Employers federation urges readiness as Middle East conflict raises costs and supply chain risks.
PETALING JAYA: The Malaysian Employers Federation (MEF) has urged the government to remain prepared with swift and targeted policy responses, expressing concern over mounting cost pressures and operational uncertainties faced by businesses following the ongoing Middle East conflict.
Its president Datuk Dr Syed Hussain Syed Husman (pic) said although the immediate impact on the domestic economy remains manageable, early signs of rising fuel prices, freight charges, insurance premiums and input costs are already being felt across key sectors, particularly among micro, small and medium enterprises (MSMEs).
“This situation highlights the vulnerability of Malaysian businesses, especially MSMEs, to external geopolitical shocks.
“Employers are already experiencing upward cost pressures in logistics, energy and raw materials.
MSMEs, with their thinner margins and limited buffers, are especially exposed to these external shocks,” he said.
Syed Hussain stressed that prolonged disruptions could trigger cascading effects, including supply chain delays, higher production costs and reduced competitiveness in both domestic and export markets.
“If the conflict persists, businesses may face sustained cost escalations and uncertainty in supply chains.
This will inevitably affect pricing, investment decisions and hiring plans,” he added, adding that employers are attempting to absorb rising costs but face limits without affecting business viability.
Syed Hussain said many MSMEs are still in a recovery phase following multiple economic shocks in recent years, including the Covid-19 pandemic, rising compliance costs and ongoing global uncertainties.
“Operating under tight cashflow conditions, these businesses may face significant strain from additional external pressures.
“Proactive and targeted support measures will be critical to help them navigate this period,” he said.
While acknowledging the government’s cautious stance, Syed Hussain called for preparedness and flexibility should the situation deteriorate.
He added that a broad-based stimulus may not be immediately necessary, but urged authorities to have contingency frameworks ready.
“Targeted measures such as temporary financial relief, facilitation of access to working capital and cost-mitigation initiatives would be vital in supporting businesses, particularly MSMEs,” he said.
He also emphasised the importance of strengthening long-term resilience through productivity improvements, digitalisation and supply chain diversification.
“This situation reinforces the need for businesses to accelerate productivity enhancements and adopt technology to mitigate future disruptions.
“Policy support in these areas will be essential for sustainable business continuity,” he added.
Syed Hussain emphasised that the government must avoid a “wait-and-see” approach and instead prepare ready-made financing mechanisms that can be activated quickly if conditions worsen.
“We cannot afford to only begin formulating financial assistance packages after the full impact has materialised.
By then, the delay could prove detrimental, especially for businesses operating on thin margins,” he said.
He added that MEF will continue to monitor developments and engage stakeholders to ensure employers’ concerns are addressed in a timely and effective manner.
