PETALING JAYA: As the Russia-Ukraine war reaches its one year anniversary with little sign of abating, Malaysian industry players continue to be plagued by cost, supply and production challenges.
Federation of Malaysian Manufacturers (FMM) president Tan Sri Soh Thian Lai (pic) noted that the ripple effect of the war continued to disrupt supply chains and commodity prices.
He used the results of a survey done by FMM in the first half of 2022, which showed that 56% of its members thought that the war was “somewhat bad” for their business.
“Of those who were impacted by the conflict, 85% were affected by the hike in business costs, with the cost of raw materials topping their list, followed by logistics and overall cost pass-through from suppliers.
“The second most popularly noted area (65%) arising from the conflict was in supply chain disruptions (delays and cancellations of raw material supply),” he said when asked for his comment on the impact on businesses from the war, which began on Feb 24 last year.
Soh also said that the ongoing war would make things worse for the industry as long as fuel prices stayed high and volatile.
“FMM hopes the government will continue to engage stakeholders to find mutually beneficial and long-term solutions for the energy sector and the economy, including providing exemptions for industries and businesses that create high-value jobs, contribute to environmental sustainability, or participate in green energy initiatives,” he said.
To address the rising cost of living, he said FMM had proposed in Budget 2023 that the government establish a National Food Security Fund with a seed fund of RM1bil to aid in local food production and processing.
Kuala Lumpur and Selangor Indian Chamber of Commerce and Industry president Nivas Ragavan said logistics and shipping were among the hardest hit industries due to the war.
With Russia being one of the largest exporters of crude oil, the price of petroleum has been volatile.
“The skyrocketing prices of most items were due to the hikes in oil prices, causing the logistics and shipping sectors, and especially the rakyat, to feel the burden,” he said.
Nivas also said that as Ukraine was the world’s largest grain producer, especially wheat, the cost of obtaining the commodity had also increased as the country could not meet the high demand from a world that was just recovering from the Covid-19 pandemic.
Johor Bakery, Biscuit, Confec-tionery, Mee and Kuay Teow Merchants Association president Chink Poh Cheng said he remained worried over the rising costs of raw ingredients in the last few months.
“The cost of our other non-ingredient expenses, from transportation to plastic bags, has also risen dramatically thanks to the rising cost of oil and gas supply globally,” he said.
Chink added that bakeries and other wheat-reliant businesses have had to maximise productivity and profitability in order to keep their prices competitive.
“We were forced to drastically increase product prices at first when the war broke out, but most wheat-reliant small and medium enterprises (SMEs) have since found dependable alternative sources of wheat outside of Ukraine and Russia.“Luckily, global wheat prices and freight costs have mostly stabilised, but their prices remain quite high compared to before the war,” he said.
He urged the government to include more incentives for SMEs in Budget 2023 to ensure that businesses have more resources to reinvest rather than just survive.
SME Association of Malaysia president Ding Hong Sing said he is all for encouraging the digitalisation of SMEs while helping small businesses export their products.
He said if the initiatives were considered in Budget 2023, it would help SMEs mitigate the effects of the Ukraine-Russia war and pandemic.
“Everyone is affected (by the war),” he said.
