7 days ago
E&E sector remains intact despite war in Middle East
GEORGE TOWN: Despite the ongoing conflict between Israel and Iran, Malaysia's electrical and electronic (E&E) manufacturing exports remain intact – for now.
Federation of Malaysian Manufacturers (FMM) Penang chapter chairman Datuk Seri Lee Tiong Li said so far, the chapter has not received any complaints from its members.
'It has not really affected the exports of our E&E products. But if the war prolongs, the situation may change, ' he said.
Lee said for E&E, most of multinational companies in Penang and Malaysia manufacture the products locally and export them to the United States, China and European countries, but not so much to the region where the ongoing conflict is taking place.
He said another reason why the exports were not affected was because Malaysia did not have any trade relationship with Israel and most of the West Asian countries.
Lee, however, warned that if the war escalated with involvement of the other major countries, it would become a serious issue and have a big impact on the sector.
'A prolonged war will change the way we do business, especially in term of diverting the route of the exports away from conflict zone, which eventually will increase the cost,' he said.
Meanwhile, Small and Medium Enterprises Association of Malaysia (Samenta) president Datuk William Ng raised concerns the impact of the war would have on commodities including oil and gas.
'This will have a dampening effect on both domestic and exports in general,' he said.
Ng said exports of local SME products to West Asia was growing, and this war could dampen that growth.
'Malaysia's trades are mostly in consumer staples, such as foodstuff and food ingredients, palm oil and derivatives. They are generally quite resilient.'
Penang Importers & Exporters Association honorary secretary Chris Tan said the overall shipping environment has become more cautious, with signs of increasing freight costs and insurance premiums globally due to the conflict.
'Direct impact remains limited for now, as Malaysia, including Penang, does not have substantial trade with either Israel or Iran.
'The current impact is moderate and manageable, but business cost is expected to rise due to longer shipping routes and higher marine insurance,' he said.
