The urgency is especially acute for SMEs, which make up about 98.5% of businesses in Malaysia.
PETALING JAYA: Malaysia’s exportdependent economy is facing growing vulnerabilities, with concerns that it may be operating with limited buffers, said economist Prof Dr Poon Wai Ching.
She warned that contingency planning is no longer optional as geopolitical fault lines, trade fragmentation and supply chain shocks increasingly threaten the country’s industrial base.
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“Bank Negara Malaysia has consistently highlighted that intensifying geopolitical tensions, trade fragmentation, energy insecurity and supply chain disruptions pose significant downside risks to macroeconomic stability, trade competitiveness and financial markets,” said Poon, who leads the Cluster for Innovative Management Practices at Taylor’s University Centre for Future of Work.
She said strategic domestic industries, including semiconductors, electrical and electronics, palm oil and downstream manufacturing, remain particularly vulnerable to localised geopolitical shocks that could rapidly cascade across regional production systems.
Poon said effective preparedness requires scenario planning, diversified supply chains, robust digital infrastructure and coordinated regional mechanisms to contain price and supply volatility.
She said the urgency is especially acute for SMEs, which make up about 98.5% of businesses in Malaysia. “Unlike large multinational companies, SMEs usually have less cash reserves, fewer suppliers and are less able to quickly adjust when external shocks or crises happen.”
Poon said the anticipated economic stress by mid-2026 should be treated not as a fixed deadline but as a call to accelerate structural reform.
She added that while no official forecast predicts a “June shock”, multiple risk indicators are converging in 2026, with the Finance Ministry itself flagging concerns over geopolitical tensions, trade fragmentation and climate-related disruptions.
She added that short-term buffers such as fuel stockpiling, import diversification and targeted subsidies could cushion energy price spikes.
“The real priority is to strengthen long-term resilience by building a circular economy and using digital green finance systems.”
Poon said the digital finance space presents an early-mover opportunity, and pointed to Bank Negara Malaysia’s asset tokenisation plans as a vehicle for carbon-based green financing that SMEs must not be locked out of.
“If SMEs are left out of these systems, they could fall behind as Asean carbon markets develop and as rules like the EU’s Carbon Border Adjustment Mechanism take effect.”
She called for a swift rollout of SME-focused carbon finance and circular economy pilot projects, particularly in steel, chemicals, palm oil and manufacturing.
She said delayed contingency planning would compound structural risks beyond short-term market volatility, eroding industrial competitiveness and burdening Malaysia’s social fabric.
“SMEs are expected to be most affected, as limited supplier networks and financial buffers could heighten risks of input shortages and cash flow pressure.”
She said inaction would also slow Malaysia’s transition towards sustainable and digitalised systems, weakening its position under emerging carbon trade rules.
Poon called on the government, industry and SMEs to shift from reactive crisis management to proactive resilience-building.
