Kuala lumpur: The Malaysia External Trade Development Corporation (MATRADE) is taking proactive measures to mitigate the effects of rising geopolitical tensions in West Asia. This includes the activation of a detailed mitigation plan aimed at assisting Malaysian exporters in dealing with challenges such as maritime blockades, increasing logistics expenses, and disruptions in supply chains.
According to BERNAMA News Agency, the move follows recent escalations in military conflict involving Iran, Israel, and the United States, which began on February 28. MATRADE has released a tailored survey to Malaysian exporters to evaluate the direct impacts of the conflict on their operations.
Preliminary findings from the survey, which included 53.7% micro, small, and medium enterprises (MSMEs), 32.7% mid-tier companies, and 13.6% multinational corporations, revealed critical insights into the industry's current state. A significant 63.9% of companies anticipate that the ongoing conflict will impact their operations, mainly due to shipment delays and rising costs in ocean freight and insurance.
Additionally, businesses foresee a decline in sales, order cancellations, and a sharp rise in raw material prices, especially for plastic-based materials linked to crude oil. Meanwhile, 39.1% of respondents are currently exporting to the region, primarily to the United Arab Emirates (UAE) and Saudi Arabia, with many considering diversifying into other markets to mitigate risks from the conflict.
To support Malaysian exporters facing these challenges, MATRADE is urging them to diversify logistics routes and redirect shipments to safer ports in the region, such as the Port of Fujairah in the UAE and Port of Salalah in Oman, and to utilize land transportation where feasible.
The agency is also accelerating efforts to help Malaysian companies expand into less-affected markets like South Asia, Latin America, and Africa, while reinforcing trade within ASEAN. To sustain trade activities, MATRADE plans to enhance digital business matching via 'Virtual eBizMatch' sessions to substitute physical trade missions in high-risk areas.
Moreover, the agency is collaborating with financial institutions to facilitate access to insurance packages for exporters affected by cargo abandonment or increased war-risk premiums. MATRADE is also leveraging Malaysia's free trade agreements (FTAs), such as the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), to help exporters gain better access to stable markets and take advantage of preferential tariff treatment.
MATRADE is simultaneously strengthening intra-ASEAN trade integration to help exporters redirect shipments away from disrupted Middle East routes and reduce escalating logistics costs and delays.
"We are enabling Malaysian exporters to redirect trade flows into geographically proximate and economically stable markets. This strategic pivot not only reduces exposure to geopolitical volatility but also strengthens Malaysia's position as a regional trade hub within Southeast Asia," stated MATRADE chairman Datuk Seri Reezal Merican Naina Merican.
He emphasized that the agency is actively involved in rerouting trade, mitigating export risks, and deepening diversification initiatives to safeguard Malaysia's long-term trade resilience.
Meanwhile, MATRADE's chief executive officer, Abu Bakar Yusof, highlighted that their immediate priority is to mitigate the 'double-ended' blockade affecting Malaysia's cargo by leveraging local presence in West Asia to resolve real-time logistical hurdles. He noted that while operational strain is anticipated, Malaysia is being positioned as a reliable alternative supplier for trade partners seeking to diversify away from regional risks.