KUALA LUMPUR (March 5): The Malaysia External Trade Development Corporation (Matrade) said a survey shows over 60% of Malaysian exporters expect to be impacted by the Middle East conflict due to shipment delays and higher shipping and insurance costs.

The survey of the ground-level impact on business operations covered 53.7% micro, small and medium enterprises, 32.7% mid-tier companies, and 13.6% multinational corporations. 

Preliminary results show that businesses reported expected drops in sales, order cancellations and rising raw material costs, especially for plastics linked to crude oil.

Around 39% of respondents export to the region, mainly the UAE and Saudi Arabia, and many are considering diversifying to other markets.

In a statement on Thursday, the trade promotion agency said it has mobilised its offices in Dubai, Jeddah, and Cairo to provide market updates, coordination and support during the current maritime disruptions.

The agency also advised exporters to reroute shipments through safer regional ports as tensions disrupt key shipping routes, including the Strait of Hormuz.

Exporters should consider alternative logistics routes and ports, including the Port of Fujairah in the United Arab Emirates and Port of Salalah in Oman, as well as explore land-based transportation options where feasible, Matrade said in a statement. 

“The feedback gathered from our recent exporters’ questionnaire highlights the urgent need for a shift from traditional trade routes to be more resilient and strategically adaptable,” its chairman Reezal Merican Naina Merican said. The recommendation comes as conflict in the Middle East — now entering its sixth day — further raised the risk of a broader maritime disruption across critical shipping corridors in the Gulf region.

Reezal said the temporary closure or disruption of chokepoints such as the Strait of Hormuz is testing the agility of Malaysia’s exporters and logistics networks.

Among other steps proposed by Matrade is replacing physical trade missions in high-risk zones with virtual business-matching sessions under Matrade’s 'Virtual eBizMatch' platform.

“At the same time, we are accelerating intra-Asean market realignment as a key pillar of our mitigation strategy,” Reezal said. 

“By leveraging deeper regional integration under the Association of Southeast Asian Nations framework and enhancing utilisation of the Asean Trade in Goods Agreement (ATIGA), we are enabling Malaysian exporters to redirect trade flows into geographically proximate and economically stable markets.”

The agency also encouraged exporters to engage financial institutions to secure insurance coverage against risks such as cargo abandonment and escalating war-risk premiums.

“While we anticipate operational strain, we are positioning Malaysia as a reliable alternative supplier for our trade partners seeking to diversify away from regional risks,” Matrade chief executive officer Abu Bakar Yusof added in the statement. 

“Our immediate priority is to mitigate the ‘double-ended’ blockade affecting our cargo by leveraging our local presence in West Asia to resolve real-time logistical hurdles,” he added.