West Asia crisis turning into lasting commercial damage, manufacturers warn

FMM In The News: KLSESCREENER.COM, June 11, 2026

KUALA LUMPUR (June 11): Malaysian manufacturers are losing orders and customers while some product lines have been abandoned as the West Asia crisis extends well into its fourth month, a survey showed.

The latest poll by the Federation of Malaysian Manufacturing (FMM) found that the cost pressures have morphed into “lasting commercial damage” as factories continued to operate under significant strain or worsening conditions despite various countermeasures.

“The most serious finding is that these costs are no longer being absorbed as a passing challenge,” the FMM said. “They have become real commercial losses.”

The survey, which drew responses from 196 companies across industries between May 25 and June 10, is the third by the federation since the outbreak of the geopolitical conflict in the Middle East at the end of February.

Results from the survey showed that 58% are operating at or below breakeven on affected product lines, while more than one-third of manufacturers are already losing orders to competitors in less affected markets, and 19% have discontinued products that are no longer viable.

Some have lost at least one major customer or contract, and 19% of the respondents expect to lose customers if conditions persist.

“Once buyers move to alternative suppliers, those relationships rarely return, which means the damage may outlast the conflict itself and erode Malaysia’s export competitiveness well beyond its resolution,” the FMM cautioned.

Operations conditions had either worsened further or remained unchanged for 87% of the respondents, while nearly two-thirds saw no improvement in any area of their operations.

Cost burdens also remained elevated, with 74% reporting production costs that were at least 10% above their pre-conflict levels.

Freight and logistics remained the biggest cost driver, affecting 86% of respondents, followed by raw material shortages at 64% and higher energy and fuel costs at 60%. More than half reported that their customers resisted price increases.

The disruption is also affecting investment and hiring decisions. Some 42% of manufacturers have made workforce adjustments since May, including hiring freezes and reduced working hours, while 5% are still implementing or have announced retrenchment plans.

About four in 10 manufacturers have deferred or cancelled investment, automation or expansion projects, which the FMM warned could pose longer-term risks to Malaysia’s productivity and industrial transformation agenda.

To help manufacturers manage the prolonged disruptions, the FMM urged the government to consider measures, including duty and tax relief for alternative-origin raw materials, double tax deduction for crisis-related freight and insurance costs, and industrial fuel cost relief.

“Timely and targeted intervention is needed to protect jobs, sustain investor confidence and help manufacturers recover once global supply chains stabilise,” the federation stressed.


Source of article: https://www.klsescreener.com/v2/news/view/1736713/west-asia-crisis-turning-into-lasting-commercial-damage-manufacturers-warn