When routes are unsafe, flights have to be diverted or cancelled,” he said in a social media post on Sunday.
“This means longer flights to Europe, an increase in fuel costs, and risk of air cargo delays.”
Tengku Zafrul explained that delayed deliveries directly lead to higher costs and increased goods prices for consumers.
Tensions flared after the United States and Israel launched attacks on Iran, triggering retaliatory strikes on Israeli territory and US military facilities in the Middle East.
The oil market reacted swiftly as Iran is situated near one of the world’s most critical oil shipping routes.
“When the conflict intensifies, oil prices surge as markets fear disruptions to oil supply,” he stated.
“Hence oil prices rise, logistics costs increase, and (goods) prices also go up.”
He added that global instability prompts investors to seek safe-haven assets like the US dollar and gold.
This capital outflow consequently puts downward pressure on the ringgit’s exchange rate.
“When the ringgit comes under pressure, imports become more expensive,” Tengku Zafrul noted.
The ultimate impact on Malaysians’ cost of living hinges on the conflict’s duration.
“If it is brief, the impact is limited,” he said.
“If it drags on, we must be prepared.”
