FMM In The News: NEW STRAITS TIMES, April 7, 2026

KUALA LUMPUR: Federation of Malaysian Manufacturing (FMM) has called for immediate government intervention to address supply chain disruptions caused by the closure of the Strait of Hormuz.

A survey by FMM found that nine in 10 respondents are already affected or expect to be affected within four weeks.

FMM said raw material shortages, rising logistics costs and tightening diesel supply are threatening production continuity across sectors producing food, household goods, packaging, chemicals and consumer products.

"This is not a situation that companies can manage through tighter margins or operational adjustments. Production lines are at risk of stoppage, export orders are being cancelled and the financial capacity of manufacturers to sustain operations is under direct and accelerating pressure.

"Government intervention is required now, not when conditions deteriorate further," FMM president Jacob Lee Chor Kok said in a statement.

FMM has flagged production stoppages as the most immediate risk due to a lack of critical inputs.

Its survey showed that 69.5 per cent of companies expect raw material shortages within four weeks, while 8.2 per cent have less than two weeks of stock for critical materials.

"These buffers are being depleted without replenishment, as extended lead times and disrupted shipping pipelines have broken normal restocking cycles," it said.

Among the affected supply chains are specialty chemicals used in electronics manufacturing, surface treatment and industrial coatings, which are facing reduced availability and longer lead times.

Aluminium, steel intermediates and copper-based materials transiting through affected routes are also subject to shipment delays and spot price renegotiation.

FMM said 67.3 per cent of companies expect production disruptions within one month, reflecting how material shortages will translate into reduced output, suspended product lines and unfulfilled domestic and export orders.

"Many of the manufacturers affected supply goods directly into the domestic consumer market, including food products, personal care items, household chemicals and packaging," it said.

Energy costs have also risen sharply across sectors. About 48.6 per cent of companies reported increases of between 10 per cent and 30 per cent, while 21.8 per cent reported increases of between 30 per cent and 50 per cent. A further 11.8 per cent reported increases exceeding 50 per cent.

The most affected sectors are those with high industrial diesel intensity, including ceramics, quarrying, glass manufacturing, heat-intensive food processing and marine logistics.

"Logistics costs have risen to levels that manufacturers can no longer absorb within existing export contracts. Some 52.7 per cent of companies reported freight and logistics cost increases of between 20 per cent and 50 per cent, while a further 17.7 per cent reported increases exceeding 50 per cent," it said.

FMM said 48.2 per cent of companies have already reduced output or suspended product lines in response to current conditions.

The federation proposed several measures, including tax deductions under the Income Tax Act 1967 for freight surcharges, war risk insurance premiums, vessel rerouting charges, demurrage fees and storage costs linked to the disruption.

It also urged the Domestic Trade and Cost of Living Ministry to expand the Sistem Kawalan Diesel Bersubsidi to include fuel-intensive industrial users such as ceramics, quarrying, glass manufacturing, heat-intensive food processing and marine logistics.

In addition, FMM called for Petroliam Nasional Bhd to prioritise domestic allocation of naphtha, liquefied natural gas and sulphur for downstream manufacturers during the crisis period.

"A formal domestic priority allocation framework with a defined review period and a clear sunset provision should be established through a joint directive from the Investment, Trade and Industry Ministry and the Natural Resources and Environmental Sustainability Ministry," it said.